ADDU LAW 3RD YEAR 2019
ILAGAN (11/20)
PRELIMINARIES
RA 9285 or the Alternative Dispute Resolution Act
of 2004. Take note that the law was approved on April
2, 2004 and took effect on April 28, 2004. RA 9285 is a
special law which institutionalizes the use of Alternative
Dispute Resolution system in the Philippines and
established the office for the Alternative Dispute
Resolution, that is based on section 1 of RA 9285. So
to understand what RA 9285 is, let’s visit the state
policy of the law.
STATE POLICY
So RA 9285 aims to what?
1. To promote party autonomy and the
resolution of disputes. Please take note of the
term party autonomy.
2. Promote the use of ADR as a means to
achieve speedy and impartial justice de-clog
court dockets.
3. To provide the means for the use of ADR as
an efficient tool and alternative procedure for
the resolution of appropriate cases. Take note
resolution of appropriate cases.
4. To enlist active private sector participation in
the settlement of disputes through ADR
Please take note of the state policy.
Let’s go first to promotion of party autonomy in the
resolution of disputes. What is meant by party
autonomy? It is the freedom of the parties to make their
own arrangements for the resolution of their disputes.
Second state policy is the promotion of the use of ADR
as a means to achieve speedy and impartial justice and
declog court dockets. What is meant by this? So
assuming there is already a pending case in court and
that parties agreed to undergo mediation process, what
will happen to that case? The case will be dismissed
because of the compromise agreement that will be
submitted to the Court for its approval. Please take
note. So with regard to the second state policy
declogging court dockets because obviously it will put
an end to a pending litigation through a compromise
agreement between the parties.
Third, it is an efficient tool and alternative procedure for
the resolution of appropriate cases. So what is being
emphasized by the third state policy? What rule under
your Civil Procedure can be connected to the third state
policy? During the pre-trial under Rule 18 of your Rules
of Court. So again, with regard to the third state policy,
it restores the importance of the priority position under
Rule 18 on pre-trial or amicable settlement of cases.
Please take note of that.
Lastly, enlist private sector participation in the
settlement of disputes. Why is there an active private
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sector participation? Remember that in Alternative
Dispute Resolution, there is always the participation of
a neutral third party who will assist the parties in
arriving at an amicable settlement. Take note, the
ultimate objective of ADR is to change the litigious
attitude of both litigants and their counsels to
immediately resort to courts, which is why there is an
overwhelming backlog of court cases. So that note
what Chief Justice stated, that the backlog of court
cases is the overuse, misuse, and abuse of courts.
Again, the backlog of court cases is the overuse, the
misuse, and the abuse of the courts. Just for emphasis,
as a corollary measure, if we want to restore the proper
rule of the judiciary, it should be the forum of the last
recourse of the private disputes.
DEFINITION
Let’s go to the definition of Alternative Dispute
Resolution. It is any process or procedure used to
resolve a dispute or controversy, other than by
adjudication of a presiding judge of a court or an
officer of a government agency, in which a neutral
third party participates to assist in the resolution of
issues, which includes arbitration, mediation,
conciliation, early neutral evaluation, mini-trial, or
any combination thereof. Please take note that under
RA 9285, the choice is given to the parties to the
dispute to choose the mode of resolving their
differences. Please take note of that.
(a) "Alternative Dispute Resolution System" means any
process or procedure used to resolve a dispute or
controversy, other than by adjudication of a presiding
judge of a court or an officer of a government agency,
as defined in this Act, in which a neutral third party
participates to assist in the resolution of issues, which
includes arbitration, mediation, conciliation, early
neutral evaluation, mini-trial, or any combination
thereof;
What happened in the case of LM Power Engineering
vs Capitol Industrial Construction Groups? The
Supreme Court ruled the ADRs provide solution that
are less consuming, less tedious, less confrontational
and more productive of goodwill and lasting
relationships. In the case of Cargill Philippines vs
San Fernando, please take note that the enactment of
RA 9285 on April 2, 2004 further institutionalized the
use of Alternative Dispute Resolution systems
including arbitration in the settlement of disputes.
Please take note of this case. Another case is RCBC
vs BDO and BDO vs CA, here the Supreme Court
ruled that ADR was envisioned as an important means
to achieve a speedy and impartial justice and declog
the court dockets. The most important feature of
arbitration and the key to its success is the public’s
confidence and trust in the integrity of the process.
Please take note of these cases.
HISTORY

Let’s go to the historical antecedent of Alternative
Dispute Resolution. First it is found in the Spanish Civil
Code of 1889. So under this, it empowers the parties
to submit their dispute for an arbitral decision. The
leading case here is the case of Contoba v. Conte 2
phil 445, it speaks about arbitration and the
enforceability of the arbitration clause
Next you have the Civil Code of 1950, specifically
under Art.2024, it recognizes the validity of a arbitration
clause which provides that a arbitral award is final.
Next we have RA 876 or the Arbitration Law was
approved in June 19 1953. Then we have the
construction industry arbitration law or E.O 1008, so all
construction disputes is governed by E.O 1008. Lastly
ADR act of 2004.
Did R.A 9285 repeal or amend our system of Barangay
Justice? It did not amend, it merely provided another
method to resolve disputes.
FORMS
Let’s go to the forms of ADR. The first form is
mediation. What is meant by Mediation? There is a
third party which is the mediator. When you say
mediator, there are two kinds of mediation. We have
the court annexed mediation and court referred
mediation. What is a court annexed mediation? It is a
mediation process conducted under the auspices of the
court after the court has acquired jurisdiction. For court
referred, the case was prematurely filed because there
is an agreement between the parties.
What is an evaluation of third person? The neutral third
person will make a non-binding assessment of the
case. During the judicial dispute resolution, the judge
becomes a neutral third person and will make a pre-
judgement, so there is a non-binding assessment
made by a neutral third person.
Mini trial? It means a structured dispute resolution
method in which the merits of a case are argued before
a panel comprising senior decision makers with or
without the presence of a neutral third person after
which the parties seek a negotiated settlement. Ganun
pa din, mag re-refer siya ng non-binding advisory
opinion on the matter.
(u) "Mini-Trial" means a structured dispute resolution
method in which the merits of a case are argued before
a panel comprising senior decision makers with or
without the presence of a neutral third person after
which the parties seek a negotiated settlement;
Mediation Arbitration is a a combination of any of the
forms of ADR
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Judicial Dispute Resolution, the judge is the neutral
third person
What are the exemptions from the application of
R.A 9285?
1. Labor Disputes - the labor code provides for
its own method of arbitration
2. Civil Status of Persons - Under the Civil Code,
the status of the person is not subject to
compromise
3. Jurisdiction of Courts - conferred by law
4. Future Legitim - since future legitim is not
subject to compromise or a waiver
5. Criminal Liability - the interest person is the
State
6. Those which by law cannot be compromised
ARBITRATION
Lets go to the definition of Arbitration :
(d) "Arbitration" means 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 this Act, resolve a dispute by
rendering an award;
This a technical definition found in R.A 9285.
Arbitration comes from the latin term “Arbitraryo”
BENEFITS OF ARBITRATION
.
Arbitration as a form of ADR that is beneficial, there are
perceived benefits of arbitration.
1. Arbitral awards as a general rule is
immediately attained finality unlike court
decisions which subject to several remedies.
2. Subject to enforceability in foreign jurisdiction.
It is through various international conventions
especially on New York Convention signed by
120 countries including the Philippines. This
foreign arbitral award is easier to enforce than
a foreign judgment since foreign judgment
needs to proven as a fact.
3. Neutrality means parties can submit
themselve to equal footing since they can
agree on the matters taken up in arbitration
4. Specialized competence which means may
select highly specialized arbitrator of their
choice provided they are independent.
5. Party participation since in arbitration can
agree on most of the matter unlike courts
while are bound by the Rules of Court
6. Speedy
7. Privacy and Confidentiality means that parties
may stipulate that the proceedings and
decision will be private
8. Cost to some extent since you do not have to
pay Court fees, Sheriff fees, etc.

SALIENT FEATURES
1. First they prescribed the rules of arbitration
2. It incorporates as part of the model law of the
international commercial arbitration.
3. It makes the model law applicable to
international commercial arbitration.
 So you take a look at the model
when talking about international
commercial arbitration and
strengthening it through specific
provision of RA 9285 and it
strengthens domestic arbitration by
making specific provisions of the
model and RA 9285 pertain to
international commercial arbitration
4. It designates an appointing authority with the
power to designate a arbitrator for a party in
default situations.
5. It provides a broad and uniform form of
provisional relief in international commercial
and domestic arbitration
6. It sets the basic principles in the enforcement
of foreign arbitral awards
Pertinent law which are the primary sources of
arbitration:
1. RA 9258
2. RA 876 refers to domestic arbitration
3. E.O 1008 governs all construction disputes
4. Article 2042 - 2046 in relation Articles 2028-
2041 of the civil code
5. Provision of the Labor Code, rules and
regulations relating to the resolution of
grievance arising from the interpretation and
interpretation of the CBA
6. Clearing house rules and regulation, governs
arbitration on check disputes
7. Case laws
8. New York Convention on the recognition and
enforcement of foreign arbitral awards
Types of Arbitration taking place in the Philippines
1. Domestic Arbitration - An arbitration that is
not international where the proceedings are
held in and where the award is rendered or
the seat of arbitration is in the Philippines and
does not have any of the characteristics which
makes it international.
2. International commercial Arbitration - The
arbitration proceeding is held in the
Philippines but it involves a dispute arising
from a commercial relationship that possess
any of the characteristics which makes it
international.
Note: The seat of the arbitration and the award is in the
Philippines
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When is arbitration international? According to R.A
9285
1. The parties to an arbitration agreement have
at the time of their agreement there place of
business is in different states
2. Where either The place of arbitration under
that agreement or the place where the
substantial part of the obligations of the
commercial relationship is to be performed or
the subject matter of the dispute is situated
outside the Philippines
3. The Parties has expressly agreed
What makes it commercial in nature? Take a look at
Sec. 21 of R.A 9285
SEC. 21. Commercial Arbitration. - An arbitration is
"commercial" if it covers matters arising from all
relationships of a commercial nature, whether
contractual or not. Relationships of a transactions: any
trade transaction for the supply or exchange of goods
or services; distribution agreements; construction of
works; commercial representation or agency; factoring;
leasing, consulting; engineering; licensing; investment;
financing; banking; insurance; joint venture and other
forms of industrial or business cooperation; carriage of
goods or passengers by air, sea, rail or road.
Take note: Domestic arbitration of what law governs
domestic arbitration under Sec.32 of R.A 9285
SEC. 32. Law Governing Domestic Arbitration. -
Domestic arbitration shall continue to be governed by
Republic Act No. 876, otherwise known as "The
Arbitration Law" as amended by this Chapter. The term
"domestic arbitration" as used herein shall mean an
arbitration that is not international as defined in Article
(3) of the Model Law.
SEC. 33. Applicability to Domestic Arbitration. - Article
8, 10, 11, 12, 13, 14, 18 and 19 and 29 to 32 of the
Model Law and Section 22 to 31 of the preceding
Chapter 4 shall apply to domestic arbitration.
When we speak of international commercial arbitration
that is governed by the model law and certain
provisions of ADR law.
(v) "Model Law" means the Model Law on International
Commercial Arbitration adopted by the United Nations
Commission on International Trade Law on 21 June
1985;
MURRAY (12/04)

THE AREAS OF OPERATION OF
ARBITRATION
Take note of the following terms:
1. Voluntary Arbitration
2. Compulsory Arbitration
3. Preventive Arbitration
I. ARBITRATION UNDER THE LABOR CODE
So, first, we have Article 260 of the Labor Code.
ART. 260. Grievance machinery and voluntary
arbitration. - The parties to a Collective Bargaining
Agreement shall include therein provisions that will
ensure the mutual observance of its terms and
conditions. They shall establish a machinery for the
adjustment and resolution of grievances arising from
the interpretation or implementation of their
Collective Bargaining Agreement and those arising
from the interpretation or enforcement of company
personnel policies.
All grievances submitted to the grievance machinery
which are not settled within seven (7) calendar days
from the date of its submission shall
AUTOMATICALLY BE REFERRED TO VOLUNTARY
ARBITRATION prescribed in the Collective Bargaining
Agreement.
For this purpose, parties to a Collective Bargaining
Agreement shall name and designate in advance a
Voluntary Arbitrator or panel of Voluntary
Arbitrators, or include in the agreement a procedure
for the selection of such Voluntary Arbitrator or
panel of Voluntary Arbitrators, preferably from the
listing of qualified Voluntary Arbitrators duly accredited
by the Board. In case the parties fail to select a
Voluntary Arbitrator or panel of Voluntary Arbitrators,
the Board shall designate the Voluntary Arbitrator or
panel of Voluntary Arbitrators, as may be necessary,
pursuant to the selection procedure agreed upon in the
Collective Bargaining Agreement, which shall act with
the same force and effect as if the Arbitrator or panel
of Arbitrators has been selected by the parties as
described above.
What are the subject of voluntary arbitration under
the Labor Code?
Take note of Article 261 regarding the jurisdiction
of the voluntary arbitrators
ART. 261. Jurisdiction of Voluntary Arbitrators or
panel of Voluntary Arbitrators. - The Voluntary
Arbitrator or panel of Voluntary Arbitrators shall have
original and exclusive jurisdiction (take note of this)
to hear and decide:
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1. all unresolved grievances arising
from the interpretation or implementation of
the Collective Bargaining Agreement and
2. those arising from the interpretation
or enforcement of company personnel
policies referred to in the immediately
preceding article.
3. violations of a Collective Bargaining
Agreement, except those which are gross in
character, shall no longer be treated as unfair
labor practice and shall be resolved as
grievances under the Collective
Bargaining Agreement. For purposes of this
article, gross violations of Collective
Bargaining Agreement shall mean flagrant
and/or malicious refusal to comply with the
economic provisions of such agreement.
4. upon agreement of the parties, shall
also hear and decide all other labor disputes
including unfair labor practices and
bargaining deadlocks.
5. Also the disputes mentioned under
Article 217 of the Labor Code or which the LA
have original and exclusive jurisdiction
The Commission, its Regional Offices and
the Regional Directors of the Department of
Labor and Employment shall not entertain
disputes, grievances or matters under the
exclusive and original jurisdiction of the
Voluntary Arbitrator or panel of Voluntary
Arbitrators and shall immediately dispose
and refer the same to the Grievance
Machinery or Voluntary Arbitration provided
in the Collective Bargaining Agreement
What happened in the case of San Jose vs. NLRC
VICENTE SAN JOSE vs NLRC
Vicente San Jose, in his position paper, states that
he was hired sometime in July 1980 as a stevedore
continuously until he was advised in April 1991 to retire
from service considering that he already reached 65
years old. That accordingly, he did apply for retirement
and was paid P3,156.39 for retirement pay.
Contentions of Ocean Terminal Services:
San Jose only worked on rotation basis and not
seven days a week due to numerous stevedores who
cannot all be given assignments at the same time; That
he performed stevedoring job only on call, so while he
was connected with the company for the past 11 years,
he did not actually render 11 years of service;That the
burden of proving that San Joses latest salary was

P200.00 rests upon him; That he already voluntarily
signed a waiver of quitclaim.The Labor Arbiter decided
the case solely on the merits of the complaint.
LA arrived at the computation that the retirement
differential is P25,443.70.
NLRC reversed LA on the ground that the differential
being claimed by San Jose is based on their CBA and
as provided under the Labor Code, interpretation or
implementation of CBA should be referred by the LA to
the grievance machinery or voluntary arbitrator.
ISSUE: Who has jurisdiction over the dispute? VA
HELD: VA has exclusive jurisdiction over unresolved
grievances
As provided under the Labor Code, the NLRC
correctly ruled that the Labor Arbiter had no jurisdiction
to hear and decide petitioners money-claim
underpayment of retirement benefits, as the
controversy between the parties involved an issue
arising from the interpretation or implementation of a
provision of the collective bargaining agreement. The
Voluntary Arbitrator or Panel of Voluntary Arbitrators
has original and exclusive jurisdiction over the
controversy under Article 261 of the Labor Code, and
not the Labor Arbiter. The court, however, will no longer
order the remand of the case The Court will not remand
the case to the Voluntary Arbitrator or Panel of
Voluntary Arbitrators for hearing. This case has
dragged on far too long - eight (8) years. Any further
delay would be a denial of speedy justice to an aged
retired stevedore. There is further the possibility that
any Decision by the Voluntary Arbitrator or Panel of
Voluntary Arbitrators will be appealed to the CA, and
finally to this Court. Formula adopted by LA will be
followed. To recapitulate; the Court hereby rules -
1.That the NLRC correctly ruled that the LA had no
jurisdiction over the case, because the case involved
an issue arising from the interpretation or
implementation of a Collective Bargaining Agreement;
2.That we adopt the computation formula for the
retirement benefits by the LA, and the basis thereof.
The respondent must therefore pay the petitioner the
additional amount of Twenty-Five Thousand Four
Hundred Forty-Three and Seventy Centavos
P25,443.70) Pesos.
Please take note of this case, here the SC laid down
the following rules:
1. The jursidiction of the LA and VA
under 217 and 262 of the Labor Code can
possibly include MONEY CLAIMS arising
from employer-employee relationship. This is
provided that it arises from the interpretation
of the CBA.
2. The exclusive and original
jurisdiction of the LA over money claims is
limited only to those arising from statutes or
contracts other than a CBA whereas when we
say VA, they have original and exclusive
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jurisdiction arising from the interpretation and
implementation of the CBA.
3. The VA can exercise jurisdiction
over any other disputes between the
employer and a union and an individual which
includes disputes mentioned under 217 of the
LC which the LA has jurisdiction provided that
there is an agreement between the Union and
the management.
So pwede pala i-subject to VA basta lang may
agreement. So termination disputes and ULP, can that
be subject to VA?
YES, provided that there is an agreement.
So please take note also of the case of San Miguel
Corporation vs NLRC (255 SCRA 133), here the SC
said the provision in the CBA stating that wages,
conditions of employment or of E-E, shall be settled by
arbitration is not sufficient to remove the ULP dispute
from the jurisdiction of the LA to VA. What happened
here?
San Miguel Corporation vs NLRC
Petitioners posit the basic principle that a collective
bargaining agreement is a contract between
management and labor that must bind and be enforced
in the first instance as between the parties thereto.
In this case, the CBA between the petitioners and
respondent union provides, under Section 1, Article V
entitled ARBITRATION, that wages, hours of work,
conditions of employment and/or employer-employee
relations shall be settled by arbitration.
Petitioners thesis is that the dispute as to the
termination of the union members and the unfair labor
practice should first be settled by arbitration, and not
directly by the labor arbiter, following the above
provision of the CBA, which ought to be treated as the
law between the parties thereto.
The argument is unmeritorious. The law in point is
Article 217 (a) of the Labor Code. It is elementary that
this law is deemed written into the CBA. In fact, the law
speaks in plain and unambiguous terms that
termination disputes, together with unfair labor
practices, are matters falling under the original and
exclusive jurisdiction of the Labor Arbiter, to wit:
Article 217. Jurisdiction of Labor Arbiters and the
Commission - (a) Except as otherwise provided under
this Code, the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide x x x the
following cases involving all workers, whether
agricultural or non-agricultural:
(1) Unfair labor practice cases:

(2) Termination disputes;
x x x x x x x x x.
The sole exception to the above rule can be found
under Article 262 of the same Code, which provides:
Aricle 262. Jurisdiction over other labor disputes -
The voluntary arbitrator or panel of voluntary
arbitrators, upon agreement of the parties, shall also
hear and decide all other labor disputes including unfair
labor practices and bargaining deadlocks. (As added
by R.A. 6715)
We subjected the records of this case, particularly the
CBA, to meticulous scrutiny and we find no
agreement between SMC and the respondent union
that would state in unequivocal language that
petitioners and the respondent union conform to
the submission of termination disputes and unfair
labor practices to voluntary arbitration. Section 1,
Article V of the CBA, cited by the herein petitioners,
certainly does not provide so. Hence, consistent with
the general rule under Article 217 (a) of the Labor
Code, the Labor Arbiter properly has jurisdiction over
the complaint filed by the respondent union on
February 25, 1991 for illegal dismissal and unfair labor
practice.
The rule is that if we say ULP and termination
disputes, the LA has original and exlusive jurisdiction
unless the partess AGREE that it will be heard by the
VA.
Just for emphasis: the CBA must state in
UNEQUIVOCAL LANGUAGE that the parties
conform to the submission of termination disputes
and unfair labor practices to voluntary arbitration
What happened to Vivero vs CA.
Vivero vs CA
In San Miguel Corp. v. National Labor Relations
Commission[21] this Court held that the phrase "all other
labor disputes" may include termination disputes
provided that the agreement between the Union and
the Company states "in unequivocal language that [the
parties] conform to the submission of termination
disputes and unfair labor practices to voluntary
arbitration."[22] Ergo, it is not sufficient to merely say
that parties to the CBA agree on the principle that "all
disputes" should first be submitted to a Voluntary
Arbitrator. There is a need for an express stipulation in
the CBA that illegal termination disputes should be
resolved by a Voluntary Arbitrator or Panel of Voluntary
Arbitrators, since the same fall within a special class of
disputes that are generally within the exclusive original
jurisdiction of Labor Arbiters by express provision of
law. Absent such express stipulation, the phrase "all
disputes" should be construed as limited to the areas
of conflict traditionally within the jurisdiction of
Voluntary Arbitrators, i.e., disputes relating to contract-
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interpretation, contract-implementation, or
interpretation or enforcement of company personnel
policies. Illegal termination disputes - not falling within
any of these categories - should then be considered as
a special area of interest governed by a specific
provision of law.
Take note again; UNEQUIVOCAL LANGUAGE pa
din
How about in the case of Apalisoc vs Radio
Philippines
Apalisoc vs Radio Philippines
Petitioner contends in any event that even assuming
that the voluntary arbitrator had no jurisdiction over the
case, it would not be in keeping with settled
jurisprudence to allow a losing party to question the
authority of the voluntary arbitrator after it had freely
submitted itself to its authority.[16]
The petition is impressed with merit.
The above-quoted Article 262 of the Labor Code
provides that upon agreement of the parties, the
voluntary arbitrator can hear and decide all other labor
disputes.
Contrary to the finding of the Court of Appeals,
voluntary arbitration as a mode of settling the
dispute was not forced upon respondents. Both
parties indeed agreed to submit the issue of validity of
the dismissal of petitioner to the jurisdiction of the
voluntary arbitrator by the Submission Agreement duly
signed by their respective counsels.
As the voluntary arbitrator had jurisdiction over the
parties controversy, discussion of the second issue is
no longer necessary.
Whether or not the VA had jurisdiction over the case?
Yes, even ULP and bargaining deadlocks. In this
case, there is a Submission Agreement duly signed by
their respective counsels thus agreeing.
What happened in Ludo vs Luym Corp vs SaornidoIn
the course of its business operations, LUDO engaged
the arrastre services of Cresencio Lu Arrastre Services
(CLAS) for the loading and unloading of its finished
products at the wharf. Accordingly, several arrastre
workers were deployed by CLAS to perform the
services needed by LUDO. These arrastre workers
were subsequently hired, on different dates, as regular
rank-and-file employees of LUDO every time the latter
needed additional manpower services. Said
employees thereafter joined respondent union, the
LUDO Employees Union (LEU), which acted as the
exclusive bargaining agent of the rank-and-file
employees. The union entered into a collective
bargaining agreement with LUDO which provides
certain benefits to the employees, the amount of which
vary according to the length of service rendered by the
availing employee.
The union requested LUDO to include in its members
period of service the time during which they rendered

