Litigation and enforcement in the

Philippines: overview
by Simeon V Marcelo, Cruz, Marcelo, & Tenefrancia
A Q&A guide to dispute resolution law in the Philippines.
The country-specific Q&A gives a structured overview of the key practical issues
concerning dispute resolution in this jurisdiction, including court procedures; fees
and funding; interim remedies (including attachment orders); disclosure; expert
evidence; appeals; class actions; enforcement; cross-border issues; the use of ADR;
and any reform proposals.
To compare answers across multiple jurisdictions visit the Litigation and
enforcement Country Q&A tool.
This Q&A is part of the global guide to dispute resolution. For a full list of
jurisdictional Q&As visit www.practicallaw.com/dispute-guide.

Main dispute resolution methods

1. What are the main dispute resolution methods used in your jurisdiction to settle large
commercial disputes?

Dispute resolution in the Philippines is primarily carried out through court litigation,
which is adversarial in character. For commercial disputes, there are two dispute
resolution methods available to parties (section 3, Republic Act 9285):
 Court litigation.
 Alternative dispute resolution, which involves arbitration, court-
annexed/referred mediation, early neutral evaluation, mediation-arbitration and
mini-trial.

Court litigation
Limitation periods
2. What limitation periods apply to bringing a claim and what triggers a limitation period?

Civil
Depending on the cause of action involved, Philippine law provides for different
limitation periods for filing a civil claim. For example:
 Civil claims over immovable property. The limitation period is 30 years
(Article 1141, Civil Code). However, a parcel of land that is already registered
under the Torrens system cannot be acquired by acquisitive prescription or
adverse possession (Supapo v De Jesus, et al, GR No. 198356, 20 April 2015).
 Civil claims over movable property. The limitation period is eight years
(Article 1140, Civil Code).
 Claims relating to a real estate mortgage. The limitation period is ten years
from the time possession is lost (Article 1142, Civil Code).
For contractual claims, the following limitation periods apply:
 Claims relating to a real estate mortgage. The limitation period is ten years
(Article 1142, Civil Code). The right of action accrues when the mortgagor
defaults in the payment of his obligation to the mortgagee.
 Civil claims based on oral contracts and quasi-contracts. The limitation
period is six years (Article 1145, Civil Code).
Additionally, claims based on injury to the rights of the claimant or quasi-delict must
be filed within four years (Article 1146, Civil Code). These limitation periods are
triggered from the time the right of action accrues.
In all other actions whose periods are not fixed by law, the civil claim must be filed
within five years from the time the right of action accrues (Article 1149, Civil Code).
The statutory limitation periods provided for in the Civil Code can be suspended on
filing the claim in court, on a written extrajudicial demand by the creditors or when
there is any written acknowledgment of the debt by the debtor (Article 1155, Civil
Code). Additionally, Article 1306 of the Civil Code provides that parties to a contract
can establish stipulations, clauses, terms and conditions, provided that they are not
contrary to law, morals, good customs, public order or public policy. Article 1306 is
silent regarding the suspension of the limitation periods. Therefore, it can be inferred
that parties can agree on a suspension of a limitation period. By agreeing to
suspend limitation periods, the parties effectively waive the time limits set by the law.