arrastre services to LUDO through the CLAS so that
they could get higher benefits. LUDO failed to act on
the request. Thus, the matter was submitted for
voluntary arbitration.
Petitioner contends that the appellate court gravely
erred when it upheld the award of benefits which were
beyond the terms of submission agreement. Petitioner
asserts that the arbitrator must confine its
adjudication to those issues submitted by the
parties for arbitration, which in this case is the sole
issue of the date of regularization of the
workers. Hence, the award of benefits by the arbitrator
was done in excess of jurisdiction
Issue: W/N the arbitrator can award such
benefits?
In construing the above provisions, we held in San
Jose vs. NLRC, that the jurisdiction of the Labor Arbiter
and the Voluntary Arbitrator or Panel of Voluntary
Arbitrators over the cases enumerated in the Labor
Code, Articles 217, 261 and 262, can possibly include
money claims in one form or another. Comparatively,
in Reformist Union of R.B. Liner, Inc. vs.
NLRC,compulsory arbitration has been defined both as
the process of settlement of labor disputes by a
government agency which has the authority to
investigate and to make an award which is binding on
all the parties, and as a mode of arbitration where the
parties are compelled to accept the resolution of their
dispute through arbitration by a third party (emphasis
supplied). While a voluntary arbitrator is not part of the
governmental unit or labor departments personnel,
said arbitrator renders arbitration services provided for
under labor laws.
Generally, the arbitrator is expected to decide only
those questions expressly delineated by the
submission agreement. Nevertheless, the arbitrator
can assume that he has the necessary power to
make a final settlement since arbitration is the final
resort for the adjudication of disputes. In another
case, thus, assuming that the submission empowers
the arbitrator to decide whether an employee was
discharged for just cause, the arbitrator in this instance
can reasonable assume that his powers extended
beyond giving a yes-or-no answer and included the
power to reinstate him with or without back pay.
What the SC was saying is that even if the award of
benefit is not included in the Submission Agreement
but since arbitration is meant to be the final say to the
dispute, then there is an implied power for the arbitrator
to rule on that matter.
How is it different from Asset Privitization Trust vs
CA?
Asset Privitization Trust vs CA
The nature and limits of the Arbitrators powers.As a
rule, the award of an arbitrator cannot be set aside for
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mere errors of judgment either as to the law or as to
the facts. Courts are without power to amend or
overrule merely because of disagreement with matters
of law or facts determined by the arbitrators. They will
not review the findings of law and fact contained in an
award, and will not undertake to substitute their
judgment for that of the arbitrators, since any other rule
would make an award the commencement, not the
end, of litigation. Errors of law and fact, or an erroneous
decision of matters submitted to the judgment of the
arbitrators, are insufficient to invalidate an award fairly
and honestly made. Judicial review of an arbitration is,
thus, more limited than judicial review of a trial.
Nonetheless, the arbitrators awards is not absolute
and without exceptions. The arbitrators cannot
resolve issues beyond the scope of the submission
agreement.The parties to such an agreement are
bound by the arbitrators award only to the extent and
in the manner prescribed by the contract and only if the
award is rendered in conformity thereto Thus, Sections
24 and 25 of the Arbitration Law provide grounds for
vacating, rescinding or modifying an arbitration
award. Where the conditions described in Articles
2038, 2039 and 2040 of the Civil Code applicable to
compromises and arbitration are attendant, the
arbitration award may also be annulled.
Against the backdrop of the foregoing provisions and
principles, we find that the arbitrators came out with an
award in excess of their powers and palpably devoid of
factual and legal basis.
What is this Submission Agreement, how will you
differentiate that from the arbitration clause?
A submission agreement is one referring a
PRESENT DISPUTE to arbitration, the dispute is
already existing. While an arbitration clause refers a
FUTURE dispute to arbitration. In a contract, what is
included, submission agreement or arbitration clause?
Usually, it is the arbitration clause since at the time the
contract was made, the dispute is not yet in existence.
Dili na ta mudwell diria kay kay Father Nazareno na
ni na area (sana dili pud mudwell sa exam :( )
Legal basis daw: 262
Lets go to 263 which speaks of Compulsory
Arbitration
When, in his opinion, there exists a labor dispute
causing or likely to cause a strike or lockout in an
industry indispensable to the national interest, the
Secretary of Labor and Employment may assume
jurisdiction over the dispute and decide it or certify the
same to the Commission for compulsory arbitration.
Such assumption or certification shall have the effect
of automatically enjoining the intended or impending
strike or lockout as specified in the assumption or
certification order. If one has already taken place at the
time of assumption or certification, all striking or locked
out employees shall immediately return-to-work and

the employer shall immediately resume operations and
readmit all workers under the same terms and
conditions prevailing before the strike or lockout. The
Secretary of Labor and Employment or the
Commission may seek the assistance of law
enforcement agencies to ensure compliance with this
provision as well as with such orders as he may issue
to enforce the same.
If the employees go to strike, is it subject to
mediation?
YES. It is subject to mediation. Legal basis, Article
263 and Rule 22 of the Omnibus Rules Implementing
the Provisions of the Labor Code. Ang tawag doon,
prementive mediation, you read the case of San Miguel
Corporation vs NLRC. So this mediation can be availed
thru the NCMB. Take note, the procedural requirement
for a valid strike is a notification to the NCMB. This
notice requirement, the absence of will make it illegal.
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Lets proceed to Construction Contracts
II. CONSTRUCTION CONTRACTS
When we say construction contracts, the specific
laws that govern are EO 1008, Section 17, 34, and 35
of RA 9285.
Which body has jurisdiction? CIAC (Construction
Industry Arbitration Commission)
Sec. 4. Jurisdiction. The CIAC shall have original and
exclusive jurisdiction over disputes arising from, or
connected with, contracts entered into by parties
involved in construction in the Philippines (take
note, Philippines na naman ang seat) , whether the
dispute arises before or after the completion of the
contract, or after the abandonment or breach thereof.
These disputes may involve government or private
contracts. For the Board to acquire jurisdiction, the
parties to a dispute must agree to submit the same to
voluntary arbitration.
So please take note of the EXPANDED jurisdiction of
the CIAC, why expanded because of Section 35 of RA
9285.
SEC. 35. Coverage of the Law. - Construction
disputes which fall within the original and exclusive
jurisdiction of the Construction Industry Arbitration
Commission (the "Commission") shall include those
between or among parties to, or who are otherwise
bound by, an arbitration agreement, directly or by
reference whether such parties are project owner,
contractor, subcontractor, quantity surveyor,
bondsman or issuer of an insurance policy in a
construction project.
The Commission shall continue to exercise original
and exclusive jurisdiction over construction disputes
although the arbitration is "commercial" pursuant to
Section 21 of this Act.
So CIAC, ano ang mode of settling disputes? It is
thru arbitration.
Question: May construction disputes be settled
in other modes of settling disputes? Pwede ba?
Mediation.
SEC. 36. Authority to Act as Mediator or
Arbitrator. - By written agreement of the parties to a
dispute, an arbitrator may act as mediator and a
mediator may act as arbitrator. The parties may also
agree in writing that, following a successful mediation,
the mediator shall issue the settlement agreement in
the form of an arbitral award.
So, if there is breach of construction contract, where do
you go? So, CIAC.

Anong mangyayari, kunwari mag-eenter kayo to
construction contract? This contract has arbitration
clause, pareha ra gihapon. Another question:
What is the condition sine qua non for the CIAC to
acquire jurisdiction over a construction dispute?
There should be a submission agreement or an
arbitration clause. Is it necessary? Yes of course, it is
necessary.
Take note also of the jurisdiction of the CIAC,
included:
1. Violations of the term of the agreement
2. Interpretation and/or application of contractual
provisions
3. Award of damages
4. Penalties
5. Commencement time and delays
6. Maintenance and Defects
7. Payment/Default of Employer or Contractor
8. Changes in Contract Clauses
Please take note that the government can be a
party in an arbitration proceeding before the CIAC.
Bakit? Because obviously nagaenter man ang
government into private contracts.
Question: What happens to a case that is filed with
the RTC regarding a construction dispute?
It must be dismissed. Anong ground for the
dismissal? Legal basis, Section 39 of RA 9285 and
Section 17(d) of RA 9285
SEC. 39. Court to Dismiss Case Involving a
Construction Dispute. - A regional trial court which a
construction dispute is filed shall, upon becoming
aware, not later than the pretrial conference, that the
parties had entered into an arbitration to be conducted
by the CIAC, unless both parties, assisted by their
respective counsel, shall submit to the regional trial
court a written agreement exclusive for the Court,
rather than the CIAC, to resolve the dispute
SEC. 17. Enforcement of Mediated Settlement
Agreement. - The mediation shall be guided by the
following operative principles:
xxx(d) The parties may agree in the settlement
agreement that the mediator shall become a sole
arbitrator for the dispute and shall treat the settlement
agreement as an arbitral award which shall be subject
to enforcement under Republic Act No. 876, otherwise
known as the Arbitration Law, notwithstanding the
provisions of Executive Order No. 1008 for mediated
dispute outside of the CIAC.
So anong ibig sabihin non? Sabi natin CIAC, pero
sabi naman ng Section 39, pwede pala ang RTC?
Provided that both parties, assisted by their respective
counsel, shall submit to the regional trial court a written
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agreement exclusive for the Court, rather than the
CIAC, to resolve the dispute.
What is the principle? Party Autonomy Principle.
In the case of China Chang jang Energy
Corporation
China Chang jang Energy Corporation
Contrary to the claim of the DOH, CIAC has
jurisdiction over the claim of HTMC. As stated in
Section 4 of Executive Order No. 1008, also known as
the "Construction Industry Arbitration Law":
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 disputes arises before or after the
completion of the contract, or after the abandonment or
breach thereof. These disputes may involve
government or private contracts. For the Board to
acquire jurisdiction, the parties to a dispute must agree
to submit the same to voluntary arbitration.
Furthermore, Article III, Section 1 of the CIAC Rules
of Procedure Governing Construction Arbitration
provides:
SECTION 1. Submission to CIAC Jurisdiction – An
arbitration clause in a construction contract or a
submission to arbitration of a construction dispute shall
be deemed an agreement to submit an existing or
future controversy to CIAC jurisdiction, notwithstanding
the reference to a different arbitration institution or
arbitral body in such contract or submission. When a
contract contains a clause for the submission of a
future controversy to arbitration, it is not necessary for
the parties to enter into a submission agreement before
the claimant may invoke the jurisdiction of CIAC.
It is undisputed that Article 12 of the four similarly-
worded consultancy agreements provides for
submission to arbitration of any dispute arising from
said agreements.
Petitioner’s reliance and interpretation of the
Supreme Court’s ruling in Jesco Services Incorporated
vs. Vera is misplaced. The same was clarified in a
subsequent resolution of the Third Division of the
Supreme Court dated September 30, 1996 in G.R. No.
125706 entitled "China Chang Jiang Energy
Corporation (Philippines) versus Rosal Infrastructure
Builders, represented by its General Manager, Alberto
S. Surla, Construction Industry Arbitration
Commission, Prudencio F. Baranda, and the Court of
Appeals." In effect, the owner-consultant agreement
entered into by petitioner and private respondents did
not divest CIAC of jurisdiction over the case. For even
if they elected another forum, their agreement will
remain to be within the jurisdiction of CIAC. In so doing,
they may not unilaterally divest CIAC of its jurisdiction
as provided for by law.

Okay so klaro yun ha? Based on this case, parties to
a construction contract need not specifically agree to
submit a dispute arising thereunder to the CIAC as long
as they agree to submit to voluntary arbitration,
regardless of what forum they choose, their agreement
will fall under the CIAC.
Take note that an arbitration arising
How do you define Domestic arbitration (DA)?
S: Domestic arbitration is where the seat of arbitration
is in the Philippines. The contract of construction is in
the Philippines. It is subject to the jurisdiction of the
CIAC even if one of the party is an international party
or a foreign entity.
What happened in the case of National Irrigation
Administration vs CA?
Okay so clear tayo ha, so Construction Disputes
again, CIAC ang original and exclusive jurisdiction.
Who is an international party?
(p) "International Party" shall mean an entity whose
place of business is outside the Philippines. It shall not
include a domestic subsidiary of such international
party or a coventurer in a joint venture with a party
which has its place of business in the Philippines.
The term foreigner arbitrator shall mean a person
who is not a national of the Philippines
.
Take note that the only concession made by RA 9285
to the international character of such arbitration is that
the CIAC even if there is that foreign entitity or
international party is that the CIAC may appoint
FOREIGN ARBITRATOR as co-arbitrator or chairmain
of the tribunal who is not required to be credited by the
CIAC, so please take note of that.
So if it will be asked in your exam? When can a
foreign arbitrator be appointed? The answer is in
Section 37 of RA 9285
SEC. 37. Appointment of Foreign Arbitrator. - The
Construction Industry Arbitration Commission (CIAC)
shall promulgate rules to allow for the appointment of a
foreign arbitrator or coarbitrator or chairman of a
tribunal a person who has not been previously
accredited by CIAC: Provided, That:
(a) the dispute is a construction dispute in
which one party is an international party
(b) the person to be appointed agreed to
abide by the arbitration rules and policies of
CIAC;
(c) he/she is either coarbitrator upon the
nomination of the international party; or
he/she is the common choice of the two CIAC-
accredited arbitrators first appointed one of
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whom was nominated by the international
party; and
(d) the foreign arbitrator shall be of different
nationality from the international party.
How about International commercial arbitration
(ICA)?
S: International Arbitration means an arbitration
where:
(a) the parties to an arbitration agreement have, at
the time of the conclusion of that agreement, their
places of business in different states; or (b) one of the
following places is situated outside the Philippines in
which the parties have their places of business: a)the
place of arbitration if determined in, or pursuant to, the
arbitration agreement; b)any place where a substantial
part of the obligations of the commercial relationship is
to be performed or the place with which the subject
matter of the dispute is most closely connected; or (c)
the parties have expressly agreed that the subject
matter of the arbitration agreement relates to more than
one country.
12/11
By: Darcy Repolidon
continuation of CONSTRUCTION DISPUTES
previous discussion based on the cases of
 China Chiang Jiang vsRosal
Infrastructure
 National Irrigation Administration vs
CA
The Principle to be remembered:
- As long as a construction contract
contains an Arbitration Clause, any party
thereto as provide to compel the other to
arbitration before the CIAC even if the other
party objects to the jurisdiction of the CIAC
because the arbitration calls for an arbitration
before another forum.
In other words, any agreement to arbitrate a
construction dispute before a forum which is not the
CIAC is rendered ineffective.WHY?
- because when we say construction
dispute, CIAC has exclusive and original
jurisdiction.
QUESTION: What will happen if a case involving
construction dispute is filed before the RTC in violation
of their arbitration agreement? Should it be dismissed?
If Yes, can it be motupropio?
- because as we said the RTC has no
jurisdiction. If you are the other party to the
arbitration agreement, what is your remedy?
Ano? Magfiletayo ng motion to dismiss or the court
will dismiss it mot propio?
Maam: (calling a Classmate) what do u think?
C: I think, the arbitration agreement should be
followed and the case filed in court should be dismiss.

M: a party should file a motion to dismiss or the court
should dismiss it motupropio?
- The Rule is either the court can
dismiss motupropio the case or a party can
file a motion to dismiss
- Dahil in the 1st place
walanamantalagang jurisdiction ang court so
pwedengipadismiss.
- Besides, the law is very clear that
construction disputes falls exclusively within
the CIAC jurisdiction.
The General Rule is Dismiss, unless both party
through the assistance of their counsels, submit to the
RTC a written agreement (agreeing that the court will
resolve the issue instead of the CIAC).
QUESTION: What is reason behind this
EXCEPTION?
- because of PARTY AUTONOMY
under section 17 (b) and section 39 RA 9285
SEC. 17. Enforcement of Mediated Settlement
Agreement. - The mediation shall be guided by the
following operative principles:
(b) The parties and their respective
counsels, if any, shall sign the settlement
agreement. The mediator shall certify that
he/she explained the contents of the
settlement agreement to the parties in a
language known to them.
SEC. 39. Court to Dismiss Case Involving a
Construction Dispute.
- A regional trial court which a construction
dispute is filed shall, upon becoming aware,
not later than the pretrial conference, that the
parties had entered into an arbitration to be
conducted by the CIAC, unless both parties,
assisted by their respective counsel, shall
submit to the regional trial court a written
agreement exclusive for the Court, rather than
the CIAC, to resolve the dispute.
Let’s proceed.
Under arbitration in RA 9285, take note that any
arbitration involving a dispute arising out of a contract
of construction is regarded as a DOMESTIC
ARBITRATION subject to the jurisdiction of the CIAC
even if 1 of the parties is a foreign entity or an
International party.
QUESTION: Who is an INTERNATIONAL PARTY?
- The law provides that an
International party is an entity that is existing
and organized under a law other than a
Philippine law.
Take note that a subsidiary of a foreign law which is
a subsidiary incorporated under the foreign law is not
considered as an international party.
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Take note that even if 1 of the parties in a
construction dispute is an international party, that is still
considered as a DOMESTIC ARBITRATION.
Sabi ng law, the only concession provided for by law
is that, the parties can appoint a FOREIGN
ARBITRATOR to protect rights of the other party to the
construction contract
QUESTION: When can a FOREIGN ARBITRATOR
can be appointed?
SEC. 37. Appointment of Foreign Arbitrator. -
The Construction Industry Arbitration Commission
(CIAC) shall promulgate rules to allow for the
appointment of a foreign arbitrator or coarbitrator or
chairman of a tribunal a person who has not been
previously accredited by CIAC: Provided, That:
(a) the dispute is a construction dispute
in which one party is an international
party
(b) the person to be appointed agreed
to abide by the arbitration rules and
policies of CIAC;
(c) he/she is either coarbitrator upon
the nomination of the international party;
or he/she is the common choice of the
two CIAC-accredited arbitrators first
appointed one of whom was nominated
by the international party; and
(d) the foreign arbitrator shall be of
different nationality from the international
party.
ARBITRAL AWARDS in construction disputes are
IMMEDIATELY EXECUTORY and need not be
confirmed by the courts or judicial confirmation (EO
1008).
General Rule: All arbitral awards need confirmation
from the court for it to be executory.
Exception: Arbitral awards in construction disputes.
QUESTION: Is the rule absolute that awards under
EO 1008 is immediately executory and need be
confirmed by the courts? So what happen in the case
of FF Cruz vs HR Construction Corp.
Anginchargemagcase report kay absent.
Maam: dilinatamagsapot-sapotuy, masuko (referring
to the class). walakoy time ana
Case attached is from the 2015 notes
FF CRUZ & CO., INC. v HR CONSTRUCTION
CORP.,
(March 14, 2012)

FACTS:
In 2004, FFCCI entered into a contract with DPWH
for a construction of the Magsaysay Viaduct, known
as the Lower Agusan Development Project. In turn,
FFCCI entered into a Subcontract agreement with
the HR Construction for the supply of materials,
labor, equipment and etc. Pursuant to the
Subcontract Agreement, HRCC would submit to
FFCCI a monthly progress billing which the latter
would then pay, subject to stipulated deductions,
within 30 days from receipt thereof. The parties
agreed that the requests of HRCC for payment
should include progress accomplishment of its
completed works as approved by FFCCI. HRCC
was able to submit 4 progress billing, however said
billing amount were reduced by FFCCI. HRCC
pursuant to the arbitration clause, filed with re CIAC
a complaint against the FFCCI. The CIAC held that
the payment method adopted by FFCCI is actually
what is known as the “back-to-back payment
scheme” which was not agreed upon under the
Subcontract Agreement. As such, the CIAC ruled
that FFCCI could not impose upon HRCC its
valuation of the works completed by the latter. It also
held that the nonpayment of FFCCI
gave HRCC the right to rescind the Subcontract
and work stoppage. Thus, this petition.
ISSUE: W/N the Factual finding of CIAC are final
and conclusive.
HELD: Generally, the arbitral award of CIAC is
final and may not be appealed except on questions
of law. Executive Order (E.O.) No. 10081vests upon
the CIAC original and exclusive jurisdiction over
disputes arising from, or connected with, contracts
entered into by parties involved in construction in the
Philippines. Under Section 19 of E.O. No. 1008, the
arbitral award of CIAC "shall be final and
inappealable except on questions of law which shall
be appealable to the Supreme Court."
In Hi-Precision Steel Center, Inc. v. Lim Kim Steel
Builders, Inc., we explained raison d’ etre for the rule
on finality of the CIAC’s arbitral award in this wise:
Voluntary arbitration involves the reference of a
dispute to an impartial body, the members of which
are chosen by the parties themselves, which parties
freely consent in advance to abide by the arbitral
award issued after proceedings where both parties
had the opportunity to be heard. The basic objective
is to provide a speedy and inexpensive method of
settling disputes by allowing the parties to avoid the
formalities, delay, expense and aggravation which
commonly accompany ordinary litigation, especially
litigation which goes through the entire hierarchy of
courts. Executive Order No. 1008 created an
arbitration facility to which the construction industry
in the Philippines can have recourse.
The Executive Order was enacted to encourage
the early and expeditious settlement of disputes in
the construction industry, a public policy the
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implementation of which is necessary and important
for the realization of national development goals.
Aware of the objective of voluntary arbitration in the
labor field, in the construction industry, and in any
other area for that matter, the Court will not assist
one or the other or even both parties in any effort to
subvert or defeat that objective for their private
purposes. The Court will not review the factual
findings of an arbitral tribunal upon the artful
allegation that such body had "misapprehended the
facts" and will not pass upon issues which are, at
bottom, issues of fact, no matter how cleverly
disguised they might be as "legal questions."
The parties here had recourse to arbitration and
chose the arbitrators themselves; they must have
had confidence in such arbitrators. x xx (Citation
omitted) Thus, in cases assailing the arbitral award
rendered by the CIAC, this Court may only pass
upon questions of law. Factual findings of
construction arbitrators are final and conclusive and
not reviewable by this Court on appeal.
This rule, however, admits of certain exceptions.
In Spouses David v. Construction Industry and
Arbitration Commission, we laid down the instances
when this Court may pass upon the factual findings
of the CIAC, thus: We reiterate the rule that factual
findings of construction arbitrators are final and
conclusive and not reviewable by this Court on
appeal, except when the petitioner proves
affirmatively that:
(1) the award was procured by corruption, fraud or
other undue means;
(2) there was evident partiality or corruption of the
arbitrators or of any of them;
(3) the arbitrators were guilty of misconduct in
refusing to postpone the hearing upon sufficient
cause shown, or in refusing to hear evidence
pertinent and material to the controversy;
(4) one or more of the arbitrators were disqualified
to act as such under section nine of Republic Act
No. 876 and willfully refrained from disclosing such
disqualifications or of any other misbehavior by
which the rights of any party have been materially
prejudiced; or
(5) the arbitrators exceeded their powers, or so
imperfectly executed them, that a mutual, final and
definite award upon the subject matter submitted to
them was not made. In this case, what was raised
by FFCCI is actually questions of law in interpreting
the Subcontract agreement.
(NB: in case i-ask ni mam about the costs of
arbitration. Here man gud HRCC waived its right to
rescind contract since it actually continued its
obligation despite the dispute, contrary to the
stipulation in the subcontract agreement)
The costs of arbitration should be shared by the
parties equally.
Section 1, Rule 142of the Rules of Court
provides:
Section 1. Costs ordinarily follow results of suit.

– Unless otherwise provided in these rules,
costs shall be allowed to the prevailing party as a
matter of course, but the court shall have power,
for special reasons, to adjudge that either party
shall pay the costs of an action, or that the same
be divided, as may be equitable.
No costs shall be allowed against the Republic
of the Philippines unless otherwise provided by
law. (Emphasis supplied)
Although, generally, costs are adjudged against
the losing party, courts nevertheless have
discretion, for special reasons, to decree otherwise.
Here, considering that the work stoppage of HRCC
is not justified, it is only fitting that both parties
should share in the burden of the cost of arbitration
equally. HRCC had a valid reason to institute the
complaint against FFCCI in view of the latter’s
failure to pay the full amount of its monthly progress
billings. However, we disagree with the CIAC and
the CA that only FFCCI should shoulder the
arbitration costs. The arbitration costs should be
shared equally by FFCCI and HRCC in view of the
latter’s unjustified work stoppage.
Maam:
1st issue: the decision rendered by the CIAC is
immediately final and executory and not subject to an
appeal.
What are those instances that subject to judicial
review or When a court may pass upon a factual
findings of the CIAC?
EXCEPTIONS:
(1) the award was procured by corruption,
fraud or other undue means;
(2) there was evident partiality or
corruption of the arbitrators or of any of them;
(3) the arbitrators were guilty of
misconduct in refusing to postpone the
hearing upon sufficient cause shown, or in
refusing to hear evidence pertinent and
material to the controversy;
(4) one or more of the arbitrators were
disqualified to act as such under section nine
of Republic Act No. 876 and willfully
refrained from disclosing such
disqualifications or of any other misbehavior
by which the rights of any party have been
materially prejudiced; or
(5) the arbitrators exceeded their powers,
or so imperfectly executed them, that a
mutual, final and definite award upon the
subject matter submitted to them was not
made. In this case, what was raised by
FFCCI is actually questions of law in
interpreting the Subcontract agreement.
What happen in the case of Philippine Commercial
International Bank vs CA, June 20, 2003
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Philippine Commercial International Bank vs
CA,
June 20, 2003
PCIB contracted WGCC to construct the 5th to
21st floors of PCIB Tower II in Makati. Alleging that
the granite finish [of the tower] proved to be
defective such that after all efforts at negotiations
proved futile it hired another contractor to redo the
defective finish, but that WGCC refused to pay it
actual damages incurred in the process, PCIB filed
a request for arbitration with the Construction
Industry Arbitration Commission (CIAC), praying
that WGCC be held liable for construction
deficiencies.
WGCC denied PCIBs claim, it alleging that it
accomplished the project faithfully and in
accordance with the specifications-requirements of
PCIB which accepted it after due inspection. It
counterclaimed that PCIB was actually indebted to
it for material cost adjustment since the cost of
materials substantially increased in the course of the
construction of the project.
The CIAC, found that PCIB was entitled to recover
from WGCC the sum of P9,741,829.00 representing
cost of repairs done by another contractor on the
project. On WGCCs counterclaim, finding that under
the parties contract, increase for labor and materials
under certain conditions was allowed but that PCIB
presented no strong, or at best, token opposition to
the evidence presented by WGCC for the escalated
cost of materials, the CIAC awarded WGCC the
amount of P5,777,157.84. The CIAC accordingly
disposed as follows:
After summing up the award to both parties this
TRIBUNAL hereby awards the amount of
(P3,964,671.16) to CLAIMANT Philippine
Commercial Industrial Bank. Respondent William
Golangco Construction is hereby ordered to pay the
stated amount with legal interest of six (6%) percent
from date of this decision until fully paid.
PCIB filed a Motion for Partial Reconsideration of
the CIAC Decision which is not allowed under
Section 9, Article XV of the CIAC Rules of
Procedure. It subsequently filed before the CA a
petition for Certiorari and/or Partial Reviewwhich
may be treated as an original action for certiorari
under Rule 65 of the Rules of Court or as a petition
for review under Circular 1-95 of the Supreme Court,
alleging that the CIAC acted in excess of its
jurisdiction and contrary to law in awarding, without
basis, an amount in favor of WGCC.
To PCIBs petition filed before the CA WGCC filed
a Motion to Dismiss with Motion to Cite PCIB
Counsel for Contempton the ground that it was filed
beyond the 15-day reglementary period for filing an
appeal, in support of which it alleged that, contrary
to the allegation of counsel for PCIB that he
acquired actual knowledge of the CIAC decision
which to file before the CA a petition for
review. Since PCIB filed before the CA its petition
for Certiorari and/or Partial Review, WGCC

concluded that it was late by 3 days. WGCC
attached to its motion a certified photocopyof the
pertinent entry in the CIAC logbook showing that
Engineer Bong Nuno received a copy of the decision
for PCIB on June 24, 1996.
By its assailed Resolution,the CA granted WGCCs
Motion to Dismiss PCIBs petition upon a finding that
indeed PCIB received a copy of the CIAC decision
and, therefore, its petition was belatedly filed. On
the nature of the petition, the CA held that an original
action for certiorari under Rule 65 and a petition for
review under Circular 1-95 of the Supreme Court
cannot be the subject of a single pleading.
PCIBs Motion for Reconsideration having been
denied by the CA, it comes to this Court by the
present petition for Certiorari and Mandamus.
ISSUE: W/N it was proper for WGCC to file a
petition for dismissal of the case.
HELD: NO
PCIBs counsel disclaims that Engineer Bong
Nuno is his employee but submits anyway that he
was not authorized to receive the CIAC decision for
him in his (counsels) capacity as, by his claim, the
authorized representative of PCIB.
The present petition fails.
In the petition for Certiorari and/or Partial Review
of CIAC filed before the CA by PCIB, inasmuch as
the undersigned counsel ha[s] not officially received
its copy of the Decision sought to be reviewed
because the Arbitral Tribunal had such copy served
only on [PCIB], the reglementary period should be
reckoned from the date when the undersigned
counsel actually acquired knowledge thereof which
was on 28 June 1996 when it filed [PCIBs] Motion
for Partial Reconsideration. Accordingly, treated as
a Petition for Review.
In the present petition before this Court, PCIBs
counsel now alleges that in the CIAC decision, he
was specifically named as the representative and
counsel for [PCIB], but since the decision was not
served on him as the authorized representative of
PCIB but to an employee of [PCIB] on June 24,
1996, it was only on June 27 (sic), 1996 that [he]
had actual knowledge of the content of the
decision. (Emphasis supplied). PCIBs counsels
latest position may not be entertained given his
glaring admission that copy of the CIAC decision
was duly served on June 24 1996 on PCIB, a party
to the case which, as will now be discussed, CIAC
Rules mandates should be the one to be notified of
the text of the decision.
The CIAC Rules of Procedure does not contain a
provision similar to Section 2, Rule 13 of the Revised
Rules of Court, reiterated in the 1997 Rules of Civil
Procedure, which provides that service to any party
represented by counsel should be made upon his
counsel, unless service upon the party himself is
ordered by the court. Instead, Section 7, Article XV
of the CIAC Rules of Procedure provides:
Section 7. Notification of Award to Parties Once
an award has been made, provided that the costs of
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the arbitration have been fully paid to the Secretariat
by the parties or by one of them, the Secretariat shall
notify the parties of the text signed by the Arbitrator
or Arbitral Tribunal.
Additional copies certified true by the Executive
Director of the Secretariat shall be made available,
on request and at any time, to
the parties or their counsel but to no one
else. (Emphasis and underscoring supplied)
From the immediately-quoted provision of the
CIAC Rules, it is the parties who are to be notified
of the text of the CIAC decision. This answers PCIBs
counsels jarring complaint that he was not officially
served with a copy of the CIAC decision.
In fine, copy of the CIAC decision
having admittedly been served on and received
by PCIB on June 24, 1996, PCIBs counsel cannot
assail the validity of such service by now claiming
that the same was ineffective as it was not served
on him (counsel) as the duly authorized
representative of PCIB.
It is an elementary rule of procedure that
perfection of an appeal within the reglementary
period is not only mandatory but
also jurisdictional so that failure to do so renders
the questioned decision final and executory, and
deprives an appellate court of jurisdiction to alter the
final judgment, much less to entertain the appeal.
PCIB having filed its petition for Certiorari and/or
Partial Review after the CIAC decision had become
final and executory, the CA correctly granted
WGCCs Motion to Dismiss the same.This leaves it
unnecessary to pass upon PCIBs plaint about the
CAs refus[al] to allow [its] alternative reliefs for
review and/or certiorari. Suffice it to state that the
following ruling of this Court instructs:
We have time and again reminded members of the
bench and bar that a special civil action for certiorari
under Rule 65 lies only when there is no appeal nor
plain, speedy and adequate remedy in the ordinary
course of law. Certiorari cannot be allowed when a
party to a case fails to appeal a judgment despite
the availability of that remedy, certiorari not being a
substitute for lost appeal. The remedies of appeal
and certiorari are mutually exclusive and not
alternative or successive (Emphasis supplied,
citations omitted.)
PCIB, at all events, appeals for a relaxation of the
Rules given the [substantial] issues and amounts
involved. But even its present petition for certiorari
and mandamus is not the proper remedy from the
CA Resolution. What it should have filed was a
petition for review under Rule 45 of the Rules of
Court. But even if, in accordance with the liberal
spirit pervading the Rules of Court and in the interest
of justice, this Court, in the exercise of its discretion,
treats the present petition for certiorari as one for
review under Rule 45, petitioner has failed to proffer
meritorious reasons or arguments for its allowance.
WHEREFORE, the present petition is hereby
DISMISSED.

SO ORDERED.
QUESTION: Who should be notified of the CIAC
decision?
- It is the PARTY to the action on
record should be notified
Since the 15-day reglementary period is already
lapsed. The decision of the CIAC is final and executory.
Maam: An Arbitration before the CIAC is held in
private and the pleadings are confidential.
General Rule: With regard to arbitral awards, the
awards by the CIAC are not published.
Exception: CIAC itself publish a bulletin, in which it
may include abstract of cases in which it has decided.
So, what happen in the case of metro Construction
vs Chatham Properties?
METRO CONSTRUCTION, INC. vs. CHATHAM
PROPERTIES, INC.
G.R. No. 141897, September 24, 2001
FACTS: Respondent Chatham Properties, Inc.
(CHATHAM) and petitioner Metro Construction, Inc.
(MCI) entered into a contract for the construction of
a multi-storey building known as the Chatham
House. In April 1998, MCI sought to collect from
CHATHAM a sum of money for unpaid progress
billings and other charges and instituted a request
for adjudication of its claims with the CIAC. The
preliminary conference before the CIAC started in
June 1998 and was concluded a month after with
the signing of the Terms of Reference (TOR) of the
Case. In the meantime, the TOR was amended and
finalized on 19 August 1998. The facts, as admitted
by the parties before the CIAC and incorporated in
the original TOR, are as follows:
1. On 21 April 1994, the parties formally entered
into a contract for the construction of the "Chatham
House" . . . for the contract price of price of
P50,000,000.00
2. On 12 July 1994, a Supplemental Contract was
executed by and between the parties whereby
CHATHAM authorized MCI to procure in behalf of
the former materials, equipment, etc.
3. Under Section I.04 of the Supplemental
Contract, the total amount of procurement and
transportation cost[s] and expenses which may be
reimbursed by MCI from CHATHAM shall not
exceed the amount of P75, 000,000.00.
4. In the course of the construction, Change
Orders No. 1, 4, 8A, 11, 12 and 13 were
implemented,
5. CHATHAM reimbursed MCI the amount of
P60,000.00 corresponding to bonuses advanced to
its workers by the latter for the 14th, 16th, and 17th
floors.
6. CHATHAM's payments to MCI totaled
P104,875,792.37, representing payments for
portions of MCI's progress billings and x xx
additional charges..
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In the resolution of these issues, the CIAC
discovered significant data, which were not evident
or explicit in the documents and records but
otherwise revealed or elicited during the hearings,
which the CIAC deemed material and relevant to the
complete adjudication of the case
The CIAC disposed of the specific money claims
by either granting or reducing them. On Issue No. 9,
i.e., whether CHATHAM failed to complete and/or
deliver the project within the approved completion
period and, if so, whether CHATHAM is liable for
liquidated damages and how much.
CIAC rendered JUdgement in favor of the
Claimant [MCI] directing Respondent [CHATHAM]
to pay Claimant [MCI] the net sum of SIXTEEN
MILLION ONE HUNDRED TWENTY SIX
THOUSAND NINE HUNDRED TWENTY TWO &
91/100 (16,126,922.91) PESOS. Impugning the
decision of the CIAC, CHATHAM instituted a petition
for review with the Court of Appeals
In upholding the decision of the CIAC, the Court of
Appeals confirmed the jurisprudential principle that
absent any showing of arbitrariness, the CIAC's
findings as an administrative agency and quasi
judicial body should not only be accorded great
respect but also given the stamp of finality. However
the Court of Appeals found exception in the CIAC's
disquisition of Issue No.9 on the matter of liquidated
damages.
ISSUE : W/N under existing law and rules the
Court of Appeals can also review findings of facts of
the Construction Industry Arbitration Commission
(CIAC).
HELD:YES
EO. No. 1008 vest upon the CIAC original and
exclusive jurisdiction over disputes arising from, or
connected with, contracts entered into by parties
involved in construction in the Philippines, whether
the dispute arises before or after the completion of
the contract, or after the abandonment or breach
thereof. By express provision of Section 19 thereof,
the arbitral award of the CIAC is final and
unappealable, except on questions of law, which are
appealable to the Supreme Court.
The parties, however, disagree on whether the
subsequent Supreme Court issuances on appellate
procedure and R.A. No. 7902 removed from the
Supreme Court its appellate jurisdiction in Section
19 of E.O. No. 1008 and vested the same in the
Court of Appeals, and whether appeals from CISC
awards are no longer confined to questions of law.
Through Circular No. 1-91, the Supreme Court
intended to establish a uniform procedure for the
review of the final orders or decisions of the Court of

Tax Appeals and other quasi judicial. The Circular
designated the Court of Appeals as the reviewing
body to resolve questions of fact or of law or mixed
questions of fact and law.
It is clear that Circular No. 1-91 covers the CIAC.
In the first place, it is a quasi judicial agency. In the
second place, the language of Section 1 of Circular
No. 1-91 emphasizes the obvious inclusion of the
CIAC even if it is not named in the enumeration of
quasi-judicial agencies. In sum, under Circular No.
1-91, appeals from the arbitral awards of the CIAC
may be brought to the Court of Appeals, and not to
the Supreme Court alone. The grounds for the
appeal are likewise broadened to include appeals
on questions of facts and appeals involving mixed
questions of fact and law
The jurisdiction of the Court of Appeals over
appeals from final orders or decisions of the CIAC is
further fortified by the amendments to B.P. Blg. 129,
as introduced by RA. No. 7902. With the
amendments, the Court of Appeals is vested with
appellate jurisdiction over all final judgments,
decisions, resolutions, orders or awards of Regional
Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, except
"those within the appellate jurisdiction of the
Supreme Court in accordance with the Constitution,
the Labor Code of the Philippines under Presidential
Decree No. 442, as amended, the provisions of this
Act, and of subparagraph (1) of the third paragraph
and subparagraph (4) of the fourth paragraph of
Section 17 of the Judiciary Act of 1948.". In view of
all the foregoing, The Supreme Court rejects MCI's
submission that Circular No. 1-91, B.P. Blg. 129, as
amended by RA. 7902, Revised Administrative
Circular 1-95, and Rule 43 of the 1997 Rules of Civil
Procedure failed to efficaciously modify the
provision on appeals in E.O. No. 1008.
QUESTION: What is the mode of appeal when we
say QUASI-JUDICIAL Bodies? The Petition for Review
under Rule 43
What happen in the case of Hi-Precision Steel Center
vs Lim Kim Steel Builders?
HI-PRECISION STEEL CENTER INC. v LIM KIM
STEEL BUILDERS INC.
G.R No. 110434, December 13, 1993
FACTS: Hi-Precision (Petitioner) entered into a
contract with Steel Builders (Private Respondent)
under which the latter as Contractor was to
complete a 21 Million Pesos construction project
owned by Hi-Precision with a period of 153 days.
The said completion of the project was then moved,
however, when the date came, only 75.8674% of
the project was actually completed. Petitioner
attributed this non-completion to Steel Builders
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which allegedly incurred delays both during the
original contract and period of extension. On the
other hand, the Steel Builders claimed that the said
non-completion of the project was either excusable
or was due to HiPrecision’s own fault and issuance
of change orders. The said project was taken over
and completed by Hi-Precision. Steel Builders
requested for an adjudication with CIAC (Public
Respondent) and sought payment of its unpaid
billings, alleged unearned profits and other
receivables. Hi-Precision on the other hand
claimed for damages and reimbursement of alleged
additional costs. The CIAC formed an Arbitral
Tribunal with 3 members and such tribunal
rendered a decision in favor of Steel Builders Inc
ordering Hi-Precision to pay Steel Builders their
claim. Hi-Precision then asks the court to set aside
the award on the basis of misapprehension of facts
under Rule 45 and 65.
ISSUE: Whether or not it was correct should set
aside the ruling of the Arbitral Tribunal.
RULING: No. under Executive Order No. 1008,
as amended, provides, in its Section 19, as follows:
Sec. 19. Finality of Awards. —
The arbitral award shall be
binding upon the parties. It shall
be final and inappealable except
on questions of law which shall be
appealable to the Supreme Court.
Section 19 makes it crystal clear that
questions of fact cannot be raised in
proceedings before the Supreme Court —
which is not a trier of facts — in respect of
an arbitral award rendered under the aegis
of the CIAC. Consideration of the
animating purpose of voluntary arbitration
in general, and arbitration under the aegis
of the CIAC in particular, requires us to
apply rigorously the above principle
embodied in Section 19 that the Arbitral
Tribunal's findings of fact shall be final and
inappealable.
The court said that it will not assist one or the other
or even both parties in an effort to subvert or defeat
the objective for their private purposes and also, that
it will not review the factual findings of an arbitral
tribunal upon the allegation that such body
misapprehended facts. The court will not, therefore,
permit the parties to relitigatebefore it the issues of
facts previously presented and argued before the
Arbitral Tribunal, save only where a very clear
showing is made that, in reaching its factual
conclusions, the Arbitral Tribunal committed an error
so hurtful to one party as to constitute a grave abuse
of discretion resulting on lack or loss of jurisdiction.
Cargill Philippines vs San Fernando Regala
Trading

FACTS:
Respondent San Fernando Regala Trading filed
with the RTC of Makati City aComplaint for
Rescission of Contract with Damages against
petitioner Cargill.It alleged that it agreed that it would
purchase from Cargill 12,000 metric tonsof Thailand
origin cane blackstrap molasses and that the
payment would beby an Irrevocable Letter of Credit
payable at sight. The parties agreed thatthe delivery
would be made in April/May. Cargill failed to comply
with itsobligations despite demands from
respondent. The respondent then filed forrescission.
The petitioner filed a Motion to Dismiss/Suspend
proceeding, arguing that theymust first resort to
arbitration as stated in their agreement before going
tocourt. However, the RTC ruled in favor of
the respondent. The CA affirmed theRTC decision,
adding that the case cannot be brought under the
ArbitrationLaw for the purpose of suspending the
proceedings before the RTC, since inits Motion to
Dismiss/Suspend proceedings, petitioner alleged,
as one of thegrounds thereof,that the
subjectcontract between the parties did not exist orit
was invalid; that the said contract bearing the
arbitration clause was neverconsummated by the
parties, thus, it was proper that such issue be
firstresolved by the court through an appropriate
trial; that the issue involved aquestion of fact that the
RTC should first resolve.
ISSUE:Whether the CA erred in finding that this
case cannot be broughtunder the arbitration law for
the purpose of suspending the proceedings in
theRTC.
HELD: YES, the petition is meritorious.
The Supreme Court held that the provision to
submit to arbitration any dispute arising between
the parties is part of the contract and is itself a
contract. The arbitration agreement is to be treated
as a separate agreement and does not
automatically terminate when the contract of which
it is a part comes to an end. To reiterate a contrary
ruling would suggest that a party's mere repudiation
of the main contract is sufficient to avoid arbitration;
that is exactly the situation that the separability
doctrine seeks to avoid.
San Fernando Regala Trading filed a complaint for
rescission of contract and damages with the trial
court. In so doing, it alleged that a contract existed.
It was that contract which provided for an arbitration
clause which expressed the parties' intention that
any dispute to arise between them, as buyer and
seller, should be referred to arbitration. It is for the
arbitrator and not the court to decide whether a
contract between the parties exists or is valid.
Under the circumstances, the argument that
rescission is judicial in nature is misplaced.
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QUESTION: What is the proper remedy if you want
to question the decision rendered by the CIAC?
- If the issue involves mix question of
facts and law or question of law, we resort to
Rule 43 (Petition for Review).
Let’s go to the next case.
Licomcen Incorporated vs Foundation
Specialist
FACTS: In a Decision promulgated last April 4,
2011, the Philippine Supreme Court favored a liberal
reading of an agreement to submit a dispute to
arbitration before the Construction Industry
Arbitration Commission (CIAC), ruling that an
arbitration clause in a construction contract should
be interpreted in its “widest signification” to enable
the CIAC to acquire jurisdiction over a construction
claim.
The ruling was rendered in the consolidated case
of Licomcen, Inc. vs. Foundation Specialists, Inc.,
G.R. Nos. 167022 and 169678. The dispute arose
between mall developer Licomcen, Inc. and
contractor Foundation Specialists, Inc. (FSI) over
the suspension of certain works and the payment of
billings and other amounts. Licomcen and FSI had a
Construction Agreement, with General Conditions of
Contract (GCC), whereby FSI undertook to
construct and install bored piles foundation for the
LCC Citimall project in Legazpi City. Immediately
after signing the agreement, FSI began work on the
project but in January 1998, Licomcen ordered it to
halt construction due to an administrative case filed
against officials of the City Government of Legazpi
and Licomcen before the Ombudsman.
The suspension was formalized through a letter of
Licomcen’s engineering consultant, E.S. de Castro
& Associates (ESCA), to FSI on January 19, 1998.
In its reply letters, FSI claimed payment for work and
materials. ESCA rejected FSI’s claims in a letter
dated March 24, 1998. Three years later, FSI sent a
final demand letter to Licomcen for payment of its
claims. As this letter was ignored, FSI filed a request
for arbitration with the CIAC in October 2002,
claiming upaid billings, costs, unrealized profit,
attorney’s fees and interest. Licomcen contested the
request, arguing, among others, that
(a) the claims were non-arbitrable because the
arbitration clause provides for the arbitration of
disputes “in connection with, or arising out of the
execution of the Works,” but FSI’s money claims do
not involve a dispute as to the execution of the
Works since they do not involve an issue as to
physical construction activities; and
(b) FSI failed to comply with the condition
precedent that a dispute must first be referred to
Licomcen for resolution, and such resolution may
only be assailed within 30 days from receipt thereof
through a notice to contest through arbitration.
The CIAC ruled in favor of FSI, which decision was
upheld with some modification by the Court of

Appeals. Both parties moved for reconsideration,
which was denied.
On appeal, the Supreme Court upheld the Court
of Appeals’ decision with modification and affirmed
that the CIAC properly acquired jurisdiction over the
parties’ dispute.
Expansive interpretation of arbitration clause The
Supreme Court ruled that the CIAC’s jurisdiction
cannot be limited by the parties’ stipulation that only
disputes in connection with or arising out of the
execution of the Works are arbitrable before the said
agency.
According to the Supreme Court, the mere fact
that the parties incorporated an arbitration clause in
their contract ipso facto vested the CIAC with
jurisdiction over any construction controversy or
claim between the parties. The Supreme Court also
added that the parties did not intend to limit resort to
arbitration only to disputes relating to physical
construction activities, holding that “an arbitration
clause pursuant to E.O 1008 [Construction Industry
ArbitrationLaw] should be interpreted at its widest
signification.” The Tribunal liberally applied the
parties’ arbitration clause so that FSI’s money
claims were considered connected with or arising
out of construction activities, thereby making such
claims arbitrable.
CIAC jurisdiction not subject to condition
precedent On the principle that the CIAC’s
jurisdiction can neither be enlarged nor diminished
by the parties, the Supreme Court also held that
such jurisdiction cannot be subject to a condition
precedent. Hence, even if FSI failed to timely
contest Licomcen’s denial of its money claims by
filing a proper notice of arbitration within 30 days
from the denial, the Supreme Court ruled that the
CIAC acquired jurisdiction of the parties’ dispute due
to the mere presence of an arbitration clause in their
construction contract.
The CIAC was created through Executive Order
No. 1008 (E.O. 1008), in recognition of the need to
establish an arbitral machinery that would
expeditiously settle construction industry disputes.
The jurisdiction of the CIAC may include but is not
limited to violation of specifications for materials and
workmanship; violation of the terms of agreement;
interpretation and/or application of contractual time
and delays; maintenance and defects; payment,
default of employer or contractor and changes in
contract cost. Excluded from the coverage of this
law are disputes arising from employer-employee
relationships which shall continue to be covered by
the Labor Code of the Philippines.
The CIAC’s jurisdiction cannot be limited by the
parties’ stipulation that only disputes in connection
with or arising out of the physical construction
activities (execution of the works) are arbitrable
before it.
In fact, all that is required for the CIAC to acquire
jurisdiction is for the parties to a construction
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contract to agree to submit their dispute to
arbitration. The CIAC is given the original and
exclusive jurisdiction over disputes arising from, or
connected with, contracts entered into by parties
involved in construction in the Philippines.This
jurisdiction cannot be altered by stipulations
restricting the nature of construction disputes,
appointing another arbitral body, or making that
body’s decision final and binding.
Metropolitan Cebu Water District vs Mactan
Rock Industries
FACTS:MCWD entered into a Water Supply
Contract (the Contract) with MRII wherein it was
agreed that the latter would supply MCWD with
potable water, in accordance with the World Health
Organization (WHO) standard or the Philippine
national standard, with a minimum guaranteed
annual volume. MRII filed a Complaint against
MCWD with the CIAC. MRII sought the reformation
of Clause 17 of the Contract, or the Price
Escalation/De-Escalation Clause, in order to include
Capital Cost Recovery in the price escalation
formula, and to have such revised formula applied
from 1996 when the bidding was conducted, instead
of from the first day when MRII started selling water
to MCWD. It also sought the payment of the unpaid
price escalation/adjustment, and the payment of
unpaid variation/extra work order and interest/cost
of money up to December 31, 2003.
MCWD filed its Answer dated April 27, 2004,
which included a motion to dismiss the complaint on
the ground that the CIAC had no jurisdiction over the
case, as the Contract was not one for construction
or infrastructure.
Decision of the CIAC
The CIAC decision, ordering the reformation of
Clause 17 of the Water Supply Contract and
ordering Respondent Metropolitan Cebu Water
District to pay Claimant, MactanRockIndustries,
Inc[.] under the reformed Clause 17 of the Water
Supply Contract, the net amount of
Php12,126,296.70 plus legal interest of six percent
(6%) per annum from the (sic) March 15,2004, the
date of filling (sic) of the case with the Construction
Industry Arbitration Commission, the rate increased
to twelve percent (12%) per annum from the date
the herein Decision have(sic) become final and
executory until the foregoing amounts shall have
been fully paid[.]
Decision of the CA in CA-G.R. SP No. 85579 -
Petition for certiorari under Rule 65 with the Court
of Appeals questioning the jurisdiction of the CIAC
Meanwhile, on October 28, 2005, the CA in its
decision in the First Petition upheld
the jurisdiction of the CIAC over the case. The CA
held that when parties agree to settle theirdisputes