Criminal
For criminal cases, the prescriptive period for the prosecution of a crime or violation
of city ordinances and special laws depend on the duration of the penalty provided
by the law. For example, crimes punishable by:
 Reclusion perpetua (that is, imprisonment from 20 years and one day to 30
years) or reclusion temporal (that is, imprisonment of 12 years and one day to 20
years) prescribe in 20 years.
 Other afflictive penalties (that is, imprisonment from six years and one day to
12 years) prescribe in 15 years.
 Correctional penalty prescribe in ten years (with the exception of those
punishable by arresto mayor, that is, imprisonment from one month and one day
to six months, which prescribe in five years).
The crime of libel or other similar offences prescribe in one year, while the crime of
oral defamation and slander by deed prescribe in six months. Light offences
punishable with imprisonment from one day to 30 days prescribe in two months.
When the penalty fixed by law is a compound one, the highest applicable penalty will
govern the prescriptive period (Article 90, Revised Penal Code).
However, violations subject to special laws and ordinances have the following
prescriptive periods (section 1, Act 3326):
 Offences punished only by a fine or by imprisonment for not more than one
month, or both: one year.
 Offences punished by imprisonment for more than one month, but less than
two years: four years.
 Offences punished by imprisonment for two years or more, but less than six
years: eight years.
 Any other offence punished by imprisonment for six years or more: 12 years.
 Violations penalised by municipal ordinances: two months.
However, there are special laws that provide for specific prescriptive periods for the
crimes they penalised.
Notably, if the crime is punishable under the Revised Penal Code, the term of
prescription will not run when the offender is outside of the Philippines (Article 91,
Revised Penal Code). However, if the crime is punishable by special penal laws, the
absence of the accused in the Philippines does not interrupt the running of the
prescriptive period (Romualdez v Marcelo, G.R. Nos. 165510-33, 28 July 2006).

Court structure
3. What is the structure of the court where large commercial disputes are usually brought? Are
certain types of dispute allocated to particular divisions of this court?
The hierarchical structure of the Philippine judicial system is as follows:
 Supreme Court.
 Court of Appeals and Court of Tax Appeals (an institutionalised tax tribunal).
 Regional Trial Courts (RTCs).
 Municipal Trial Courts (MTCs), Metropolitan Trial Courts (MeTCs) and
Municipal Circuit Trial Courts (MCTCs).
Additionally, the Philippines has an anti-graft collegial court called
the Sandiganbayan.
Under the Judiciary Reorganisation Act of 1980 (Batas Pambansa Blg. 129) (BP
129), exclusive original jurisdiction depends on the subject matter, and the nature or
amount, or both, of the claim. For example, the RTCs have exclusive original
jurisdiction over all civil actions, among others (section 33, BP 129):
 Where the subject of litigation is incapable of pecuniary estimation.
 Actions that involve title to, or possession of, real property, or any interest
therein, where the assessed value of the property exceeds PHP50,000.
 All actions in the admiralty and maritime jurisdiction.
 Probate matters, where the demand or claim, or gross estate, respectively,
exceeds PHP200,000 if within Metro Manila, and PHP100,000 if outside of Metro
Manila.
The MTCs, MeTCs and MCTCs have exclusive original jurisdiction over (section 33,
BP 129):
 Civil actions and probate proceedings where the value of the property,
interest in the property or the estate falls below the threshold amounts for cases
over which the RTCs have exclusive original jurisdiction.
 All cases of forcible entry and unlawful detainer.
 Cadastral or land registration cases covering lots where there is no
controversy or opposition, or if contested lots are involved, where the value does
not exceed PHP100,000.
 In the case of the absence of all RTC judges in a province or city, petitions for
a writ of habeas corpus or applications for bail in criminal cases.
Cases generally originate in the RTCs, MTCs, MeTCs and MCTCs. Regarding
appellate jurisdiction, the RTCs have limited appellate jurisdiction over all cases
decided by the MTCs, MeTCs and MCTCs within the RTCs' territorial jurisdiction.
Additionally, the Court of Appeals has appellate jurisdiction over all cases emanating
from the RTCs. However, if only questions of law are involved, the subject judgment
or final order must be appealed directly to the Supreme Court (section 9, BP 129).
The Supreme Court exercises appellate jurisdiction over the decisions of the Court
of Appeals and the Court of Tax Appeals.
The Court of Tax Appeals is dedicated to resolving tax disputes and controversies
between the state and taxpayers, including civil and criminal cases for violation of
the National Internal Revenue Code. Special courts in the RTCs are designated by
the Supreme Court to hear and try commercial, family-related and "heinous" crime
cases. The lower courts (the RTCs, MTCs, MeTCs and MCTCs) have one sitting
judge per branch in the different judicial regions of the Philippines. The Court of
Appeals currently has 23 divisions while the Court of Tax Appeals has three
divisions, with three justices sitting in each division (section 1, Rule 1, Internal Rules
of the Court of Appeals; section 2, Rule 2, Revised Rules of the Court of Tax
Appeals).
Finally, the Supreme Court is composed of one Chief Justice and 14 Associate
Justices, who are divided into three divisions. However, certain cases that are
exceptionally significant are decided by the Supreme Court en banc (that is, by all
the Justices of the Supreme Court) (Section 4(1), 1987 Philippine Constitution).
The answers to the following questions relate to procedures that apply in all
courts in the Philippines.