arising from or connected with construction
contracts, the CIAC acquires primary jurisdiction.
Citing Philrock Inc. v. Construction Industry
Arbitration Commission, the CA statedthat the CIAC
may resolve not only the merits of such
controversies, but may also awarddamages,
interest, attorneys fees, and expenses of litigation,
when appropriate. And, Second,the CA held that the
claims in question fall under the jurisdiction of the
CIAC. Thus:MCWDs motion for reconsideration of
the decision in the First Petition was still pending
when itfiled the petition for review under Rule 43
(Second Petition) appealing the decision of the
CIAC.The motion for reconsideration was eventually
denied in a Resolution dated May 3, 2006.MCWD
did not appeal from the denial of the motion. It, thus,
became final and executory.
ISSUE: W/N CIAC may exercise jurisdiction over
disputed arising from a water supply contract.
HELD: YES, CIAC has Jurisdiction over the case.
The jurisdiction of courts and quasi-judicial bodies
is determined by the Constitution and the law. It
cannot be fixed by the will of the parties to the
dispute, nor can it be expanded or diminished by
stipulation or agreement.
The text of Section 4 of E.O. No. 1008 is broad
enough to cover any dispute arising from, or
connected with, construction contracts, whether
these involve mere contractual money claims or
execution of the works. This jurisdiction cannot be
altered by stipulations restricting the nature of
construction disputes, appointing another arbitral
body, or making that body’s decision final and
binding. Thus, unless specifically excluded, all
incidents and matters relating to construction
contracts are deemed to be within the jurisdiction of
the CIAC.
Based on the previously cited provision outlining
the CIACs jurisdiction, it is clear that with regard to
contracts over which it has jurisdiction, the only
matters that have been excluded by law are
disputes arising from employer-employee
relationships, which continue to be governed by the
Labor Code of the Philippines. Moreover, this is
consistent with the policy against split jurisdiction.
 The Court finds in the affirmative.
The motion for reconsideration was
denied by CA and MCWD never appealed
the case. Thus, the decision of the CA
became final and executory. The Court
has held time and again that a final and
executory judgment, no matter how
erroneous, cannot be changed even by
this Court. The CA affirming the CIAC’s
jurisdiction and it becoming final, is now
beyond the jurisdiction of the Court to
review or modify, even supposing for the
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sake of argument, that it is indeed
erroneous.
 Where the law does not
delineate, neither should we. Neither the
provisions of the Civil Code on reformation
of contracts nor the law creating CIAC
exclude reformation in its jurisdiction.
Therefore, because the CIAC has been
held to have jurisdiction over the contract,
it follows that it has jurisdiction to order the
reformation of the contract as well.
Maam: Please take note that the jurisdiction of the
CIAC as a quasi-judicial body is confined to
construction disputes,that is, those arising from, or
connected to, contracts involving 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.
The CIAC has jurisdiction over all such disputes
whether the dispute arises before or after the
completion of the contract.
So SC interpreted again the jurisdiction of the CIAC.
So what happen in Manila Insurance Company Inc.
vs Sps. Amurao
Manila Insurance Company Inc. vs Sps.
Amurao
FACTS:
Spouses Roberto and Aida Amurao (Sps.
Amurao) entered into a Construction Contract
Agreement (CCA) with Aegean Construction and
Development Corp. (Aegean) for the construction of
a six-storey commercial building. To guarantee its
obligation, Aegean posted performance bonds
secured by petitioner Manila Insurance Company,
Inc. (Manila Insurance) and Intra Strata Assurance
Corporation (Intra Strata). Aegean failed to comply
with its obligation. Hence, the spouses filed a
complaint before the RTC to enforce its claim
against the sureties.
During the pre-trial, Manila Insurance and Intra
Strata discovered that the CCA contained an
arbitration clause. Consequently, they filed a Motion
to Dismiss on the grounds of lack of cause of action
and lack of jurisdiction. The RTC denied the motion
to dismiss.
Manila Insurance appealed to the Court of Appeals.
The CA dismissed the petition.
Hence, Manila Insurance elevated the matter to the
Supreme Court.
Manila Insurance argues that it cannot be held liable
as a surety because the claim of Sps. Amurao is
premature. Manila Insurance contends that the
dispute between the spouses and Aegean should be
brought first before the CIAC for arbitration.

ISSUE: Whether or not the RTC has jurisdiction
over the dispute?
HELD:YES, the CIAC has jurisdiction over the case
and not the RTC (Under section 4 of RA 1008).
Sec. 4. Jurisdiction. The CIAC shall have original
and exclusive jurisdiction over disputes arising from,
or connected with, contracts entered into by parties
involved in construction in the Philippines, whether
the dispute arises before or after the completion of
the contract, or after the abandonment or breach
thereof. These disputes may inlve government or
private contracts. For the Board to acquire
jurisdiction, the parties to a dispute must agree to
submit the same to voluntary arbitration.
The jurisdiction of the CIAC may include but is not
limited to violation of specifications for materials and
workmanship; violation of the terms of agreement;
interpretation and/or application of contractual time
and delays; maintenance and defects; payment,
default of employer or contractor and changes in
contract cost.
Excluded from the coverage of this law are
disputes arising from employer-employee
relationships which shall continue to be covered by
the Labor Code of the Philippines.
In order for the CIAC to acquire jurisdiction, 2
requisites must concur:
1. the dispute must be somehow
connected to a construction contract; and
2. the parties must have agreed to
submit the dispute to arbitration
proceedings.
In this case, both requisites are present.
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Let’s go to CHECK CLEARING DISPUTES.
CHECK CLEARING DISPUTES
This is the third kind of dispute under the auspices of
the Philippine Clearing House Corporation
(PCHC ArbiCom).
Take note that it is open to all banking institutions
authorized to operate by the BSP.
The PCHC was organized in May 19, 1977 principally
to provide a means of clearing checks and other items
pursuant to Section 102 of the New Central Bank Act.
When we say check- clearing disputes is limited
to?
A: Banks
QUESTION: What kind of arbitration is the
hearing?
A: INSTITUTIONAL ARBITRATION because it is
heard specifically by the PCHC. It is the ArbiCOm, the
body that investigates, hears the disputes and decides
the disputes.
QUESTION: How do you define a bank?
Under RA 8791(General Banking Act of 2000),
Bank is define as an entity engaged in the lending of
funds obtained in the form of deposits.
QUESTION: What are the different kinds of
banks?
Under RA 8791(General Banking Act of 2000)
1. Universal Bank
2. Commercial Banks
3. Thrift Banks
4. Rural Banks
5. Cooperative Banks
6. Islamic Banks
What is the condition sine qua non before the
dispute be a subject to arbitration before the PCHC
ArbiCom?
1. The participation of 2 banks in the
clearing operations in the PCHC is a
manifestation of its submission to its
jurisdiction so that a mere fact that it is a
banking institution, would not automatically
subject issues to the PCHC.
2. It must be authorized.
3. It must be banking institution.
4. It must be a member of PCHC.
Let’s go to the procedure before the PCHC
ArbiCombriefly.
1. Any dispute or controversy between
two or more clearing participants involving
any check or item cleared through the PCHC
shall be submitted to the ArbiCom through a
 ADDU LAW 3RD YEAR 2019

written complaint of any participant in the

controversy; Note: The law provides that a preliminary
2. Five copies of the complaint shall be conferenceshould be conducted before the
filed with the ArbiCom copy furnish the ArbiCom. It is mandatory.
respondent who shall have 30 non-extendible
days to file his answer;
3. Upon the filing of the complaint by a
member bank, the PCHC shall create an
ArbiCom consisting of four members, three of
whom are incumbent or retired senior officers
of participating banks not involved in the
dispute and a fourth member who shall be an
attorney at law with at least five years
experience as a bank lawyer without any
previous or present relation with any of the
participating banks involved and who shall
only have advisory function without any right
to vote.
The Chariman and any member shall be
sufficient to constitute a quorum for the
purpose of conducting conferences or
hearings or trials before the ArbiCom but a
vote of any 2 members of the ArbiCom shall
be necessary to render and promulgate an
order, resolution, award or decision of the
case presented for arbitration EXCEPT if it
involves or the principal amount is 300,000 or
less, then the arbitration shall be heard by a
sole arbitrator and his vote shall be sufficient
to render and promulgate the said decision;
4. If a Formal Hearing is required, then
the Sole Aribicom shall ask a clarificatory
questions of the witnesses. The hearing shall
not last for more than 30 days after which the
parties shall have a non- extendible period of
30 days to file their memoranda. The decision
of the sole arbitrator or the ArbiCom shall be
made within 45 days from the preliminary
conference or the submission of the parties’
respective memoranda.
If the formal hearing is not required, then the
Arbicom can decide the case on the basis of
the affidavits and documents submitted by the
parties in the preliminary conference.Within a
non-extendible period of 15 days after the
receipt of the decision, a party may file his
Motion for Reconsideration and the other
party may file his Opposition thereto within 15
days.
5. After the lapsed of the 15-day
period, the motion shall be resolved by
majority vote of the PCHC and the decision
made by the ArbiCom for the resolution of the
MR shall be executory without necessity of
judicial confirmation of the said award.
Such executory decision is the basis in the
AUTOMATIC DEBIT of the awarded therein
from the clearing account of the losing party.
Even if the losing party files a Petition for
Review before the RTC in the National Capital
Region where office of any party is located.

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12/15 RODRIQUEZ
17 Haru Gwapo
PRINCIPLE OF SEPARABILITY OF AN
ARBITRATION CLAUSE
So let us proceed to the principle of separability of an
arbitration clause. The law provides that the arbitral
agreement is independent from the main contract the
general premise is that the agreement is independent
from the main contract so this is the General rule in
domestic arbitration as well as international
commercial arbitration. So if it is domestic arbitration
the basis is arbitration law specifically sec 2, 6, and 7.
If it is international commercial arbitration, it is found
under article 16-1 of the model law. The cases in point
are the cases of:
1.) Gonzales v Martinez
2.) CARGILL PHILIPPINES v San Fernando
*please read these cases and be sure to distinguish the
2 cases from each other
So what is meant by the arbitral agreement is
independent from the main contract? It simply
means that invalidity of the arbitration clause /
agreement does not or will not render the invalidity of
the main arbitration or the main contract it violated.
Under Rule 2.2 of the special ADR rules of court it
provides that “The Special ADR Rules recognize the
principle of separability of the arbitration clause, which
means that said clause shall be treated as an
agreement independent of the other terms of the
contract of which it forms part. A decision that the
contract is null and void shall not entail ipso jure the
invalidity of the arbitration clause.” (last paragraph)
Why is this so? As a review on your obli con (Calls
Remmon) What do you think Remmon? Why does the
invalidty of arbitration clause not affect the main
contract? ANS: it is severable. Take note that the
arbitral agreement is mainly a clause in the main
contract that is different from the main contract itself,
hence, the rule is that the invalidity of the main contract
will not affect the validity of the said arbitration clause
and vice-versa. Please take not of rule 2.2 of the
special ADR rules of court.
So earlier I said you have distinguish the Gonzales
case and the San Fernando case. In the San Fernando
case here the supreme court ruled that: “The doctrine
of separability, or severability as other writers call it,
enunciates that an arbitration agreement is
independent of the main contract. The arbitration
agreement is to be treated as a separate agreement
and the arbitration agreement does not automatically
terminate when the contract of which it is a part comes
to an end.
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The separability of the arbitration agreement is
especially significant to the determination of whether
the invalidity of the main contract also nullifies the
arbitration clause. Indeed, the doctrine denotes that the
invalidity of the main contract, also referred to as the
"container" contract, does not affect the validity of the
arbitration agreement. Irrespective of the fact that the
main contract is invalid, the arbitration
clause/agreement still remains valid and enforceable.”
So the arbitration clause per se is a separate contract
in itself, the arbitration agreement may thus be invoked
regardless of the possible nullity or invalidity of the
main contract. Also as ruled in this case as a further
consequence of doctrine of seperability is: “even the
party who has repudiated the main contract is not
prevented from enforcing its arbitration clause.”
In the case of PEZA v Edison G.R. NO. 179537 please
read this case in its full. Here the Supreme Court
ruled that under the doctrine of separability an
arbitration agreement: “independent of the main
contract. The arbitration agreement is to be treated as
a separate agreement and the arbitration agreement
does not automatically terminate when the contract of
which it is a part comes to an end.” Moreover, “The
separability of the arbitration agreement is especially
significant to the determination of whether the invalidity
of the main contract also nullifies the arbitration clause.
Indeed, the doctrine denotes that the invalidity of the
main contract, also referred to as the "container"
contract, does not affect the validity of the arbitration
agreement. Irrespective of the fact that the main
contract is invalid, the arbitration clause/agreement still
remains valid and enforceable.”
Bale in this case one of the parties ayaw I-enforce ang
main contract because the condition of the main
contract is unconscionable because they were asking
for the payment of taxes. Dapat daw di I enforce.
So balik tayo sa principle of seperability, we said that
the basis of the principle that the arbitration clause is a
separate contract is Arbitration law Sec 2, 6, 7. How
about under the provisions of the New Civil Code do
we have provision that would support that indeed
arbitration laws are regarded as a separate contract?
The answer to that is YES. Under the Civil Code it
prescribes a presumption of divisibility or seperability if
the provision of the said contract. The presumption of
Divisibility or separability of the said contract.
How about Fraudulent inducement to contract.
Question can the arbitral tribunal rule on the issue on
fraudulent inducement on the contract or creation of
contract? Is that an arbitrable issue? Yes, the arbitral
tribunal can rule on the issue of fraudulent inducement
in the creation of the said contract. Why is that so? Why
is there jurisdiction ang arbitral tribunal to say that “uy
one of the parties was fraudulently induced” in the
making of the contract why is that so? Because there
is nothing in the law that bars the arbitral tribunal na
indeed one of the parties, and under the principle of

competence competence the arbitral tribunal can
initially or primarily rule WON it has jurisdiction in a
particular issue. Thus a arbitral tribunal can rule and
such is deemed an arbitral issue in both international
commercial and as well as domestic arbitration.
Under International commercial arbitration with regard
to fraudulent inducement to contract. Yes the arbitral
tribunal is empowered to decided in any objection with
regard the existence or validity of the arbitration
agreement and principle of competence compentent.
And with regards with domestic arbitration, the law
provides that it is subject to an arbitration if the
language of the arbitration clause is broad enough,
such as when it provided for arbitration claims, or
disputes arising out of or from or relating to the said
contract. When you fraudulent inducement to contract,
it makes the contract what kind of contract?
VOIDABLE, indi siya void. Voidable, bakit kasi meron
vitiation of consent.
Lets go to the timeliness of waiver as well as the
operation and effect of the arbitration agreement, so
the rules are the following if it is international
commercial arbitration as found under the Arbitration
and Conciliation Act law, the law provides that an
arbitration agreement or any person claiming through
or under him, so applies not later than the date of
submitting his first statement on the substance of the
dispute
If it is domestic arbitration please take note of these
rules,
1.) First rule is that in case contract to
arbitrate future controversies you should
serve to the other party a demand to
arbitrate;
2.) in case you want to arbitrate an existing
controversy you have to file a motion to
dismiss with the court having jurisdiction
on the said matter ;
3.) Under R.A 9285 Sec 24- 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.
What does this mean? The rule is that if there is
an arbitration clause or agreement it has to be
timely invoked. Why need timely invocation?
Because if the party to the said agreement fails to
do so it shall constitute a waiver to the said
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arbitration. You call the attention of the court,
although it is the duty of the court to dismiss, aka
dismissal moto proprio because the court has no
jurisdiction on the said matter. But in event na wala
kabalo si judge aning Ra 9285, the parties should
call the attenetion of the court na dapat mag
arbitrate sa mi bago mag kaso. If you do not do
that it will constitute waiver of your right to
arbitrate.
Please take note Chung Fu industry vs CA G.R.
No. 96283 as well as the case of Asset
Privatization Trust v. Court of Appeals, here the
law provides that “dispute or action subject of
arbitration is instituted in a court of law, the court
not in liberty to disregard the arbitration agreement
and allow the action to proceed”. So duty bound
ang court, it is not in liberty to disregard ang
arbitration agreement and allow the action to
proceed.
What is the effect of failure of the defendant to
raise arbitration if a motion to dismiss or affirmative
defense on his answer? Again, waiver of the right
to arbitrate.
The first factor:
1.) Whether the parties action are
inconsistent with the right to arbitrate.
2.) Whether the litigation machinery has
been substantially invoked
3.) Whether a party either requested
arbitration enforcement close to trial date
or delayed for a long period before
seeking a stay of the suit
4.) Whether defendant seeking arbitration
filed a counterclaim without asking for a
stay of the proceedings
5.) Whether important intervening steps had
taken place
6.) Whether the delay affected, misled, or
prejudiced the opposing party
7.) When the parties litigate in a court of law
a dispute that is subject to arbitration
So 1-7 are some of the factors that may be considered
that a party has opted to waive his right to arbitration.
So in the case of far east international vs nankai kogyo
here the Supreme Court ruled that: having waived
recourse through arbitration, the losing party cannot
thereafter question the jurisdiction of the court. Kasi
nga it has to be timely invoked. It applies to both
domestic and international commercial arbitration.
Effect of arbitration agreement
GR: The rule is that an arbitration agreement which is
timely invoked precludes court action.
So what are the Rules? If a dispute or action subject to
arbitration is subjected to a court of law, the court is not
in liberty to disregard the arbitration agreement and
allow the action to proceed. Take note in the case of

Chung Fu industry vs CA the correct procedure is for
the court to suspend the case and not to dismiss it and
require the parties to proceed to arbitration in
accordance with their agreement. Susped + refer to
arbitration = correct procedure.
In the later case of Asset Privatization Trust v CA it is
erroneous for the court to dismiss, to issue a final order
dismissing the case because the court should only
suspend the case. So what are the reasons for saying
do not dismiss the case but only suspend it.
1.) 1st reason: Rule 2.2 Special ADR rules of
court
Rule 2.2. Policy on arbitration.- (A) Where the parties
have agreed to submit their dispute to arbitration,
courts shall refer the parties to arbitration pursuant to
Republic Act No. 9285 bearing in mind that such
arbitration agreement is the law between the parties
and that they are expected to abide by it in good faith.
Further, the courts shall not refuse to refer parties to
arbitration for reasons including, but not limited to, the
following:
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 a foreign
country;
f. One or more of the issues are legal and one
or more of the arbitrators are not lawyers;
g. One or more of the arbitrators are not
Philippine nationals; or
h. One or more of the arbitrators are alleged
not to possess the required qualification
under the arbitration agreement or law.
(B) Where court intervention is allowed under ADR
Laws or the Special ADR Rules, courts shall not refuse
to grant relief, as provided herein, for any of the
following reasons:
a. Prior to the constitution of the arbitral
tribunal, the court finds that the principal
action is the subject of an arbitration
agreement; or
b. The principal action is already pending
before an arbitral tribunal.
The Special ADR Rules recognize the principle of
competence-competence, which means that the
arbitral tribunal may initially rule on its own jurisdiction,
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including any objections with respect to the existence
or validity of the arbitration agreement or any condition
precedent to the filing of a request for arbitration.
The Special ADR Rules recognize the principle of
separability of the arbitration clause, which means that
said clause shall be treated as an agreement
independent of the other terms of the contract of which
it forms part. A decision that the contract is null and
void shall not entail ipso jure the invalidity of the
arbitration clause
2.) 2nd reason: And rule 2.4 Special ADR rules
Competence Competence
Rule 2.4. Policy implementing competence-
competence principle. - The arbitral tribunal shall be
accorded the first opportunity or competence to rule on
the issue of whether or not it has the 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. When
a court is asked to rule upon issue/s affecting the
competence or jurisdiction of an arbitral tribunal in a
dispute brought before it, either before or after the
arbitral tribunal is constituted, the court must exercise
judicial restraint and defer to the competence or
jurisdiction of the arbitral tribunal by allowing the
arbitral tribunal the first opportunity to rule upon such
issues.
Where the court is asked to make a determination of
whether the arbitration agreement is null and void,
inoperative or incapable of being performed, under this
policy of judicial restraint, the court must make no more
than a prima facie determination of that issue.
Unless the court, pursuant to such prima facie
determination, concludes that the arbitration
agreement is null and void, inoperative or incapable of
being performed, the court must suspend the action
before it and refer the parties to arbitration pursuant to
the arbitration agreement.
So Klaro kaayo, if a case Is prematurely filed in court
pursuant to the previous cases cited: na court should
merely suspend the case. So question what if a case if
prematurely filed in court in contravention to the
agreement arbitrate? You file a motion to dismiss the
case by first remedy or move for the suspension of the
proceedings or move or file a motion to refer the case
to arbitration. Question why sabi naten na pwede mag
file ng motion to dismiss the case, why is this a possible
remedy? (calls SHANE CASTRO) take note the case
is prematurely filed in court. Because under RULE 16
ROC the failure to do a condition precedent is a ground
for a motion to dismiss. Assume that yung issue ninyo

finally the case in court you are questioning the
existence, validity, or enforceability of the arbitration
clause, Question, can the court take cognizance of the
same? NO, it is subject to the jurisdiction of the arbitral
tribunal following policy on Judicial restraint, but as an
exception the court can make a prima facie
determination whether or not he arbitration agreement
is valid, operative, enforceable, but only limited to a
PRIMA FACIE DETERMINATION. Assume that the
court determines that the arbitration agreement is void,
unenforceable, and inoperative what will happen to the
case? It is the DUTY of the court to take cognizance of
the case Rule 2.4 following the policy of competence-
competence.
What is the remedy against the order of the court which
erroneously denied or referred the case for arbitration?
1.) Petition for prohibition or 2.) petition for certiorari
under rule 65. Why Certiorari, because lack of
jurisdiction and there is no other remedy since the
PRIMA FACIE DETERMINATION is a lose jurisdiction over the case when it refers to the party
INTERLOCUTORY ORDER.
The mere existence of an arbitration agreement, does
not preclude a court from taking cognizance of a case
even if the defendant claims that recourse must first be
through arbitration, because nga the court can make a
prima facie determination with regard to the validity
enforceability of the arbitration clause and it is the duty
of the court to determine WON the controversy is
subject to arbitration. And unless, the court determines
that the arbitration agreement is null and void, the duty
of the court to suspend the action and refer to
arbitration.
In the case of western minolco corp vs cir, here the
supreme court ruled that, the court is not a bar to
inquiring the question WON it has jurisdiction over the
case if the party claims it has NO jurisdiction over a
controversy.
LIBERALITY
Lets procedure to the rule on LIBERALITY
In the case of LM engineering v capitol an arbitration
agreement is liberally construed and should be
resolved in favor of a arbitration. Because the policy of
the law leans towards arbitration. So, because of the
rule on liberality the arbitral tribunal in resolving the
issue WON the controversy is subject to arbitration ano
gina tingnan ng court/ arbitral tribunal sabi ng SC, “it
looks into the scope of the arbitration agreement and it
interprets it liberally so that any doubt is construed in
favor of arbitration.” Why? We encourage Alternative
Dispute Resolution. The Subcontract agreement
provides the parties hereto agree that any dispute or
coincide as regards the implementation of this
agreement which cannot be settled between
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respondent and petitioner should be settled by means
of arbitration. The SC, futher said the agreement of the
parties to refer any dspute or conflict as regards the
interpretation or implementation under their contract to
arbitration includes within is scope discrepancies as to
the amount of the advances, unpayable
accomplishment, the provision on the application of the
provision of termination and consequent set of
expenses. Sabi ng SC this is an arbitrable issue.
REFERRAL TO ARBITRATION
The rule is that, if an action is commenced before a
court on a matter that is the subject matter of arbitration
agreement, the court should not dismiss the action, but
simply suspend it and await the final outcome of the
arbitration for possible confirmation and enforcement
of the award in court. Dito ina emphasize na suspend
ra ang proceedings, what is the basis rule 4 special adr
rules of court. Take note that the trial court does not
to arbitration kasi nga suspended lang ang proceeding,
if it is later finaly determined the controversy is subject
to arbitration.
PROVISIONAL REMEDIES
We file before the court provisional remedies. Now can
the arbitral tribunal grant provisional remedies? Yes
what is the basis?
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,
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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.
Ok, yan nakasabi sa rule 5 yan sa special ADR rules
of court it refers to the provisional remedies that can be
applied in relation to arbitration kung mag adto n aka
before the court. Ano procedure if we are seeking for
procedural remedies before the COURT before the
constitution of the arbitral tribunal or may inability mag
grant ang arbitral tribunal? Use rule 5 special ADR
rules of court. Upon constitution of the arbitral tribunal
where do you file or ask for issuance of provisional
remedies? You ask before the arbitral tribunal, unless
arbitral tribunal cannot grant or is not able to grant the
request of provisional remedies (sec 28, 29 RA 9285).
In the case of home bankers savings vs ca, a party to
a pending arbitration has the right without violating the
rule for forum shopping to institute an action to obtain
a writ of preliminary attachment from the court to
preserve the property which is the subject matter of the
arbitration.
Let us now visit Rule 5 of the Special Rules of Court:
RULE 5: INTERIM MEASURES OF PROTECTION
Rule 5.1. Who may ask for interim measures of
protection. - A party to an arbitration agreement may
petition the court for interim measures of protection.
(discussion) Kanusa gani makaask ug provisional
remedies sa court?
Rule 5.2. When to petition. - A petition for an interim
measure of protection may be made (a) before
arbitration is commenced, (b) after arbitration is
commenced, but before the constitution of the arbitral
tribunal, or (c) after the constitution of the arbitral
tribunal and at any time during arbitral proceedings but,
at this stage, only to the extent that the arbitral tribunal
has no power to act or is unable to act effectively.
(discussion) What are the grounds under rule 5.4:
Rule 5.4. Grounds. - The following grounds, while not
limiting the reasons for the court to grant an interim
measure of protection, indicate the nature of the
reasons that the court shall consider in granting the
relief:
a. The need to prevent irreparable loss or
injury;