Rights of audience
4. Which types of lawyers have rights of audience to conduct cases in courts where large
commercial disputes are usually brought? What requirements must they meet? Can foreign
lawyers conduct cases in these courts?

Rights of audience/requirements
Any person duly admitted as a member of the bar and who is in good and regular
standing is entitled to practice law (section 1, Rule 138, Rules of Court). To be
admitted to the bar, the applicant must be:
 A citizen of the Philippines.
 At least 21 years of age.
 Of good moral character. This is proven by the applicant producing to the
Supreme Court satisfactory evidence of good moral character, and that no
charges against him involving moral turpitude, have been filed or are pending in
any court in the Philippines (section 2, Rule 138, Rules of Court).
 A resident of the Philippines.
The applicant must also have graduated with a Bachelor of Laws and passed the
bar examinations given by the Supreme Court.

Foreign lawyers
Section 14, Article XII of the 1987 Philippine Constitution provides that the practice
of all professions in the Philippines must be limited to Filipino citizens (except in
cases prescribed by law). As a result, foreign lawyers cannot engage in the practice
of law in the Philippines, and must be represented by a member of the Philippine
Bar in all matters connected with such practice.

Fees and funding

5. What legal fee structures can be used? Are fees fixed by law?

Generally, the amount of attorneys' fees due is provided for in the retainer
agreement, which is conclusive relating to the lawyer's compensation. In the
absence of a fee agreement, the amount of attorneys' fees is fixed on the basis
of quantum meruit (that is, the reasonable worth of the attorney's services). If the
attorney's fees are claimed to be excessive, the courts can determine what is
reasonable under the circumstances. However, a lawyer must not be allowed to
recover more than what is reasonable (section 24, Rule 138, Rules of Court).
Rule 20.1, Canon 20 of the Code of Professional Responsibility lists the following
factors that must be observed by a lawyer when determining his fees:
 The time spent and extent of services rendered or required.
 The novelty and difficulty of the questions involved.
 The importance of the subject matter.
 The skill demanded.
 The probability of losing other employment as a result of the acceptance of
the proffered case.
 The customary charges for similar services and the schedule of fees of the
Integrated Bar of the Philippines (IBP) Chapter to which he belongs.
 The amount involved in the controversy and the benefits resulting to the client
from the service.
 The contingency or certainty of compensation.
 The character of the employment, whether occasional or established.
 The professional standing of the lawyer.
Lawyers are paid by hourly rate or by contingent fee or a combination of both
depending on the arrangement with the client. Contingency fee arrangements
between lawyers and their clients are allowed, subject to the supervision of the
court, especially in cases where the arrangement was obtained by the lawyer
through undue influence, fraud or imposition, or if the contingent fee agreed upon is
clearly excessive (Tanhueco v De Dumo, A.M. No. 1437, 25 April 1989).
To safeguard the administration of justice, champertous contracts or any agreement
by a lawyer to bear the costs of litigation or to receive his fee as a percentage of the
proceeds of the judgment is not permitted. Canon 42 of the Canons of Professional
Ethics expressly provides that "a lawyer may not properly agree with a client that the
lawyer will pay or bear the expense of litigation; he may in good faith advance
expenses as a matter of convenience, but subject to reimbursement".
6. How is litigation usually funded? Can third parties fund it? Is insurance available for litigation
costs?