b. The need to provide security for the
performance of any obligation;
c. The need to produce or preserve evidence;
or
d. The need to compel any other appropriate
act or omission.
(discussion) ang venue ng interim measure for
protection
Rule 5.3. Venue. - A petition for an interim measure of
protection may be filed with the Regional Trial Court,
which has jurisdiction over any of the following places:
a. Where the principal place of business of
any of the parties to arbitration is located;
b. Where any of the parties who are
individuals resides;
c. Where any of the acts sought to be enjoined
are being performed, threatened to be
performed or not being performed; or
d. Where the real property subject of
arbitration, or a portion thereof is situated.
(discussion) what prov rem can a court grant?
Rule 5.6. Type of interim measure of protection that a
court may grant.- The following, among others, are the
interim measures of protection that a court may grant:
a. Preliminary injunction directed against a
party to arbitration;
b. Preliminary attachment against property or
garnishment of funds in the custody of a bank
or a third person;
c. Appointment of a receiver;
d. Detention, preservation, delivery
inspection of property; or,
e. Assistance in the enforcement of an interim
measure of protection granted by the arbitral
tribunal, which the latter cannot enforce
effectively.
(discussion) sabi sa rule 5.7 dispense prior notice,
itong rule 5.7 is similar to what provisional remedy
under the Rules of Court? Similar to the provisional
remedy of * (wala gi answer ni mam) kasi di notified Ex-
parte to siya.
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Rule 5.7. Dispensing with prior notice in certain cases.
- Prior notice to the other party may be dispensed with
when the petitioner alleges in the petition that there is
an urgent need to either (a) preserve property, (b)
prevent the respondent from disposing of, or
concealing, the property, or (c) prevent the relief
prayed for from becoming illusory because of prior
notice, and the court finds that the reason/s given by
the petitioner are meritorious.
Rule 5.8. Comment/Opposition. - The
comment/opposition must be filed within fifteen (15)
days from service of the petition. The opposition or
comment should state the reasons why the interim
measure of protection should not be granted.
(discussion) Just read rule 5.9:
Rule 5.9. Court action. - After hearing the petition, the
court shall balance the relative interests of the parties
and inconveniences that may be caused, and on that
basis resolve the matter within thirty (30) days from (a)
submission of the opposition, or (b) upon lapse of the
period to file the same, or (c) from termination of the
hearing that the court may set only if there is a need for
clarification or further argument.
If the other parties fail to file their opposition on or
before the day of the hearing, the court shall motu
proprio render judgment only on the basis of the
allegations in the petition that are substantiated by
supporting documents and limited to what is prayed for
therein.
In cases where, based solely on the petition, the court
finds that there is an urgent need to either (a) preserve
property, (b) prevent the respondent from disposing of,
or concealing, the property, or (c) prevent the relief
prayed for from becoming illusory because of prior
notice, it shall issue an immediately executory
temporary order of protection and require the
petitioner, within five (5) days from receipt of that order,
to post a bond to answer for any damage that
respondent may suffer as a result of its order. The ex-
parte temporary order of protection shall be valid only
or for a period of twenty (20) days from the service on the
party required to comply with the order. Within that
period, the court shall:
a. Furnish the respondent a copy of the
petition and a notice requiring him to comment
thereon on or before the day the petition will
be heard; and
b. Notify the parties that the petition shall be
heard on a day specified in the notice, which
must not be beyond the twenty (20) day
period of the effectivity of the ex-parte order.
27

The respondent has the option of having the temporary
order of protection lifted by posting an appropriate
counter-bond as determined by the court.
If the respondent requests the court for an extension of
the period to file his opposition or comment or to reset
the hearing to a later date, and such request is granted,
the court shall extend the period of validity of the ex-
partetemporary order of protection for no more than
twenty days from expiration of the original period.
After notice and hearing, the court may either grant or
deny the petition for an interim measure of protection.
The order granting or denying any application for
interim measure of protection in aid of arbitration must
indicate that it is issued without prejudice to
subsequent grant, modification, amendment, revision
or revocation by an arbitral tribunal.
Rule 5.10. Relief against court action. - If respondent
was given an opportunity to be heard on a petition for
an interim measure of protection, any order by the court
shall be immediately executory, but may be the subject
of a motion for reconsideration and/or appeal or, if
warranted, a petition for certiorari.
(discussion) remedy to the court to the orders under
rule 5:
1) Motion for recon
2) Appeal
3) Certiorari
Rule 5.11. Duty of the court to refer back. - The court
shall not deny an application for assistance in
implementing or enforcing an interim measure of
protection ordered by an arbitral tribunal on any or all
of the following grounds:
a. The arbitral tribunal granted the interim
relief ex parte; or
b. The party opposing the application found
new material evidence, which the arbitral
tribunal had not considered in granting in the
application, and which, if considered, may
produce a different result; or
c. The measure of protection ordered by the
arbitral tribunal amends, revokes, modifies or
is inconsistent with an earlier measure of
protection issued by the court.
If it finds that there is sufficient merit in the opposition
to the application based on letter (b) above, the court
shall refer the matter back to the arbitral tribunal for
appropriate determination.
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Rule 5.12. Security. - The order granting an interim
measure of protection may be conditioned upon the
provision of security, performance of an act, or
omission thereof, specified in the order.
The Court may not change or increase or decrease the
security ordered by the arbitral tribunal.
(discussion) what is meant by rule 5.12? unsa man
siya sa provisional remedy? Bond requirement yan!
The bond will answer for all damages if di tama ang
Preliminary attachment.
Rule 5.13. Modification, amendment, revision or
revocation of court’s previously issued interim measure
of protection. - Any court order granting or denying
interim measure/s of protection is issued without
prejudice to subsequent grant, modification,
amendment, revision or revocation by the arbitral
tribunal as may be warranted.
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 previously issued by the
court to the extent that it is inconsistent with the
subsequent interim measure of protection issued by
the arbitral tribunal.
(discussion) so ni adto mog courte para mangayog
provisional remedy before na constitute ang arbitral
tribunal unya ma constitute na karon ang arbitral
tribunal tapos naa gihapon koy prelimnary injunction sa
court ano mangyari sa PI ko sa court? It is assumed na
may consistency sa Prov rem issued by the arbitral
tribunal and that issued by the courts.
Rule 5.14. Conflict or inconsistency between interim
measure of protection issued by the court and by the
arbitral tribunal. - Any question involving a conflict or
inconsistency between an interim measure of
protection issued by the court and by the arbitral
tribunal shall be immediately referred by the court to
the arbitral tribunal which shall have the authority to
decide such question.
(discussion) if naay conflict between the interim
measure of the court and arbitral tribunal, it shall be
referred to the arbitral tribunal which shall have the
jurisdiction to decide on such questions.
Rule 5.15. Court to defer action on petition for an
interim measure of protection when informed of
constitution of the arbitral tribunal. - 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

thereunder upon being informed that an arbitral tribunal
has been constituted pursuant to such agreement. The
court may act upon such petition only if it is established
by the petitioner that the arbitral tribunal has no power
to act on any such interim measure of protection or is
unable to act thereon effectively.
What is this principle of competence competence?
The principle of competence competence states that
the arbitral tribunal may initially rule on its own
jurisdiction including any objection with respect to the
existence and validity of the arbitration agreement or
any condition precedent to the filing of a request of
arbitration. Competence competence is found under
rule 2.4:
Rule 2.4. Policy implementing competence-
competence principle. - The arbitral tribunal shall be
accorded the first opportunity or competence to rule on
the issue of whether or not it has the 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. When
a court is asked to rule upon issue/s affecting the
competence or jurisdiction of an arbitral tribunal in a
dispute brought before it, either before or after the
arbitral tribunal is constituted, the court must exercise
judicial restraint and defer to the competence or
jurisdiction of the arbitral tribunal by allowing the
arbitral tribunal the first opportunity to rule upon such
issues.
Where the court is asked to make a determination of
whether the arbitration agreement is null and void,
inoperative or incapable of being performed, under this
policy of judicial restraint, the court must make no more
than a prima facie determination of that issue.
Unless the court, pursuant to such prima facie
determination, concludes that the arbitration
agreement is null and void, inoperative or incapable of
being performed, the court must suspend the action
before it and refer the parties to arbitration pursuant to
the arbitration agreement.
(discussion): The arbitral tribunal is given by law the
first opportunity to rule, determine WON it has
jurisdiction over a particular issue, or WON it has
jurisdiction or competence to decide a on a issue
submitted to it for decision, including any objection with
respect to the validity of the arbitration agreement.
Policy under the law is judicial restraint. Please
remember the court can only may a prima facie
determination of the validity of the arbitration
agreement.
THE ABITRATOR
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Who is this arbitrator? He is the person appointed, or
the person named under the arbitration agreement. He
is the person appointed to render an award, alone or
with other with a dispute that is subject under an
arbitration agreement. This is found in Sec 3 in RA
9876. Qualification of arbitrator, he should be in legal
age, full enjoyment of civil rights, he must know to read
and write.
So lets go to the disqualifications of an arbitrator this
is found in Sec 10 of the arbitration law as well as article
12 of the model law: disqualification can occur if the
arbitrator (section 10,Republic Act 9876 otherwise
known as the Arbitration Law ):
 Is related by blood or marriage within the sixth
degree to either party to the controversy.
 Has or had financial, fiduciary or other interest in
the controversy or cause to be decided or in the
result of the proceeding.
 Has any personal bias which might prejudice the
right of any party to a fair and impartial award.
 person to act as his champion or to advocate his
cause
 where justifiable doubts as to the arbitrators
impartiality
 if he does not possess the qualifications agreed
upon by the party.
So lets go to the 6th disqualification, pasabot inii na
pwede mag stipulate ang parties sa qualifications na
gusto nila for the arbitrator. What if ig-agaw mo 4th
degree under the 1st disqualification dili ka pwede
mahimong arbitrator Bawal because hantod 6th degree
lang.
Let’s proceed to the choice of the arbitrators
Kailangan ba yung arbitrators if domestic arbitration
mga lawyers? Not need, pwede stipulated na lawyer
but GR: no need. But take not in international
commercial arbitration and domestic arbitration, it is not
necessary na ang arbitrator has any special training, or
experience or admitted to the Philippine bar. But you
will wonder na arbitrators will interpret the provision of
the contract but depende nay an if I stipulate sa parties
to the case. How about foreigners, can foreigners act
as an arbitrators? Take note, if it is international
commercial arbitration, Yes pwede foreigners. How
about domestic arbitration, pwede ba foreigners?
There is no bias against such foreigners, unless the
parties by agreement impose nationality restrictions of
the said arbitrator. So pwede ang foreigners. Unsay
legal basis na pwede foreigners? Sec 37 of ra 9285:
SEC. 37. Appointment of Foreign Arbitrator. - The
Construction Industry Arbitration Commission (CIAC)
shall promulgate rules to allow for the appointment of a
foreign arbitrator or coarbitrator or chairman of a

tribunal a person who has not been previously
accredited by CIAC: Provided, That:
(a) the dispute is a construction dispute in
which one party is an international party
(b) the person to be appointed agreed to
abide by the arbitration rules and policies of
CIAC;
(c) he/she is either coarbitrator upon the
nomination of the international party; or
he/she is the common choice of the two CIAC-
accredited arbitrators first appointed one of
whom was nominated by the international
party; and
(d) the foreign arbitrator shall be of different
nationality from the international party.
(discussion) The GR: the parties are given a choice in
both domestic arbitration and international commercial
arbitration to choose the arbitrators.
Pwede baa ng court mag appoint arbitrators? Yes legal
basis? Rule 6 of special ADR rules of court:
RULE 6: APPOINTMENT OF ARBITRATORS
Rule 6.1. When the court may act as Appointing
Authority. - The court shall act as Appointing Authority
only in the following instances:
a. Where any of the parties in an institutional
arbitration failed or refused to appoint an
arbitrator or when the parties have failed to
reach an agreement on the sole arbitrator (in
an arbitration before a sole arbitrator) or when
the two designated arbitrators have failed to
reach an agreement on the third or presiding
arbitrator (in an arbitration before a panel of
three arbitrators), and the institution under
whose rules arbitration is to be conducted fails
or is unable to perform its duty as appointing
authority within a reasonable time from
receipt of the request for appointment;
b. In all instances where arbitration is ad hoc
and the parties failed to provide a method for
appointing or replacing an arbitrator, or
substitute arbitrator, or the method agreed
upon is ineffective, and the National President
of the Integrated Bar of the Philippines (IBP)
or his duly authorized representative fails or
refuses to act within such period as may be
allowed under the pertinent rules of the IBP or
within such period as may be agreed upon by
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the parties, or in the absence thereof, within
thirty (30) days from receipt of such request
for appointment;
c. Where the parties agreed that their dispute
shall be resolved by three arbitrators but no
method of appointing those arbitrators has
been agreed upon, each party shall appoint
one arbitrator and the two arbitrators thus
appointed shall appoint a third arbitrator. If a
party fails to appoint his arbitrator within thirty
(30) days of receipt of a request to do so from
the other party, or if the two arbitrators fail to
agree on the third arbitrator within a
reasonable time from their appointment, the
appointment shall be made by the Appointing
Authority. If the latter fails or refuses to act or
appoint an arbitrator within a reasonable time
from receipt of the request to do so, any party
or the appointed arbitrator/s may request the
court to appoint an arbitrator or the third
arbitrator as the case may be.
(discussion) Please take note these are the instances
a-c wherein the court itself may appoint an arbitrator di
ni siya automatic or moto propio, because you have to
file a petition in court to get an arbitrator.
Rule 6.2. Who may request for appointment. - Any
party to an arbitration may request the court to act as
an Appointing Authority in the instances specified in
Rule 6.1 above.
Rule 6.4. Contents of the petition. -The petition shall
state the following:
a. The general nature of the dispute;
b. If the parties agreed on an appointment
procedure, a description of that procedure
with reference to the agreement where such
may be found;
c. The number of arbitrators agreed upon or
the absence of any agreement as to the
number of arbitrators;
d. The special qualifications that the
arbitrator/s must possess, if any, that were
agreed upon by the parties;
e. The fact that the Appointing Authority,
without justifiable cause, has failed or refused
to act as such within the time prescribed or in
the absence thereof, within a reasonable
time, from the date a request is made; and

f. The petitioner is not the cause of the delay
in, or failure of, the appointment of the
arbitrator.
Apart from other submissions, the petitioner must
attach to the petition (a) an authentic copy of the
arbitration agreement, and (b) proof that the Appointing
Authority has been notified of the filing of the petition
for appointment with the court.
Rule 6.6. Submission of list of arbitrators. - The court
may, at its option, also require each party to submit a
list of not less than three (3) proposed arbitrators
together with their curriculum vitae.
Rule 6.7. Court action. - After hearing, if the court finds
merit in the petition, it shall appoint an arbitrator;
otherwise, it shall dismiss the petition.
In making the appointment, the court shall have regard
to such considerations as are likely to secure the
appointment of an independent and impartial arbitrator.
At any time after the petition is filed and before the court
makes an appointment, it shall also dismiss the petition
upon being informed that the Appointing Authority has
already made the appointment.
Rule 6.9. Relief against court action. - If the court
appoints an arbitrator, the order appointing an
arbitrator shall be immediately executory and shall not
be the subject of a motion for reconsideration, appeal
or certiorari. An order of the court denying the petition
for appointment of an arbitrator may, however, be the
subject of a motion for reconsideration, appeal or
certiorari.
Lets go to the method of appointing arbitrators what are
the rules. Ok if it is domestic arbitration the parties shall
simply provide in their arbitration agreement the
method for the appointment of arbitrator, it na yung
default yung sabi natin sa rule 6 when a court shall be
appointing authority of said arbitrator. If it is
intenrnational Commercial arbitration, then the parties
are free to agree on the said procedure for appointing
the said arbitrator. In the absence of such agreement,
if the arbitration is with 3 arbitrators each party shall
appoint arbitrator, and the 2 arbitrators shall appoint
another arbitrator. The next rule is that if there is failure,
we will go again to the court to request the appointment
of an arbitrator. If it is with a sole arbitrator and the
parties are unable to agree who is the arbitrator, he
shall be appointed upon request of the party, adto
napud ta sa courte. So read rule 6 of special ADR rules
of court.
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Lets proceed to Challenge and Disqualifications.
In both domestic and international arbitration the
parties are given the decision to decide the procedure
for challenging the arbitrator. Ingon nato the parties can
stipulate the qualifications of the arbitrator, they are
also given the power to stipulate the procedure to
challenge the person appointed as arbitrator. A party
who wants to challenge an arbitrator is required to
present a written statement of the reasons for the
challenge to the arbitral tribunal. If the challenge is not
successful you request the appointing authority to
decide on the said challenge. Question you want to
challenge the qualification of the arbitrator, unsay body
ang naay jurisdiction? Before the arbitral tribunal,
ngano arbitral tribunal man ang naay jurisdiction?
Because of rule 7 (actually la gi answer ni mam)
Who is an appointing authority? "Appointing Authority"
shall mean the person or institution named in the
arbitration agreement as the appointing authority; or
the regular arbitration institution under whose rule 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
arbitrators shall be made by the National President of
the Integrated Bar of the Philippines or his duly
authorized representative. So, very technical ang term.
So pwede b aka mag challenge sa appointment of
arbitrator with the court? Yes allowed by sec 7 of
special adr rules and art 13 of model law. John
Sanchez please read, ay absent.
RULE 7: CHALLENGE TO APPOINTMENT OF
ARBITRATOR
Rule 7.2. When challenge may be raised in court. -
When an arbitrator is challenged before the arbitral
tribunal under the procedure agreed upon by the
parties or under the procedure provided for in Article 13
(2) of the Model Law and the challenge is not
successful, the aggrieved party may request the
Appointing Authority to rule on the challenge, and it is
only when such Appointing Authority fails or refuses to
act on the challenge within such period as may be
allowed under the applicable rule or in the absence
thereof, within thirty (30) days from receipt of the
request, that the aggrieved party may renew the
challenge in court.
(discussion) so di ka makaderecho sa court una sa
arbitral tribunal and then you go to appointing authority,
you go to the court only if the appointing authority
refuses or fails to act on the challenge.

Rule 7.3. Venue. - The challenge shall be filed with the
Regional Trial Court (a) where the principal place of
business of any of the parties is located, (b) if any of
the parties are individuals, where those individuals
reside, or (c) in the National Capital Region.
Rule 7.4. Grounds. - An arbitrator may be challenged
on any of the grounds for challenge provided for in
Republic Act No. 9285 and its implementing rules,
Republic Act No. 876 or the Model Law. The nationality
or professional qualification of an arbitrator is not a
ground to challenge an arbitrator unless the parties
have specified in their arbitration agreement a
nationality and/or professional qualification for
appointment as arbitrator.
(discussion) So unsay grounds aning challenge? Diba
tong mga disqualifications. Just for emphasis “The
nationality or professional qualification of an arbitrator
is not a ground to challenge an arbitrator unless the
parties have specified in their arbitration agreement a
nationality and/or professional qualification for
appointment as arbitrator.”
Rule 7.5. Contents of the petition. - The petition shall
state the following:
a. The name/s of the arbitrator/s challenged
and his/their address;
b. The grounds for the challenge;
c. The facts showing that the ground for the
challenge has been expressly or impliedly
rejected by the challenged arbitrator/s; and
d. The facts showing that the Appointing
Authority failed or refused to act on the
challenge.
The court shall dismiss the petition motu proprio unless
it is clearly alleged therein that the Appointing Authority
charged with deciding the challenge, after the
resolution of the arbitral tribunal rejecting the challenge
is raised or contested before such Appointing Authority,
failed or refused to act on the challenge within thirty
(30) days from receipt of the request or within such
longer period as may apply or as may have been
agreed upon by the parties.
Rule 7.7. Court action. - After hearing, the court shall
remove the challenged arbitrator if it finds merit in the
petition; otherwise, it shall dismiss the petition.
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The court shall allow the challenged arbitrator who
subsequently agrees to accept the challenge to
withdraw as arbitrator.
The court shall accept the challenge and remove the
arbitrator in the following cases:
a. The party or parties who named and
appointed the challenged arbitrator agree to
the challenge and withdraw the appointment.
b. The other arbitrators in the arbitral tribunal
agree to the removal of the challenged
arbitrator; and
c. The challenged arbitrator fails or refuses to
submit his comment on the petition or the brief
of legal arguments as directed by the court, or
in such comment or legal brief, he fails to
object to his removal following the challenge.
The court shall decide the challenge on the basis of
evidence submitted by the parties.
The court will decide the challenge on the basis of the
evidence submitted by the parties in the following
instances:
a. The other arbitrators in the arbitral tribunal
agree to the removal of the challenged
arbitrator; and
b. If the challenged arbitrator fails or refuses
to submit his comment on the petition or the
brief of legal arguments as directed by the
court, or in such comment or brief of legal
arguments, he fails to object to his removal
following the challenge.
(Discussion) What if the challenge in the procedure
agreed upon by the parties is not successful or the
decision of the arbitral tribunal is that it rejects a
challenge? Punta na tayu sa courte and wee use rule
7 of adr rules of court? party may request the
Appointing Authority to rule on the challenge, and it is
only when such Appointing Authority fails or refuses to
act on the challenge within such period as may be
allowed under the applicable rule or in the absence
thereof, within thirty (30) days from receipt of the
request, that the aggrieved party may renew the
challenge in court.
So steps sa challenge Arbitral tribunal -> Appointing
authority -> Court to renew your challenge.
 ADDU LAW 3RD YEAR 2019

Lets go to the Equal right of the parties to appoint
arbitrator, the rule is that the parties are entitled to
choose an equal number of arbitrators subject to the
limitations as provided under article 2045 of the civil
code:
In the leading case of Cf Luzon development v
association luzon bank employees, the rules on judges
should be similarly applicable to arbitrators, since
arbitrators act in quasi-judicial capacity and in fact
deemed instrumentality of the government.

Art. 2045. Any clause giving one of the parties power How about liability for civil liability for judicial
to choose more arbitrators than the other is void and of error? Santos vs Orlino The error must be gross or
no effect. (n) patent, deliberate and malicious, or incurred with
evident bad faith (Quizon v. Balthazar, Jr., 65 SCRA
(discussion) take note that additional arbitrators may 293 [1975]).
be appointed this is allowed under section 9 under the
arbitration law but the making of additional arbitrators The imputed error in this case not being in the
must be made in writing and the said additional premises gross, and the record being bereft of any
arbitrator must sit with the original arbitrator/s upon the persuasive showing of deliberate or malicious intent on
hearing. Take note, that a substitute arbitrator may also the part of respondent Judge to cause prejudice to any
be named. party, the instant administrative proceeding against the
latter must be given short shrift for what of basis. So
yes pwede siya civil liability.
magellan capital v zosa, In fairness and justice to the
plaintiff [defendant], the two defendants (MCMC and
MCHC)[herein petitioners] which represent the same
interest should be considered as one and should be
entitled to only one arbitrator to represent them in the
arbitration proceedings. Accordingly, the arbitration
clause, insofar as the composition of the panel of
arbitrators is concerned should be declared void and of
no effect, because the law says, Any clause giving one
of the parties power to choose more arbitrators than the
other is void and of no effect (Article 2045, Civil Code).
(in relt to the equal right to designate arbitrators)

And in relation to Magellan, The dispute or controversy

between the defendants (MCMC and MCHC) [herein
petitioners] and the plaintiff [herein defendant] should
be settled in the arbitration proceeding in accordance
with the Employment Agreement, but under the panel
of three (3) arbitrators, one (1) arbitrator to represent
the plaintiff, one (1) arbitrator to represent both
defendants (MCMC and MCHC)[herein petitioners]
and the third arbitrator to be chosen by the plaintiff
[defendant Zosa] and defendants [petitioners].

There is no law prescribing the liability of arbitrators, so

does the arbitrator incur any liability at all? Yes, if he
does not discharge his duties relied on him, the liability
of the arbitrator is only contractual liability. Why
contractual liability? Because dili man siya ma file-an
kung walay arbitration agreement, because of the
arbitration agreement, and he is named in the said
arbitration agreement, that is why his liability is
contractual in nature. So pasabot ani kay liable siya for
damages arising from breach of contract? What is that
exception under torts and damages? If the act itself is
tortuous in nature damages can still be claimed. Please
take note liability for wrong decision there is no liability
at all, but he will be liable if he does not discharge his
duty.

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1/17 TAN
PRINCIPLE OF SEPARABILITY OF ARBITRATION
CLAUSE
The law provides that the arbitral agreement is
independent from the main contract. This is the general
rule in domestic arbitration, as well as in international
commercial arbitration. If it’s domestic arbitration, the
basis is the arbitration law, specifically Sections 2,6,
and 7. In the Civil Code, we have provisions on
divisibility or separability that support the fact of an
arbitration clause being separate from the main
contract.
If it’s international commercial arbitration, it’s found in
Articles 16 par 1 of the Model Law.
What is meant by “that the arbitral agreement is
independent from the main contract”? The principle of
separability means that the invalidity of the arbitration
clause will not render the main arbitration or contract
invalid, and vice versa. As a review of Obligations and
Contracts, the arbitral agreement, while enclosed in the
main contract, is still different from the main contract
itself. Specifically, under Rule 2.2 of the Special ADR
Rules of Court:
Rule 2.2. Policy on arbitration.-
xxx
The Special ADR Rules recognize the principle of
separability of the arbitration clause, which means
that said clause shall be treated as an agreement
independent of the other terms of the contract of
which it forms part. A decision that the contract is
null and void shall not entail ipso jure the invalidity
of the arbitration clause.
Cargill v. San Fernando
One of the parties does not want to enforce the main
contract, because he alleged that the conditions of
such is unconscionable.
Under the doctrine of separability, an arbitration
agreement is independent from the main contract,
so the former is a separate contract in itself.
The Supreme Court further ruled that as a
consequence of the doctrine of separability, even
the very party who repudiates the main contract may
invoke its arbitration clause.
Note: Read the case of Gonzales v. Matinez as well,
and distinguish it from this case.
Philippine Economic Zone Authority v. Edison
(Bataan) Cogeneration Corporation
GR No. 179537
The arbitration agreement may thus be invoked,
regardless of the possible invalidity of the main
contract. The arbitration agreement does not also
automatically terminate when the main contract
ends.
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Note: Read the full text.
FRAUDULENT INDUCEMENTS
The arbitral tribunal can rule on that issue of fraudulent
inducement in the creation of contract. The rationale for
this is that there is nothing in the law that bars the
arbitral tribunal from ruling such, in lieu of the principle
of competence-competence, whereby the arbitral
tribunal can initially and primarily rule whether or not it
has jurisdiction over a particular issue. So it can be an
arbitral issue in both international commercial and
domestic arbitration.
Under international commercial arbitration in regards to
fraudulent inducement, the arbitral tribunal is
empowered to decide on any objection as to the
existence or validity of the arbitration agreement.
Under domestic arbitration, the law provides that it is
subject to arbitration if the language of the arbitration
clause is broad enough such as to provide for
arbitration claims or disputes arising or relating to the
said contract.
When we say a contract is fraudulently induced, it
makes it merely voidable.
TIMELINESS OF WAIVER
If it is international commercial arbitration, the
arbitration agreement must be invoked to preclude
court action not later than when submitting the first
statement on the substance of the dispute.
If it is domestic arbitration, take note of the following
rules:
1. In case of contract to arbitrate future
controversies, you should serve to the other party
a demand to arbitrate
2. In case you want to arbitrate an existing
controversy, you have to file a Motion to Dismiss
with the court having jurisdiction on the said
matter; and
 What is the effect of failure of the defendant
to raise arbitration in a Motion to Dismiss or
as an affirmative defense in his answer?
Waiver of his right to arbitrate.
3. The 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 (Section 24 of RA
9285)
 What does #3 mean?The rule is that if
there is an arbitration clause or

agreement, it has to be timely invoked,
because if the party fails to do so, it will
constitute as a waiver of the said
arbitration. The court must be informed
that there was a case filed before the
court invoking a contract where this is an
arbitration agreement. You call the
attention of the court, although it is the
duty of the court to immediately dismiss
motu proprio, because the court has no
jurisdiction over the said matter. If the
judge really has no knowledge, there is
RA 9285 where the party to the said
arbitration agreement should call the
attention of the court that there is an
existing arbitration clause, so there must
be arbitration first before a case can be
filed, because if the latter shall occur, it
will constitute as a waiver of the right to
arbitrate.
 The leading cases are Chung Fu v. CA
and Asset Privatization Trust v. CA
Asset Privatization Trust v. CA
If a dispute or action subject of arbitration is
instituted within a court of law, the court is without
liberty to disregard the arbitration agreement, and
cannot allow the action to proceed.
Factors considered when a party is deemed to have
waived his right to require arbitration whether:
a) Party’s action is inconsistent with the right to
arbitrate
b) Litigation machinery has been substantially
invoked
c) Party either requested arbitration enforcement
close to the trial date or delayed for a long period
before asking for a stay of the suit
d) Defendant seeking arbitration filed a counterclaim
asking for a stay of the proceedings
e) Important intervening steps such as resort to
discovery procedure not otherwise available in
arbitration have been taken
f) Delay affected, misled or prejudiced the opposing
party
g) Parties in fact litigate in a court of law a dispute
that is subject to arbitration
Far East International Import v. Nankai Kogyo
Having waived recourse through arbitration, the
losing party cannot thereafter question jurisdiction of
the court, because it has to be timely invoked. This
applies to both domestic and international
commercial arbitration.
OPERATION AND EFFECT OF ARBITRATION
AGREEMENTS
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An arbitration agreement timely invoked precludes
court action.
Chung Fu Industries v. CA
The correct procedure is to suspend the case, and
not dismiss it, and require the parties to proceed with
the arbitration in accordance to their agreements.
Asset Privatization Trust v. CA
If a dispute or action subject of arbitration is
instituted within a court of law, the court is without
liberty to disregard the arbitration agreement, and
cannot allow the action to proceed It is erroneous
for a court to issue a final order dismissing the case,
because the court should suspend the case.
Reasons for suspending and not dismissing the case:
1. Rule 2.2
Rule 2.2. Policy on arbitration.-
(A) Where the parties have agreed to submit
their dispute to arbitration, courts shall refer the
parties to arbitration pursuant to Republic Act
No. 9285 bearing in mind that such arbitration
agreement is the law between the parties and
that they are expected to abide by it in good faith.
Further, the courts shall not refuse to refer
parties to arbitration for reasons including, but
not limited to, the following:
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 a foreign country;
f. One or more of the issues are legal and one or
more of the arbitrators are not lawyers;
g. One or more of the arbitrators are not
Philippine nationals; or
h. One or more of the arbitrators are alleged not
to possess the required qualification under the
arbitration agreement or law.
xxx
2. Rule 2.4
Rule 2.4. Policy implementing competence-
competence principle. –
The arbitral tribunal shall be accorded the first
opportunity or competence to rule on the issue
of whether or not it has the 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. When a court is asked to rule upon
issue/s affecting the competence or jurisdiction
of an arbitral tribunal in a dispute brought before
it, either before or after the arbitral tribunal is
constituted, the court must exercise judicial
restraint and defer to the competence or
jurisdiction of the arbitral tribunal by allowing the

arbitral tribunal the first opportunity to rule upon
such issues.
Where the court is asked to make a
determination of whether the arbitration
agreement is null and void, inoperative or
incapable of being performed, under this policy
of judicial restraint, the court must make no more
than a prima facie determination of that issue.
Unless the court, pursuant to such prima facie
determination, concludes that the arbitration
agreement is null and void, inoperative or
incapable of being performed, the court must
suspend the action before it and refer the parties
to arbitration pursuant to the arbitration
agreement.
Comments: So take note of Rule 2.4 on the
policy of implementing competence-
competence and judicial restraint on the part of
the court.
If a case is prematurely filed in court, pursuant to the
cases of Asset Privatization Trust, the court should
merely suspend the case, because Rule 2.2 and 2.4.
Remedies when a case is prematurely filed in
contravention with the agreement to arbitrate
1. File a Motion to Dismiss the case
 Rationale: Under Rule 16 of the 1997 Rules of
Civil Procedure, one of the grounds to dismiss
the case is failure to comply with the condition
precedent.
2. Move to suspend the court proceedings (in lieu of
Asset Privatization Trust)
3. File a motion to refer the case to arbitration
Assume that the issue in filing the case is that you are
questioning the existence, validity, operation and
enforcement of the arbitration clause. Can the court
cognizance of the case, when such was prematurely
filed in contravention with the agreement to arbitrate?
No, but the court can make a prima facie determination
as to the question. The mere existence of an arbitration
agreement does not preclude the court from taking
cognizance of the case even if the defendant claims
that recourse must first be through arbitration, since the
court can make a prima facie determination. It’s the
duty of the court to determine if the controversy should
be subject to arbitration
Assuming that the court determines that the arbitration
agreement is valid etc., then it is the duty of the court
to suspend the action and refer the parties to arbitration
pursuant to the arbitration agreement. But if the
determination was that the agreement was void,
unenforceable, inoperative or incapable of being
performed, then the duty of the court is to take
cognizance of the case.
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Remedies against the order of the court which
erroneously denied either of the three remedies?
1. File a petition for prohibition (in order to prohibit the
court from taking cognizance of the case)
2. File a petition for certiorari (since it’s merely an
interlocutory order)
Western Minolco Corporation Case
The court is not barred from inquiring into the
question whether or not it has jurisdiction over the
case if the party claims it has no jurisdiction over a
controversy.
RULE ON LIBERALITY
The arbitral tribunal or court, in resolving the issue
whether or not the controversy is subject to arbitration,
looks into the scope of the arbitration agreement and
interprets it liberally, so that any doubt is construed in
favor of arbitration, since we encourage alternative
dispute resolution.
LM Engineering v. Capitol Industry
An arbitration agreement is liberally construed, and
any doubt should be resolved in favor of arbitration,
since the policy of the law is on arbitration.
In the case before us, the Subcontract has the
following arbitral clause:
“6. The Parties hereto agree that any dispute or
conflict as regards to interpretation and
implementation of this Agreement which cannot be
settled between [respondent] and [petitioner]
amicably shall be settled by means of arbitration x x
x.”
Clearly, the resolution of the dispute between the
parties herein requires a referral to the provisions of
their Agreement. Within the scope of the arbitration
clause are discrepancies as to the amount of
advances and billable accomplishments, the
application of the provision on termination, and the
consequent set-off of expenses.
The Supreme Court then ruled that this is an
arbitrable issue.
REFERRAL TO ARBITRATION
If an action is commenced before a court on a matter
that is the subject of an arbitration agreement, the court
is not allowed to dismiss the action. The court simply
has to suspend the action to await the final outcome of
the arbitration for possible confirmation and
enforcement of the award before the court.
As what we said before in the case of Asset
Privatization, simply suspend the proceedings, with
Rule 4 of the Special ADR Rules of Court as basis.

When the court issues an order suspending the
proceedings before it, it means it has taken jurisdiction
over the case, otherwise it would not issue such order.
The trial court does not lose jurisdiction over the case
when it refers parties to arbitration, since again, the
proceedings are merely suspended even if the
controversy was later determined to be subject to
arbitration.
PROVISIONAL REMEDIES
The arbitral tribunal can grant provisional remedies,
which may be found in Section 28 and 29 of RA 9285.
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.
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(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.
Under Section 28, prior the constitution of the arbitral
tribunal, we can request for provisional remedies
before the court. The procedure we use is Rule 5 of the
Special ADR Rules. After constitution of the arbitral
tribunal, you request for provisional remedies before
the arbitral tribunal, unless the latter cannot grant your
request for provisional remedies.
Home Bankers v. CA
A party to a pending arbitration has the right, without
violating the rule on forum shopping, to institute an
action to obtain a writ of preliminary attachment from
the court in order to preserve the property which is
the subject matter of arbitration.
Rule 5 of Special ADR Rules only refers to provisional
remedies that can be applied in relation to arbitration if
we will actually go to the courts.
Special ADR Rules:
RULE 5: INTERIM MEASURES OF PROTECTION
Rule 5.1. Who may ask for interim measures of
protection. - A party to an arbitration agreement may
petition the court for interim measures of protection.
Rule 5.2. When to petition. - A petition for an interim
measure of protection may be made (a) before
arbitration is commenced, (b) after arbitration is
commenced, but before the constitution of the
arbitral tribunal, or (c) after the constitution of the
arbitral tribunal and at any time during arbitral
proceedings but, at this stage, only to the extent that
the arbitral tribunal has no power to act or is unable
to act effectively.

Rule 5.3. Venue. - A petition for an interim measure
of protection may be filed with the Regional Trial
Court, which has jurisdiction over any of the
following places:
a. Where the principal place of business of
any of the parties to arbitration is located;
b. Where any of the parties who are
individuals resides;
c. Where any of the acts sought to be
enjoined are being performed, threatened
to be performed or not being performed; or
d. Where the real property subject of
arbitration, or a portion thereof is situated.
Rule 5.4. Grounds. - The following grounds, while
not limiting the reasons for the court to grant an
interim measure of protection, indicate the nature of
the reasons that the court shall consider in granting
the relief:
a. The need to prevent irreparable loss or
injury;
b. The need to provide security for the
performance of any obligation;
c. The need to produce or preserve
evidence; or
d. The need to compel any other
appropriate act or omission
Rule 5.5. Contents of the petition. - The verified
petition must state the following:
a. The fact that there is an arbitration
agreement;
b. The fact that the arbitral tribunal has not
been constituted, or if constituted, is
unable to act or would be unable to act
effectively;
c. A detailed description of the appropriate
relief sought;
d. The grounds relied on for the allowance
of the petition
Apart from other submissions, the petitioner must
attach to his petition an authentic copy of the
arbitration agreement.
Rule 5.6. Type of interim measure of protection that
a court may grant.- The following, among others, are
the interim measures of protection that a court may
grant:
a. Preliminary injunction directed against a
party to arbitration;
b. Preliminary attachment against property
or garnishment of funds in the custody of a
bank or a third person;
c. Appointment of a receiver;
d. Detention, preservation, delivery or
inspection of property; or,
e. Assistance in the enforcement of an
interim measure of protection granted by
the arbitral tribunal, which the latter cannot
enforce effectively.
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Rule 5.7. Dispensing with prior notice in certain
cases. - Prior notice to the other party may be
dispensed with when the petitioner alleges in the
petition that there is an urgent need to either (a)
preserve property, (b) prevent the respondent from
disposing of, or concealing, the property, or (c)
prevent the relief prayed for from becoming illusory
because of prior notice, and the court finds that the
reason/s given by the petitioner are meritorious
Comments: The provisional remedy in Rule 5.7 is
issued ex parte.
Rule 5.8. Comment/Opposition. - The
comment/opposition must be filed within fifteen (15)
days from service of the petition. The opposition or
comment should state the reasons why the interim
measure of protection should not be granted.
Comments: Due process requirement, because you
filed a petition in court. The next procedure should
be that you should require the other party to
comment or oppose whether or not the provisional
remedy should be issued.
Rule 5.9. Court action. - After hearing the petition,
the court shall balance the relative interests of the
parties and inconveniences that may be caused,
and on that basis resolve the matter within thirty (30)
days from (a) submission of the opposition, or (b)
upon lapse of the period to file the same, or (c) from
termination of the hearing that the court may set only
if there is a need for clarification or further argument.
If the other parties fail to file their opposition on or
before the day of the hearing, the court shall motu
proprio render judgment only on the basis of the
allegations in the petition that are substantiated by
supporting documents and limited to what is prayed
for therein.
In cases where, based solely on the petition, the
court finds that there is an urgent need to either (a)
preserve property, (b) prevent the respondent from
disposing of, or concealing, the property, or (c)
prevent the relief prayed for from becoming illusory
because of prior notice, it shall issue an immediately
executory temporary order of protection and require
the petitioner, within five (5) days from receipt of that
order, to post a bond to answer for any damage that
respondent may suffer as a result of its order. The
ex-parte temporary order of protection shall be valid
only for a period of twenty (20) days from the service
on the party required to comply with the order.
Within that period, the court shall:
a. Furnish the respondent a copy of the
petition and a notice requiring him to
comment thereon on or before the day the
petition will be heard; and
b. Notify the parties that the petition shall
be heard on a day specified in the notice,

which must not be beyond the twenty (20)
day period of the effectivity of the ex-parte
order.
The respondent has the option of having the
temporary order of protection lifted by posting an
appropriate counter-bond as determined by the
court.
If the respondent requests the court for an extension
of the period to file his opposition or comment or to
reset the hearing to a later date, and such request is
granted, the court shall extend the period of validity
of the ex-parte temporary order of protection for no
more than twenty days from expiration of the original
period.
After notice and hearing, the court may either grant
or deny the petition for an interim measure of
protection. The order granting or denying any
application for interim measure of protection in aid
of arbitration must indicate that it is issued without
prejudice to subsequent grant, modification,
amendment, revision or revocation by an arbitral
tribunal.
Rule 5.10. Relief against court action. - If
respondent was given an opportunity to be heard on
a petition for an interim measure of protection, any
order by the court shall be immediately executory,
but may be the subject of a motion for
reconsideration and/or appeal or, if warranted, a
petition for certiorari.
Rule 5.11. Duty of the court to refer back. - The court
shall not deny an application for assistance in
implementing or enforcing an interim measure of
protection ordered by an arbitral tribunal on any or
all of the following grounds:
a. The arbitral tribunal granted the interim relief ex
parte; or
b. The party opposing the application found new
material evidence, which the arbitral tribunal had not
considered in granting in the application, and which,
if considered, may produce a different result; or
c. The measure of protection ordered by the arbitral
tribunal amends, revokes, modifies or is inconsistent
with an earlier measure of protection issued by the
court.
If it finds that there is sufficient merit in the
opposition to the application based on letter (b)
above, the court shall refer the matter back to the
arbitral tribunal for appropriate determination.
Rule 5.12. Security. - The order granting an interim
measure of protection may be conditioned upon the
provision of security, performance of an act, or
omission thereof, specified in the order.
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The Court may not change or increase or decrease
the security ordered by the arbitral tribunal.
Comments: This is the bond requirement akin to
your subject in Provisional Remedies (ex.
preliminary
attachment)
Rule 5.13. Modification, amendment, revision or
revocation of court’s previously issued interim
measure of protection. –
Any court order granting or denying interim
measure/s of protection is issued without prejudice
to subsequent grant, modification, amendment,
revision or revocation by the arbitral tribunal as may
be warranted.
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 previously
issued by the court to the extent that it is inconsistent
with the subsequent interim measure of protection
issued by the arbitral tribunal.
Comments: You went to the court to issue a
provisional remedy before the arbitral tribunal was
constituted. Now the tribunal was constituted, but
there is already a preliminary injunction issued.
What will happen to the preliminary injunction, will it
still take effect? If the relief granted by the tribunal is
not inconsistent with the provisional remedy granted
by the court, the general rule is that it the provisional
remedy is not deemed modified or amended.
Rule 5.14. Conflict or inconsistency between interim
measure of protection issued by the court and by the
arbitral tribunal. - Any question involving a conflict or
inconsistency between an interim measure of
protection issued by the court and by the arbitral
tribunal shall be immediately referred by the court to
the arbitral tribunal which shall have the authority to
decide such question.
Comments: Assuming there is inconsistency
between the provisional remedy issued by the
tribunal and that of the court, apply Rule 5.14. Why
do we have to refer this back to the arbitral tribunal?
As a policy, we are upholding the agreement of the
parties to submit into arbitration, so the rules provide
in case of inconsistency, the arbitral tribunal’s
decision shall prevail.
Rule 5.15. Court to defer action on petition for an
interim measure of protection when informed of
constitution of the arbitral tribunal. - 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 thereunder upon being informed that

an arbitral tribunal has been constituted pursuant to
such agreement. The court may act upon such
petition only if it is established by the petitioner that
the arbitral tribunal has no power to act on any such
interim measure of protection or is unable to act
thereon effectively.
Comments: This is an important provision.
Rule 5.16. Court assistance should arbitral tribunal
be unable to effectively enforce interim measure of
protection. - The court shall assist in the
enforcement of an interim measure of protection
issued by the arbitral tribunal which it is unable to
effectively enforce.
PRINCIPLE OF COMPETENCE-COMPETENCE
The principle states that the arbitral tribunal may
initially rule on its own jurisdiction, including any
objection with respect to the existence or validity of the
arbitration agreement or any condition precedent in the
filing of a request for arbitration.This principle is found
in Rule 2.4.
Rule 2.4. Policy implementing competence-
competence principle. - The arbitral tribunal shall be
accorded the first opportunity or competence to rule
on the issue of whether or not it has the 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.
When a court is asked to rule upon issue/s affecting
the competence or jurisdiction of an arbitral tribunal
in a dispute brought before it, either before or after
the arbitral tribunal is constituted, the court must
exercise judicial restraint and defer to the
competence or jurisdiction of the arbitral tribunal by
allowing the arbitral tribunal the first opportunity to
rule upon such issues.
Where the court is asked to make a determination of
whether the arbitration agreement is null and void,
inoperative or incapable of being performed, under
this policy of judicial restraint, the court must make
no more than a prima facie determination of that
issue.
Unless the court, pursuant to such prima facie
determination, concludes that the arbitration
agreement is null and void, inoperative or incapable
of being performed, the court must suspend the
action before it and refer the parties to arbitration
pursuant to the arbitration agreement.
So this principle entails that the arbitral tribunal is given
by law. The first opportunity to rule and determine
whether or not it has jurisdiction over a particular issue
or has competence or jurisdiction to the dispute
submitted to it for decision, including any objection with
respect to the existence or validity of the arbitration
agreement. That’s why the policy of the law is judicial
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restraint. Again, the courts can take cognizance and
can only make a prima facie determination with regard
to the existence, validity, operation and enforceability
of the arbitration agreement.
THE ARBITRATOR
The arbitrator is the person appointed (or named in the
arbitration agreement) to render an award, alone or
with others, in a dispute that is the subject of an
arbitration agreement (Section 3 of RA 9285)
Qualifications
1. Of legal age
2. In full enjoyment of his civil rights and
3. Must know how to read and write
Disqualifications of an arbitrator (as provided for in
Section 10, RA 876 for domestic arbitration and Article
12, Model Law for international arbitration)
a) Related by blood or marriage within the sixth
degree to either party to the controversy.
b) 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
c) Has any personal bias, which might prejudice the
right of any party to a fair and impartial award.
d) Select as an arbitrator any person to act as his
champion or to advocate his cause
e) Justifiable doubts as to the arbitrator’s partiality
f) Does not possess the qualifications agreed upon
by the parties
 As to letter F, the parties can actually stipulate
as to the qualifications they desire for the
arbitrator.
Choice of Arbitrators
General Rule
In domestic and international commercial arbitration,
the parties are given the choice as to the arbitrators.
The courts are also given the power to appoint
arbitrators.
Special ADR Rules:
RULE 6: APPOINTMENT OF ARBITRATORS
Rule 6.1. When the court may act as Appointing
Authority. - The court shall act as Appointing
Authority only in the following instances:
a) Where any of the parties in an institutional
arbitration failed or refused to appoint an
arbitrator or when the parties have failed to
reach an agreement on the sole arbitrator (in an
arbitration before a sole arbitrator) or when the
two designated arbitrators have failed to reach
an agreement on the third or presiding arbitrator
(in an arbitration before a panel of three
arbitrators), and the institution under whose
rules arbitration is to be conducted fails or is
unable to perform its duty as appointing

authority within a reasonable time from receipt
of the request for appointment;
b) In all instances where arbitration is ad hoc and
the parties failed to provide a method for
appointing or replacing an arbitrator, or
substitute arbitrator, or the method agreed upon
is ineffective, and the National President of the
Integrated Bar of the Philippines (IBP) or his
duly authorized representative fails or refuses
to act within such period as may be allowed
under the pertinent rules of the IBP or within
such period as may be agreed upon by the
parties, or in the absence thereof, within thirty
(30) days from receipt of such request for
appointment;
c) Where the parties agreed that their dispute
shall be resolved by three arbitrators but no
method of appointing those arbitrators has
been agreed upon, each party shall appoint one
arbitrator and the two arbitrators thus appointed
shall appoint a third arbitrator. If a party fails to
appoint his arbitrator within thirty (30) days of
receipt of a request to do so from the other
party, or if the two arbitrators fail to agree on the
third arbitrator within a reasonable time from
their appointment, the appointment shall be
made by the Appointing Authority. If the latter
fails or refuses to act or appoint an arbitrator
within a reasonable time from receipt of the
request to do so, any party or the appointed
arbitrator/s may request the court to appoint an
arbitrator or the third arbitrator as the case may
be.
Comments: These are the instances where the court
may appoint an arbitrator, but it’s not motu proprio
or an automatic appointment, because you have to
file a petition in court for the appointment of said
arbitrator.
Rule 6.2. Who may request for appointment. - Any
party to an arbitration may request the court to act
as an Appointing Authority in the instances specified
in Rule 6.1 above.
Rule 6.3. Venue. - The petition for appointment of
arbitrator may be filed, at the option of the petitioner,
in the Regional Trial Court (a) where the principal
place of business of any of the parties is located, (b)
if any of the parties are individuals, where those
individuals reside, or (c) in the National Capital
Region.
Rule 6.4. Contents of the petition. -The petition shall
state the following:
a. The general nature of the dispute;
b. If the parties agreed on an appointment
procedure, a description of that procedure
with reference to the agreement where
such may be found;
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c. The number of arbitrators agreed upon
or the absence of any agreement as to the
number of arbitrators;
d. The special qualifications that the
arbitrator/s must possess, if any, that were
agreed upon by the parties;
e. The fact that the Appointing Authority,
without justifiable cause, has failed or
refused to act as such within the time
prescribed or in the absence thereof, within
a reasonable time, from the date a request
is made; and
f. The petitioner is not the cause of the
delay in, or failure of, the appointment of
the arbitrator.
Apart from other submissions, the petitioner must
attach to the petition (a) an authentic copy of the
arbitration agreement, and (b) proof that the
Appointing Authority has been notified of the filing of
the petition for appointment with the court.
Rule 6.5. Comment/Opposition. - The
comment/opposition must be filed within fifteen (15)
days from service of the petition.
Rule 6.6. Submission of list of arbitrators. - The court
may, at its option, also require each party to submit
a list of not less than three (3) proposed arbitrators
together with their curriculum vitae.
Rule 6.7. Court action. - After hearing, if the court
finds merit in the petition, it shall appoint an
arbitrator; otherwise, it shall dismiss the petition.
In making the appointment, the court shall have
regard to such considerations as are likely to secure
the appointment of an independent and impartial
arbitrator.
At any time after the petition is filed and before the
court makes an appointment, it shall also dismiss
the petition upon being informed that the Appointing
Authority has already made the appointment.
Rule 6.8. Forum shopping prohibited. - When there
is a pending petition in another court to declare the
arbitration agreement inexistent, invalid,
unenforceable, on account of which the respondent
failed or refused to participate in the selection and
appointment of a sole arbitrator or to appoint a party-
nominated arbitrator, the petition filed under this rule
shall be dismissed.
Rule 6.9. Relief against court action. - If the court
appoints an arbitrator, the order appointing an
arbitrator shall be immediately executory and shall
not be the subject of a motion for reconsideration,
appeal or certiorari. An order of the court denying
the petition for appointment of an arbitrator may,

however, be the subject of a motion
reconsideration, appeal or certiorari.
As to the method of appointment:
 In domestic arbitration, the parties will simply
provide (in their arbitration agreement) the method
for the appointment or naming of the arbitrator.
 In international commercial arbitration, the parties
are free to agree the said procedure for the said
arbitrator. In absence of such agreement, if the
arbitration is with three arbitrators, each party shall
appoint one arbitrator and two arbitrators thus
appointed shall appoint a third arbitrator. The
reason for this is because an arbitral tribunal is a
body. It can be one or three arbitrators to decide
on an issue.
In case of failure, the parties shall go to court to request
for an appointment of an arbitrator. If it’s a sole
arbitrator, and the parties fail to agree on such
arbitrator, it shall be appointed upon the request of a
party to the court, in lieu of Rule 6.
Lawyers
In domestic and international commercial arbitration,
it’s not necessary for the arbitrators to have any special
training or experience or be admitted to the Philippine
bar, unless otherwise stipulated.
Foreigners
In international commercial arbitration, foreigners are
allowed to be arbitrators. In domestic arbitration, there
is no bias unless the parties by agreement impose
restrictions as to the nationality of the arbitrator.
SEC. 37,RA 9285. Appointment of Foreign
Arbitrator. - The Construction Industry Arbitration
Commission (CIAC) shall promulgate rules to allow
for the appointment of a foreign arbitrator or
coarbitrator or chairman of a tribunal a person who
has not been previously accredited by CIAC:
Provided, That:
(a) the dispute is a construction dispute in
which one party is an international party
(b) the person to be appointed agreed to
abide by the arbitration rules and policies
of CIAC;
(c) he/she is either coarbitrator upon the
nomination of the international party; or
he/she is the common choice of the two
CIAC-accredited arbitrators first appointed
one of whom was nominated by the
international party; and
(d) the foreign arbitrator shall be of different
nationality from the international party.
CHALLENGE AND DISQUALIFICATION
Special ADR Rules
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for Rule 1.11. Definition. - The following terms shall
have the following meanings:
xxx
b. "Appointing Authority" shall mean the person or
institution named in the arbitration agreement as the
appointing authority; or the regular arbitration
institution under whose rule 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 arbitrators
shall be made by the National President of the
Integrated Bar of the Philippines or his duly
authorized representative.
Xxx
RULE 7: CHALLENGE TO APPOINTMENT OF
ARBITRATOR
Rule 7.1. Who may challenge. - Any of the parties to
an arbitration may challenge an arbitrator.
Rule 7.2. When challenge may be raised in court. -
When an arbitrator is challenged before the arbitral
tribunal under the procedure agreed upon by the
parties or under the procedure provided for in Article
13 (2) of the Model Law and the challenge is not
successful, the aggrieved party may request the
Appointing Authority to rule on the challenge, and it
is only when such Appointing Authority fails or
refuses to act on the challenge within such period as
may be allowed under the applicable rule or in the
absence thereof, within thirty (30) days from receipt
of the request, that the aggrieved party may renew
the challenge in court.
Comments: In both domestic and international
commercial arbitration, the parties are given the
decision to decide on the procedure for challenging
an arbitrator. Without such agreement, the party
who intends to challenge is required to send a
written statement of the reasons for the challenge to
an arbitral tribunal. If the challenge is not successful,
you request the appointing authority to decide on the
said challenge.
The body that has the primary jurisdiction to
entertain on such challenge is with the arbitral
tribunal (as agreed upon by parties or by the Model
Law, as pursuant to Rule 7.2), not with the courts
just yet. You cannot automatically challenge the
qualification with regard appointment. You first go to
the tribunal, then to the Appointing Authority, then to
the court.
Rule 7.3. Venue. - The challenge shall be filed with
the Regional Trial Court (a) where the principal
place of business of any of the parties is located, (b)
if any of the parties are individuals, where those
42

individuals reside, or (c) in the National Capital
Region.
Rule 7.4. Grounds. - An arbitrator may be
challenged on any of the grounds for challenge
provided for in Republic Act No. 9285 and its
implementing rules, Republic Act No. 876 or the
Model Law. The nationality or professional
qualification of an arbitrator is not a ground to
challenge an arbitrator unless the parties have
specified in their arbitration agreement a nationality
and/or professional qualification for appointment as
arbitrator.
Comments: As discussed earlier, if the arbitrator is
cousins with one of the parties, then that is one of
the grounds to challenge.
Rule 7.5. Contents of the petition. - The petition shall
state the following:
a. The name/s of the arbitrator/s
challenged and his/their address;
b. The grounds for the challenge;
c. The facts showing that the ground for the
challenge has been expressly or impliedly
rejected by the challenged arbitrator/s; and
d. The facts showing that the Appointing
Authority failed or refused to act on the
challenge.
The court shall dismiss the petition motu proprio
unless it is clearly alleged therein that the Appointing
Authority charged with deciding the challenge, after
the resolution of the arbitral tribunal rejecting the
challenge is raised or contested before such
Appointing Authority, failed or refused to act on the
challenge within thirty (30) days from receipt of the
request or within such longer period as may apply or
as may have been agreed upon by the parties.
Comments: So if the procedure set forth in Rule 7.2
was not followed, then the court can motu propio
dismiss the petition.
Rule 7.6. Comment/Opposition. - The challenged
arbitrator or other parties may file a comment or
opposition within fifteen (15) days from service of
the petition.
Rule 7.7. Court action. - After hearing, the court shall
remove the challenged arbitrator if it finds merit in
the petition; otherwise, it shall dismiss the petition.
The court shall allow the challenged arbitrator who
subsequently agrees to accept the challenge to
withdraw as arbitrator.
The court shall accept the challenge and remove the
arbitrator in the following cases:
a. The party or parties who named and
appointed the challenged arbitrator agree
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to the challenge and withdraw the
appointment.
b. The other arbitrators in the arbitral
tribunal agree to the removal of the
challenged arbitrator; and
c. The challenged arbitrator fails or refuses
to submit his comment on the petition or
the brief of legal arguments as directed by
the court, or in such comment or legal brief,
he fails to object to his removal following
the challenge.
The court shall decide the challenge on the basis of
evidence submitted by the parties.
The court will decide the challenge on the basis of
the evidence submitted by the parties in the
following instances:
a. The other arbitrators in the arbitral
tribunal agree to the removal of the
challenged arbitrator; and
b. If the challenged arbitrator fails or
refuses to submit his comment on the
petition or the brief of legal arguments as
directed by the court, or in such comment
or brief of legal arguments, he fails to
object to his removal following the
challenge.
Rule 7.8. No motion for reconsideration, appeal or
certiorari. - Any order of the court resolving the
petition shall be immediately executory and shall not
be the subject of a motion for reconsideration,
appeal, or certiorari.
Rule 7.9. Reimbursement of expenses and
reasonable compensation to challenged arbitrator. -
Unless the bad faith of the challenged arbitrator is
established with reasonable certainty by concealing
or failing to disclose a ground for his disqualification,
the challenged arbitrator shall be entitled to
reimbursement of all reasonable expenses he may
have incurred in attending to the arbitration and to a
reasonable compensation for his work on the
arbitration. Such expenses include, but shall not be
limited to, transportation and hotel expenses, if any.
A reasonable compensation shall be paid to the
challenged arbitrator on the basis of the length of
time he has devoted to the arbitration and taking into
consideration his stature and reputation as an
arbitrator. The request for reimbursement of
expenses and for payment of a reasonable
compensation shall be filed in the same case and in
the court where the petition to replace the
challenged arbitrator was filed. The court, in
determining the amount of the award to the
challenged arbitrator, shall receive evidence of
expenses to be reimbursed, which may consist of air
tickets, hotel bills and expenses, and inland
transportation. The court shall direct the challenging
 ADDU LAW 3RD YEAR 2019

party to pay the amount of the award to the court for

the account of the challenged arbitrator, in default of The litigants here suffered injury on account of the
which the court may issue a writ of execution to award.
enforce the award.

Transcriber’s Note:
EQUAL RIGHTS OF PARTIES TO DESIGNATE THE Read the following cases, as they will be included in
ARBITRATORS the exam
The parties are entitled to choose an equal number of  Construction disputes
arbitrators, subject to the limitations provided in Art o Hutama case (GR#180540)
2045 of the Civil Code: o William Golangco Construction v. Ray
Burton (GR#163582)
Article 2045. Any clause giving one of the parties o Gammon Philippines v. Metro Rail
power to choose more arbitrators than the other is Transit (GR#144792)
void and of no effect.
 Review of arbitral awards
Additional arbitrators may be appointed under Section o Fruehauf case (GR#204197)
9 of the Arbitration Law, but the naming should be  Special ADR Rules
made in writing. The additional arbitrators must sit with o DENR v. United Planner’s Consultants
the original arbitrators during the hearing. (GR# 212081)
 Enforcement of foreign arbitral awards
A substitute arbitrator may also be named. o Tuna Processing v. Philippine King Ford
(GR# 185582)
Magellan Capital v. Zosa
The agreement for the composition of the arbitral
panel is invalid. The employee would never receive
justice in the arbitration proceeding from the panel
of arbitrators, because both companies representing
the same interest should be considered as one, and
can only be entitled to one arbitrator to represent
them in the arbitration proceedings.

The controversy should be settled in the arbitration

proceedings, in accordance with the employment
agreement, but under the panel of three arbitrators:
one arbitrator to represent the plaintiff, one to
represent both defendants, and one to be chosen by
Zosa and the said defendants.

Note: Read the full text.

LIABILITY FOR WRONG DECISIONS

There is no law prescribing liability of arbitrators, but
the arbitrator incurs liabilities if he does not discharge
the duties required of him. The liability would be
contractual in nature, because he is named as an
arbitrator in the arbitration agreement. He could then
be liable for damages arising from breach of contract.

CF Luzon Development Bank v. Association of

Luzon Development Bank Employees
The rule applicable to judges should, by analogy, be
applicable to arbitrators, since the latter act in a
quasi-judicial capacity and are deemed as
instrumentality of the government.

Santos v. Orlino
There can be civil liability for judicial error, if such
error was gross, patent, deliberate, malicious and
incurred with bad faith.

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ARBITRATION PROCEEDINGS
When is the Arbitral Tribunal deemed constituted?
It is deemed constituted when the sole arbitrator or
the third arbitrator who has been nominated has
accepted the nomination and a written communication
of said nomination and acceptance has been received
by the party making a request.
As a general rule, the number of members of the
arbitral tribunal depends upon the agreement between
the parties. It can be a sole arbitrator or there can also
be three or even five arbitrators, depending on the
agreement between the parties.
In the event that the parties failed to name the
arbitrator, what is the remedy?
The court will appoint the arbitrator. The court will
now become the appointing authority pursuant to Rule
7[Rule 6.1 is the correct provision] of the Special ADR
Rules of Court.
Place of Arbitration
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.
Again, the place of arbitration is the place agreed
upon by the parties to the arbitration agreement.
In International Commercial Arbitration, if the parties
have not designated the place where the arbitration is
to take place, the arbitral tribunal may determine the
place of arbitration, having regard to the circumstance
of the case including convenience of parties.
Take note, what is taken into account is the
convenience of parties if it is the arbitral tribunal who
will decide the place of arbitration.
With regard to the place of arbitration, what is
important is that if the arbitral tribunal chooses the
place of arbitration, the said place must have a
relevance to the contract and it should not impose any
undue hardship upon any one of the parties to the
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contract, specially in terms of attending the hearings or
presenting the witnesses.
In sum, in determining the place of arbitration, the
arbitral tribunal must take into account the following:
1. Convenience to the parties, and
2. Relevance of the place to the
contract.
Law of Procedure
So what will govern the law of procedure in the said
arbitration proceedings?
Rule 2.3. Rules governing arbitral
proceedings. - The parties are free to agree on the
procedure to be followed in the conduct of arbitral
proceedings. Failing such agreement, the arbitral
tribunal may conduct arbitration in the manner it
considers appropriate.
The law provides that in both domestic and
international arbitration, the parties may agree on the
application of the rules of procedure governing the
arbitration other than those set forth under Philippine
law.
In case of failure, it is the arbitral tribunal who will
decide the procedure in the manner it considers
appropriate.
Why are the parties given an option to decide the law
of procedure? Why is it that it is the parties who will
decide what procedure will govern the arbitration
proceedings?
Because of the Principle of Autonomy of Contracts.
It should be noted that the choice of Philippines as
the place or seat of arbitration means that the
arbitration itself is subject to Philippine Law.
So in both Domestic Arbitration and International
Commercial Arbitration, the seat of arbitration is in the
Philippines. If the seat of arbitration isthe Philippines,
so the law of procedure is subject to Philippine Law as
the Lex Arbitrii or Lex Loci Arbitrii.
So please take note that is the limitation imposed by
law. Although the parties are free to agree on what
procedure will govern their arbitration proceedings, the
governing procedure, it is subject to limitation or
qualification.
What is the limitation or qualification imposed by law?
The basic limitations and qualifications imposed by
law ensure that the basic requirements of due process
are satisfied.

So the agreement is subject to due process
requirement.
So when we speak of due process requirement vis a
vis the arbitration proceeding, what does it mean?
When you say due process as applied to arbitration
proceedings, it means that:
a. The party is given a chance to be
heard and to submit his evidence;
b. The tribunal must consider the
elements presented;
c. The tribunal must have something to
support its decision;
d. The evidence to support the decision
must be substantial (substantial evidence);
e. The decision be rendered on the
evidence presented or at least contained in
the record of the proceedings;
f. The decision must be rendered in
such a manner that the parties can know the
issues involved and the reasons for the
decisions rendered.
Please take note of due process in arbitration
procedure based on the case of Ang Tibay vs CIR69
Phil 635.
How about if it is international commercial
arbitration? What is the governing law on procedure?
Again, the general premise is that in both domestic
and international commercial arbitration, the place of
arbitration is the place agreed upon by the parties to
the arbitration agreement.
But if the seat of arbitration is the Philippines, it Is
subject to Philippine Law, and applying Lex Arbitrii or
Lex Loci Arbitrii.
Limitations
International Commercial Arbitration
The following are the limitations or qualifications
imposed under the Model Law in International
Commercial Arbitration:
1. The procedure for appointing
arbitrators is subject to the provisions
concerning the appointing of appointing
authority and specifying instances when the
appointing authority may designate an
arbitrator;
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2. The procedure for challenging an
arbitrator is subject to the provisions
authorizing the appointment of the appointing
authority to decide an unsuccessful challenge
to an arbitrator;
3. Those pertaining to the form and
content of the award;
4. Those pertaining to the correction or
interpretation of an award or making an
additional award;
5. Those pertaining to the procedure
for setting aside an award and the grounds for
setting aside an award;
6. Those pertaining to the procedure
for refusing enforcement of the award and
grounds for not enforcing the award.
But the general rule is that thelaw on procedure
depends upon the agreement of the parties.
Hearings before the Arbitrators
General Rule: There must be a hearing that should
be conducted.
Exception:When the arbitral tribunal may or may not
hold hearings for the presentation of evidence or for
oral arguments.
Exception to the exception: The parties agreed in
writing that no hearing shall be held and agreed to
submit their dispute to arbitration through other means
other than oral hearing.
What are “other means other than oral hearing”?
Through position papers. That will stand in lieu of oral
hearing.
What is the rule if it is domestic arbitration?
The rule is found under Sections 12 and 15 of the
Arbitration Law.
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.
At the close of the hearings, the arbitral tribunal shall
now inquire whether all the parties have proof or
witnesses to present. In the absence of any, they shall
declare the hearings closed, unless the parties prefer
to file their respective briefs.
If the parties decide to file their briefs, then the
hearings will close after the arbitral tribunal receivesthe
trial briefs of the said parties.
So in domestic arbitration, as a general rule, there is
a need for a hearing.
Please take note of Section 18 of the Arbitration Law:
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.
So here again, it is through position papers.
Can the arbitrators not attend the hearings? Instead,
they will delegate their authority in favor of others and
to receive the evidence of the parties? Is that allowed?
Under Sec. 14 of the Arbitration Law, arbitrators are
required to attend all the hearings and hear all the
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allegations and proofs of the parties. Their dutyis
personal and cannot be delegated.
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.
Take note also that they have the power to issue
subpoena. They have subpoena power.
Home Bankers Association vs CA
Although arbitrators have the power to issue
subpoena, the exercise of such power is without
prejudice to the right of a party to file a petition in
court to safeguard any matter which is the subject of
the dispute in arbitration.
So before the arbitrators, can the parties file a motion
to quash the subpoena?
You file a petition in court safeguard any matter which
is the subject of the dispute in arbitration.
Language of the Arbitration
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.
General Rule: The parties are free to agree on the
language or languages to be used in the arbitral
proceedings.
 International Arbitration - English
 Domestic Arbitration - English or
Filipino
A foreign arbitrator can be appointed by the parties
especially if it is before the CIAC.
Role of Arbitrators
 The function of the arbitrator is akin
to a judge. Thus, he should be impartial.
The rule of impartiality provides that they
are not allowed to play an active part in the
proceedings before them.
However, during the hearings conducted
before the arbitral tribunal, they are allowed to
ask clarificatory questions.
 The arbitrator is the sole judge of the
relevancy and the materiality of the evidence
offered.
Are the arbitrators bound by the Rules of Court, such
as the Parole Evidence Rule?
The arbitrators are not bound by the Revised Rules
of Court.
Barbers vs Laguio
They are like judges before them; they should be
accorded reasonable leeway in asking questions to
witnesses as may be esssential to elicit the relevant
facts and to bring out the truth; he may properly
intervene in the presentation of evidence to expedite
and prevent unnecessary waste of time.
So again, the arbitral tribunal is not bound to conform
to the Rules of Court, as provided under Sec. 15 of the
Arbitration Law.
Default of a Party
Under the Arbitration Law, there is no default of a
party. There are no default awards.
Why is that?
Because arbitration proceedings are not bound by
the Rules of Court.
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And the policy of the law when it comes to arbitration
is to settle the dispute as speedily as possible.
What are the rules?
 Domestic Arbitration - 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.
 International Commercial Arbitration
-
o If the claimant fails to
communicate his statement of claim,
then the arbitral tribunal shall
terminate the proceedings.
o If it is the respondent who
fails to file his answer, the duty of the
arbitral tribunal is to continue the
proceedings without treating such
failure as admission of the claimant’s
allegations.
o If any of the party fails to
appear at the hearing or to produce
documents, the arbitral tribunal shall
continue its proceedings and make
an award based on the evidence
before them.
So please take note, no default awards under
Arbitration Law inDomestic Arbitration as well as
International Commercial Arbitration.
Experts
What are the rules?
 The first rule is that, if it is
International Commercial Arbitration, the
arbitral tribunal may appoint experts to report
to it on specific issues that the arbitral tribunal
may deem appropriate;
Why is the arbitral tribunal allowed to name experts
who are like commissioners under Rule 32 of the Rules
of Court? What is the basis?
The basis for the appointment of experts is Art. 26 of
the Model Law.
Article 26. Expert appointed by arbitral tribunal
(1) Unless otherwise agreed by the parties, the
arbitral tribunal

(a) may appoint one or more experts to
report to it on specific issues to be
determined by the arbitral tribunal;
(b) may require a party to give the expert
any relevant information or to produce, or
to provide access to, any relevant
documents, goods or other property for his
inspection.
(2) Unless otherwise agreed by the parties, if a
party so requests or if the arbitral tribunal considers
it necessary, the expert shall, after delivery of his
written or oral report, participate in a hearing where
the parties have the opportunity to put questions to
him and to present expert witnesses in order to
testify on the points at issue.
 If it is Domestic Arbitration, it is also
allowed even if RA 9285 has not made Artile
26 of the Model Law apply to domestic
arbitration.
So this right of the parties to call an expert, what kind
of right is this?
It is related to the fundamental right of a party to be
able to present evidence by an expert appointed by the
arbitral tribunal.
Grant of Provisional Remedies
The rule is that before the arbitral tribunal, any party
to the arbitration agreement may ask for provisional
remedies.
How about before the court?
Under Rule 5, that is also allowed after the
constitution of the arbitral tribunal, the party to the
arbitration agreement may go to court and ask for the
implementation of provisional remedies.
Take note regarding the power of the arbitral tribunal
to grant provisional remedies. It can grant anytime
before rendering the award but this is without prejudice
to the right of the party to petition the court to take
measures necessary to safeguard or conserve the
matter, any subject matter, of the dispute.
Please take note of the grant of provisional remedies
before the arbitral tribunal and judicial before the courts
under Rule 5 of the Special ADR Rules of Court.
Just a review:
 Under the Rules, prior to the
constitution of the arbitral tribunal if it is not
incompatible with the arbitration agreement, a
party may apply for the issuance of
provisional remedies before the court.
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What do you file before the court?
A petition.
 The second rule is that after the
constitution of the arbitral tribunal and during
the arbitral proceedings, it is allowed before
the arbitral tribunal.
But if the request for the issuance of interim
measures or its modification and the arbitral
tribunal has no power to act or is unable to act
effectively, the petition may be filed before the
court.
Here, there is a judicial remedy if the arbitral tribunal
is unable to act on your request for the issuance of a
provisional remedy.
 Any party may request that the
provisional relief be granted against the
adverse party.
Can that provisional remedy requested by the party
to the arbitration agreement be enforced against a third
party? Is the provisional remedy or the writ enforceable
against a third party? Or is it exclusive against the
parties to the said agreement?
Under the law, the third person, the moment his
property is attached, he becomes a forced-Intervenor
in that case.
Aside from that, there is already that bond to secure
and protect the rights of the parties against whom the
said writ is being issued.
[Ma’am Guerzo: You research on that. Let’s answer
that next meeting.]
 There is a bond requirement.
Order granting provisional relief is conditioned
upon the provision of a security or any act or
omission specified in the said order.
 The order of the provisional relief
issued by the arbitral tribunal or by the court
shall be binding upon the parties to the said
arbitration agreement.
 A party who does not comply with
the order shall be liable for all damages
resulting from non-compliance including all
expenses and reasonable attorney’s fees,
paid in obtaining the order’s judicial
enforcement.
Arbitration as Practice of Law

So what are the rules?
Any individual who is not a member of the Philippine
Bar may represent any party in both international and
domestic arbitration.
If it is International Commercial Arbitration, under
Sec. 32 of RA 9285, a party may be represented by any
person of his choice.
If the representative is not a member of the Bar, he is
not authorized to appear as counsel in any Philippine
court or any quasi-judicial body and whether or not
such appearance is in relation to the arbitration in
which he appeared.
But the premise is that Arbitration is deemed a
practice of law.
Confidentiality of Arbitration Proceedings
General Rule: Arbitration proceedings including all
records, evidence and the arbitral award, shall be
considered confidential and shall not be published.
Exceptions:
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. 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.
Arbitral Award
How does the arbitral tribunal render an award?
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Under Art. 29 of the Model Law:
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.
Under the Arbitration Law, it does not state the rule
that a majority vote is required. The Arbitration Law is
silent on that matter.
But the rule is that:
 By majority vote, if the arbitral
tribunal consists of more than one arbitrator;
or
 The award can be rendered by the
sole arbitrator
Separate or Partial Final Awards
How about separate or final awards? Can the arbitral
tribunal render partial award or judgement?
The rule is that the Model Law and the Arbitration
Law is silent on that matter. So the presumption is that
it is allowed and the arbitral tribunal may render
separate awards since the purpose of arbitration is to
end the controversy.
The basis is Rule 36 of Rules of Court which applies
by analogy.
Section 5. Separate judgments. — When
more than one claim for relief is presented in an
action, the court, at any stage, upon a
determination of the issues material to a
particular claim and all counterclaims arising
out of the transaction or occurrence which is the
subject matter of the claim, may render a
separate judgment disposing of such claim. The
judgment shall terminate the action with respect to
the claim so disposed of and the action shall
proceed as to the remaining claims. In case a
separate judgment is rendered the court by order
may stay its enforcement until the rendition of a
subsequent judgment or judgments and may
prescribe such conditions as may be necessary to
secure the benefit thereof to the party in whose favor
the judgment is rendered.
 ADDU LAW 3RD YEAR 2019

Tamboan vs CA decide the case within 30 days after close of

365 SCRA 359 hearing.

Separate awards are analogous to judgments that Form of Award

are partial but final in nature because they put an
end to a particular matter or to some defined and The rule is that:
separate branch of a controversy.
 Domestic Arbitration
Scope of Relief Regarding Arbitral Award
1. It must be in writing, signed
Under the Arbitration Law, the arbitral tribunal may and acknowledged by a majority of
grant remedy or relief that they may deem just and the arbitrators.
equitable and within the scope of the agreement of the
parties but not limited to a specific performance of the (in writing, signed, and
contract. acknowledged)

Earlier we learned that the arbitrators, even if it is not  International Commercial Arbitration
found in the arbitration agreement, they can interpret to
put an end to the said controversy. 1. It shall be in writing and
signed by the arbitrators;
Please take note that as long as the award derives its 2. It shall state the reasons
essence from the contract and is based on a plausible upon which it is based;
interpretation of the contract, they can grant the said 3. It shall state its date and
remedy. place of arbitration or where the
award is deemed to have been
Finally, as a caveat, any limitation upon the remedial rendered.
power of an arbitrator, it must either be explicitly
contained or clearly incorporated in the said arbitration Grogun Inc. vs NAPOCOR
clause.
An award that is not verified by the sole arbitrator
General Rule: They decide only those matters that or by a majority of the arbitrators as required by Sec.
have been submitted to them, as provided under Sec. 20 is invalid.
20 of the Arbitration Law.
But take note that this case is not applicable to
Asset Privatization Trust vs CA arbitral awards rendered after effectivity of RA 9285 in
both Domestic and International Commercial
Arbitrators cannot resolve issues beyond the Arbitration.
scope of such submission agreement. The parties to
such agreement are bound by the arbitrator’s award, Under RA 9285, the requirement is that the award
only to the extent and in the matter prescribed by the shall be in writing and signed by a majority of the
contract only if the award is rendered in conformity arbitrators.
thereto.
What if the parties settled during the conduct of the
Time to Render Decision arbitration?

In civil cases, the judge is mandated to decide a The arbitral tribunal shall terminate the proceedings
particular action within 90 days. and if requested by the parties and not objected to by
the arbitral tribunal, there will be rendered a settlement
In arbitration, the rule is that: award.

 International Commercial Arbitration
- there is no time frame because the arbitral
tribunal is given considerable leeway when to
decide unless the parties provide a period
within which the arbitral tribunal should render
a decision
 Domestic Arbitration - it depends
upon the agreement of the parties and if there
is no agreement, the arbitral tribunal shall
The legal bases are Art. 30 of the Model Law and
Sec. 20 of the Arbitration Law.
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.

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(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.
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.
Please take note, amicable settlement in the form of
settlement award.
Law on the Merits
Can the arbitrator decide based on equity in
Domestic Arbitration?
Yes. Under Sec. 20 of the Arbitration Law:
“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.”
But you stick to the general rule, that you apply what
the law is and in the absence of applicable law, you
may apply equity. So basis is substantive law.
In one case, the SC ruled that:
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“In the absence of any agreement or statutory
limitation, the arbitrator may do justice as he sees fit,
applying his own sense of law and equity to the facts
as he finds them to be making the award reflecting the
spirit rather than the letter of the agreement, even
though the award exceeds the remedy requested by
the parties.”
How about in International Commercial Arbitration?
What is the rule?
 The first rule is that the applicable
law is based on the agreed law of the parties
which refers to the substantive law of the
State and not its Conflict Rule.
 In the absence of designation, then
the arbitral tribunal shall apply the national law
determined by the Conflicts of Laws Rules.
 The arbitral tribunal shall decide in
accordance with the terms of the contract,
taking into account the usages of trade
applicable to the transaction.
The choice of applicable law in International
Commercial Arbitration will be respected unless the
body of law chosen is:
1. Contrary to public policy of the
Philippines;
2. Contrary to the universally-accepted
principles of morality;
3. It is penal in character;
4. It is purely fiscal or administrative in
nature;
5. It would work undeniable injustice to
the citizens or residents of the Philippines;
6. It would work against the vital
interest of the national security of the
Philippines.
Confidentiality
Just a reiteration, the arbitration proceedings
including all records, evidence, as well as arbitral
award, is considered confidential subject to limitations:
1) when the parties consent, or
2) for the limited purpose of disclosing
to the court relevant documents, provided that
the same is pending before the said court.
Correction and Interpretation of Arbitral Award
January 29, 2019
G.R. It can be provided that the arbitration award or
agreement is non-appealable and executory
But take note cororaliy to this is Rule 19.7

Rule 19.7. No appeal or certiorari on the merits of an
arbitral award. - An agreement to refer a dispute to
arbitration shall mean that the arbitral award shall be
final and binding. Consequently, a party to an
arbitration is precluded from filing an appeal or a
petition for certiorari questioning the merits of an
arbitral award.
If the parties agree to submit their dispute to
arbitration, then the parties are not allowed to file an
appeal or a certiorari case to question the merits of the
same award.
1/29 FIRST PART MURRAY
So, regarding the GR that the arbitration award or
agreement is final, non-appealable and executory -
what is the legal basis?
Under the law, particularly the Civil Code:
Article 2044. Any stipulation that the arbitrators'
award or decision shall be final, is valid, without
prejudice to articles 2038, 2039, and 2040.
Take note, this is still subject to judicial review based
on the three articles:
Article 2038. A compromise in which there is
mistake, fraud, violence, intimidation, undue influence,
or falsity of documents, is subject to the provisions of
article 1330 of this Code.
However, one of parties cannot set up a mistake of
fact as against the other if the latter, by virtue of the
compromise, has withdrawn from a litigation already
commenced. (1817a)
Article 2039. When the parties compromise
generally on all differences which they might have with
each other, the discovery of documents referring to one
or more but not to all of the questions settled shall not
itself be a cause for annulment or rescission of the
compromise, unless said documents have been
concealed by one of the parties.
But the compromise may be annulled or rescinded if
it refers only to one thing to which one of the parties
has no right, as shown by the newly-discovered
documents. (n)
Article 2040. If after a litigation has been decided by
a final judgment, a compromise should be agreed
upon, either or both parties being unaware of the
existence of the final judgment, the compromise may
be rescinded.
Ignorance of a judgment which may be revoked or set
aside is not a valid ground for attacking a compromise.
The next limitation is found under Section 24 of the
Arbitration Law. It provides for the vacating of an award
- what award? Domestic arbitration award. Take note,
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pag-international, iba yun, model law ang gagamitin
mo.
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.
The additional grounds for vacating an award is
found under Rule 11.4
Rule 11.4. Grounds. - (A) To vacate an arbitral
award. - The arbitral award may be vacated on the
following grounds:
a. The arbitral award was procured through
corruption, fraud or other undue means;
b. There was evident partiality or corruption
in the arbitral tribunal or any of its members;
c. The arbitral tribunal was guilty of
misconduct or any form of misbehavior that
has materially prejudiced the rights of any
party such as refusing to postpone a hearing
upon sufficient cause shown or to hear
evidence pertinent and material to the
controversy;
d. One or more of the arbitrators was
disqualified to act as such under the law and

willfully refrained from disclosing such
disqualification; or
e. 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 them was not
made.
The award may also be vacated on any or all of the
following grounds:
a. The arbitration agreement did not exist,
or is invalid for any ground for the revocation
of a contract or is otherwise unenforceable; or
b. A party to arbitration is a minor or a
person judicially declared to be incompetent.
So again, please take note of Section 24 in relation
to Rule 11.4.
Under Section 25 on the other hand provides for the
grounds for correcting an arbitration. This is provided
under RA 876 in relation to Section 40 of RA 9285
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.
That is also reiterated under Rule 11.4. So if you are
asked what are the distinctions between Section 24
and 25?
So Section 24, it involves grounds which affect the
merits of the arbitral award so this is serious. As
distinguished under Section 25, hindi naman sya
ganun katrivial pero mga typographical error, basta di
naman naapektuhan ang merits ng arbitral award.
Please take note of the grounds in relation to Rule
11.4
Is a correction to vacate or arbitration domestic award
allowed under the arbitral tribunal?
You file a complaint for vacation of a domestic award
under the arbitral tribunal. True or false?
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False. If it is domestic arbitration, the arbitral tribunal
loses its jurisdiction. that is why you cannot file such
complaint. What then is the remedy?
File a complaint under RTC under Rule 11.
Rule 11.3. Venue. - The petition for confirmation,
correction/modification or vacation of a domestic
arbitral award may be filed with Regional Trial Court
having jurisdiction over the place in which one of the
parties is doing business, where any of the parties
reside or where arbitration proceedings were
conducted
How about if it is international commercial
arbitration?
Rule 12.3. Venue. - A petition to recognize and
enforce or set aside an arbitral award may, at the
option of the petitioner, be filed with the Regional Trial
Court: (a) where arbitration proceedings were
conducted; (b) where any of the assets to be attached
or levied upon is located; (c) where the act to be
enjoined will be or is being performed; (d) where any of
the parties to arbitration resides or has its place of
business; or (e) in the National Capital Judicial Region.
Okay, next, the judgement of the RTC either vacating
or modifying a domestic award is considered an order
or decision entered upon the award. Under Section 29
of the Arbitration Law there are two judgments
contemplated.
1. Judgment entered upon the award -
a judgment confirming, vacating, correcting or
modifying an award. It is considered as a
judgment because
2. It is considered as an order made in
a proceeding under RA 876. When you say
order, it includes order which determines a
specific aspect of the arbitration.
If it is considered as a judgment entered upon the
award, what are the effects? (review daw ng civprooo)
Under Rule 39, it is subject to EXECUTIOON.
The ground raised to vacate an arbitratral award is
that the arbitrator commited errors of facts or law or
errors of facts and law. Will the court entertain your
petition? The answer here is no. Because as provided
for under Rule 19.10
Rule 19.10. Rule on judicial review on arbitration in
the Philippines. - As a general rule, the court can only
vacate or set aside the decision of an arbitral tribunal
upon a clear showing that the award suffers from any
of the infirmities or grounds for vacating an arbitral
award under Section 24 of Republic Act No. 876 or
under Rule 34 of the Model Law in a domestic
arbitration, or for setting aside an award in an
 ADDU LAW 3RD YEAR 2019

international arbitration under Article 34 of the Model (2) An arbitral award may be set aside by the court
Law, or for such other grounds provided under these specified in article 6 only if:
Special Rules.
a) the party making the application
The court shall not set aside or vacate the award furnishes proof that:
of the arbitral tribunal merely on the ground that
the arbitral tribunal committed errors of fact, or of i. a party to the arbitration
law, or of fact and law, as the court cannot agreement referred to in article 7 was
substitute its judgment for that of the arbitral under some incapacity; or the said
tribunal. agreement is not valid under the law to
which the parties have subjected it or,
Take note, EXCLUSIVE KASI YUNG GROUNDS failing any indication thereon, under
SA 24 AND 25. the law of this State; or

What are your remedies if it is domestic award? ii. the party making the application
[to set aside or resist enforcement]
1. MR within 15 days from the was not given proper notice of the
receipt of a copy of the decision appointment of an arbitrator or of the
2. To file an appeal before the CA via arbitral proceedings or was otherwise
Petition for Review or Petition for unable to present his case; or
Certiorari from the receipt of a copy of the
decision or order or resolution...take note, iii. the award deals with a dispute not
this is ALTERNATIVE REMEDIES ONLY. contemplated by or not falling within
Why? the terms of the submission to
arbitration, or contains decisions on
matters beyond the scope of the
1/29 FIRST PART SINGANON submission to arbitration, provided
that, if the decisions on matters
Please read Rule 19.9 of the Special ADR Rules of submitted to arbitration can be
Court. separated from those not so
submitted, only that part of the award
Rule 19.9. Prohibited alternative remedies. - which contains decisions on matters
Where the remedies of appeal and certiorari are not submitted to arbitration may be set
specifically made available to a party under the aside; or
Special ADR Rules, recourse to one remedy shall
preclude recourse to the other. iv. the composition of the arbitral
tribunal or the arbitral procedure was
Awards in International Commercial Arbitration not in accordance with the agreement
of the parties, unless such agreement
There is Judicial Recourse, but you have to file that was in conflict with a provision of this
within 3 months after receipt of the award for the setting Law from which the parties cannot
aside of the award. That is found under Art. 34 of the derogate, or, failing such agreement,
Model Law. was not in accordance with this Law;
or
Article 34. Application for setting aside as
exclusive recourse against arbitral award b) the court finds that:

(3) An application for setting aside may not be i. the subject-matter of the
made after three months have elapsed from the date dispute is not capable of
on which the party making that application had settlementby arbitration under the
received the award or, if a request had been made law of this State; or
under article 33, from the date on which that request
had been disposed of by the arbitral tribunal. ii. the award is in conflict
with the public policy of this State.

Please take note of that in relation to Rule 12 of the

Special ADR Rules of Court.
What are the grounds to set aside or resist
enforcement? Judicial Review of Arbitral Awards

The rule is that judicial review is limited review only.

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Asset Privatization Trust vs CA
The courts will not review the findings of law and
fact contained in an award and will not undertake to
substitute its judgment for that of the arbitrators
since any other rule would make an award the
commencement and not the end of litigation.
You relate that also to Rule 19.10 of the Special ADR
Rules of Court, that the court will not substitute its
judgment for that of the arbitral tribunal.
When is judicial review available to correct an arbitral
tribunal?
We already know the grounds under Secs. 24 and
25.
The following are the leading cases:
Chung Fu vs CA
If the arbitrator failed to apply the terms and
conditions of the agreement which forms part of the
law applicable between the parties, thus committing
grave abuse of discretion.
Asset Privatization Trust vs CA
Where the arbitrators resolved the issue beyond
the scope of the submission agreement, thereby
committing grave abuse of discretion.
[Third,] If the arbitrators acted in manifest
disregard of the law.
[And lastly,] Where the voluntary arbitrator failed
to apply the terms and provisions of the agreement
which formed part of the applicable law between the
parties.
So those are some cases wherein the SC ruled that
the arbitral decision is subject to judicial review.
Carpio vs Sulu Resources
The SC enunciated why there is only limited or
restricted scope review.
Even if review by the CA of the CIAC decisions
included questions of fact and law,review of factual
findings were warranted only when such factual
findings were challenged to have been made with
grave abuse of discretion.
So again, there is only limited or restricted scope of
judicial review.
Enforcement of Philippine Arbitral Awards
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When we say Philippine Arbitral Awards, it refers to
Domestic Arbitral Awards as well as International
Commercial Awards.
Is an arbitral award required to be judicially confirmed
by the court in order to be enforceable?
Yes. Under Sec. 40 of RA 9285:
SEC. 40. Confirmation of Award. - The
confirmation of a domestic arbitral award shall be
governed by Section 23 of R.A. 876.
A domestic arbitral award when confirmed shall be
enforced in the same manner as final and executory
decisions of the Regional Trial Court.
The confirmation of a domestic award shall be
made by the regional trial court in accordance with
the Rules of Procedure to be promulgated by the
Supreme Court.
A CIAC arbitral award need not be confirmed by
the regional trial court to be executory as provided
under E.O. No. 1008.
Why is there a need for judicial confirmation?
Philippine arbitral awards require judicial
confirmationfor it to be enforceable. For enforceability
of the said award.
That is the general rule.
 Confirmation of Domestic Arbitral
Award - governed by Sec. 23 of the Arbitration
Law
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.
Take note also of Sec. 28 of the Arbitration Law:
“At any time within 1 month after the award is made,
any party to the controversy which was arbitrated may
apply to the court having jurisdiction for an order
confirming the award. Thereupon, the court must grant
such order, unless the award is vacated or modified.”
When to request confirmation before the court?

 Domestic Arbitration - at any time
after lapse of 30 days from receipt by the
petitioner of the arbitral award.
So you file a petition to confirm the said award.
Please take note of the time which is 30 days.
Is the other party to the arbitration agreement allowed
to file an opposition or a petition to vacate vis a vis the
petition to confirm? Is filing an opposition to the petition
to confirm arbitral award allowed?
No, and this is specifically found under the Special
ADR Rules of Court. The law provides that:
“The filing of a petition to confirm shall not authorize
the filing of a belated petition to vacate.”
So it is not allowed to file a petition to vacate the
domestic arbitral award.
So if you wish to file a petition to vacate the domestic
award, you do that within the period of 30 days
because upon the lapse of the 30-day period, there will
be a confirmation of the arbitral award.
After 30 days, you are no longer allowed to petition
the court to vacate the arbitral award because the
award has already become final.
Take note, petition to vacate may only be filed within
30 days after receipt; while petition to confirm may be
filed at any time after lapse of the 30-day periodfrom
receipt of the award if it is domestic arbitration.
SPECIAL ADR RULES OF COURT
Exclusions:
 The Special ADR Rules of Court do
not apply to court-annexed mediation which
shall be governed by issuances of the
Supreme Court. A.M. No. 11-1-6-SC-Philja
governs court-annexed mediation as well as
judicial dispute resolution.
 Special ADR Rules of Court does
not apply to the resolution or settlement of
labor disputes under the Labor Code.
As a review, emphasis on the Special ADR
Rules,what are the conditions for arbitration to
proceed?
 There is a need for a submission
agreement if you are to subject or submit your
present dispute to arbitration, and
 A valid and enforceable agreement if
you want to submit your future disputes to
arbitration.
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So absence of either one, parties cannot proceed to
arbitration.
Special features of the Special ADR Rules of Court:
1. Intrinsic value—To respect party
autonomy or freedom of the parties to make
their own arrangements in the resolution of
their dispute
2. Instrumental value— The law
recognizes that ADR, particularly arbitration
and mediation, are important means to
achieve a speedy and efficient resolution of
disputes, impartial justice, curve a litigious
culture, and to de-clog court dockets
3. There is a need for Judicial
Confirmation of the award to make it
enforceable — Judicial confirmation is
necessary for the enforceability of the said
arbitral award. All awards made by the
arbitrator or arbitral tribunal requires
confirmation by the court for it to be
enforceable.
What is the exception to this general rule?
Under EO No. 1008, a CIAC award need not be
confirmed by the RTC for it to be executory and
enforceable.
4. The Special ADR Rules of Court do
not govern the arbitration proceeding itself, as
the proceedings are subject to the agreement
between the parties to the arbitration
agreement.
5. The law and the Special ADR Rules
recognize that construction disputes shall be
governed by EO No. 1008 and it’s arbitration
rules.
6. Construction disputes filed in court
shall be dismissed and referred to CIAC for
arbitration. Exclusive jurisdiction belongs to
CIAC involving construction disputes.
7. The Revised Rules of Court may not
be resorted to even in a suppletory capacity.
Under Rule 22.1:
Rule 22.1. Applicability of Rules of Court. - The
provisions of the Rules of Court that are applicable
to the proceedings enumerated in Rule 1.1 of these
Special ADR Rules have either been included and
incorporated in these Special ADR Rules or
specifically referred to herein.

In connection with the above proceedings, the
Rules of Evidence shall be liberally construed to
achieve the objectives of the Special ADR Rules.
There is no longer a need to state that the
Revised Rules of Court apply suppletorily because
the Rules of Court have already been incorporated
in the Special ADR Rules of Court.
8. The Special ADR Rules of Court
now resolves conflicting procedural remedies
of appeal with the confirmation or vacation of
award.
Please take note of Rule 43 Sec. 1 of your Rules
of Court, which refers to Appeals before the Court
of Appeals from an award made by any Quasi-
Judicial Agency in the exercise of its quasi-judicial
function.
So the CIAC is included as a quasi-judicial
agency. So from the CIAC, if you want to appeal,
you go to the CA under Rule 43 Sec. 1.
9. All actions under the Special ADR
Rules of Court are classified as Special
Proceedings.
10. A large number of judicial
intervention are by Summary Proceeding.
If you notice under the Rules, there issummary
proceeding. When you say summary proceeding,
it requires personal service and filing of a petition
or by a courier service.
Since it is a summary hearing, there is still a
hearing but the hearing is conducted in one day
only and for purposes of clarifying the facts.
Further, the court is required to resolve the
matter within a period of 30 days from the date of
the hearing.
11. The arbitration rule on Competence-
Competence is now in force.
That if you are questioning the jurisdiction of the
arbitral tribunal, the arbitral tribunal is given the
first opportunity to rule on whether or not it has
jurisdiction over the matter arbitrated.
12. Appeal to the Supreme Court under
the Special ADR Rules of Court is
discretionary only.
Under Rule 19.36:
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Rule 19.36. Review discretionary. - A review by
the Supreme Court is not a matter of right, but of
sound judicial discretion, which will be granted
only for serious and compelling reasons
resulting in grave prejudice to the aggrieved
party. The following, while neither controlling nor
fully measuring the court's discretion, indicate the
serious and compelling, and necessarily, restrictive
nature of the grounds that will warrant the exercise
of the Supreme Court’s discretionary powers, when
the Court of Appeals:
a. Failed to apply the applicable standard or test
for judicial review prescribed in these Special ADR
Rules in arriving at its decision resulting in
substantial prejudice to the aggrieved party;
b. Erred in upholding a final order or decision
despite the lack of jurisdiction of the court that
rendered such final order or decision;
c. Failed to apply any provision, principle, policy or
rule contained in these Special ADR Rules resulting
in substantial prejudice to the aggrieved party; and
d. Committed an error so egregious and harmful
to a party as to amount to an undeniable excess of
jurisdiction.
The mere fact that the petitioner disagrees with the
Court of Appeals’ determination of questions of fact,
of law or both questions of fact and law, shall not
warrant the exercise of the Supreme Court’s
discretionary power. The error imputed to the Court
of Appeals must be grounded upon any of the above
prescribed grounds for review or be closely
analogous thereto.
A mere general allegation that the Court of
Appeals has committed serious and substantial
error or that it has acted with grave abuse of
discretion resulting in substantial prejudice to the
petitioner without indicating with specificity the
nature of such error or abuse of discretion and the
serious prejudice suffered by the petitioner on
account thereof, shall constitute sufficient ground for
the Supreme Court to dismiss outright the petition.
***END***
“There is no gain without struggle”
-Martin Luther King Jr.
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