Funding
The parties to a suit fund the litigation in the Philippines. Third-party funding is not a
common practice and the Canons of Professional Ethics does not authorise such an
arrangement.
However, third-party funding is arguably legal if there is an assignment of credit to
be collected through legal action. The assignment of credit is an agreement in which
the creditor (the assignor), by a legal cause, such as sale, dation in payment,
exchange or donation, and without the need of the consent of the debtor, transfers
his credit and its accessory rights to a third party (the assignee), who acquires the
power to enforce it to the same extent as the assignor could have enforced it against
the debtor (Article 1624, Civil Code).

Insurance
Theoretically, insurance is available to cover all or part of a party's legal costs but
this is currently not a practice in the Philippines. However, the Rules of Court
provide for certain circumstances when the legal costs constitute a lien on the
judgment (for example, in the case of indigents, whenever the judgment rendered is
favourable to them).

Court proceedings
Confidentiality
7. Are court proceedings confidential or public? If public, are the proceedings or any information
kept confidential in certain circumstances?

Court hearings are held in public, except in certain circumstances when the court
directs otherwise. For example, cases involving children in conflict with the law
under AM No. 02-1-18-SC, that is, those who are between 15 to 18 years old at the
time of the commission of the offence.
Regarding court documents, the Constitution recognises the right of the people to
information on matters of public concern and permits access to official records or
decisions, subject to limitations provided by law (section 7, Article III, 1987
Philippine Constitution). In Hilado v Reyes, G.R. No. 163155, 21 July 2006, the
Supreme Court held that there is a presumption of public access when the following
conditions are met:
 Court documents sought to be examined are submitted to a court of
competent jurisdiction.
 The documents were submitted in the course of adjudicatory proceedings.
 The documents are relevant to an adjudication.
The exceptions to this rule include:
 Cases involving violence against women and children punishable under the
Republic Act (RA) No. 9262.
 Family cases under RA No. 8369.
 Raffle, deliberations and minutes of Supreme Court cases under the Supreme
Court Internal Rules of Procedure.
 Adoption proceedings under RA 8552.
In these cases, the records and documents are deemed confidential.
Under the Rule on the Examination of a Child Witness, SC Adm. Memo. No. 00-4-
70, only the following are allowed to attend a competency examination of a child:
 The judge and necessary court personnel.
 The counsel for the parties.
 The litigation friend (guardian ad litem).
 One or more support persons for the child.
 The defendant, unless the court determines that competence can be fully
evaluated in his absence (section 6(c) , SC Adm. Memo. No. 00-4-70).
Similarly, when a child testifies, the court can order the exclusion from the courtroom
of all persons who do not have a direct interest in the case, including members of
the press (section 23, SC Adm. Memo. No. 00-4-70).

Pre-action conduct
8. Does the court impose any rules on the parties in relation to pre-action conduct? If yes, are
there penalties for failing to comply?

As a general rule, persons who reside in the same city or municipality who are
involved in a dispute must undergo conciliation proceedings before the council of the
smallest unit of the local government (the barangay) (section 408, Republic Act
7160). Failure to undergo barangay conciliation proceedings renders an action
dismissible outright on the ground that there was no compliance with a condition
precedent for filing a claim (section 1, Rule 16, Rules of Court).
Exceptions to this general rule include:
 When one party is the government or any subdivision or instrument of the
government.
 When one party is a public officer and the dispute relates to the performance
of his official functions.
 Offences punishable by imprisonment exceeding one year or a fine exceeding
PHP5,000.
 Offences where there is no private offended party.
 Where the dispute relates to real properties located in different cities or
municipalities (section 408, RA 7160).
 The accused is under detention.
 A person has otherwise been deprived of liberty calling for habeas
corpus proceedings.
 Actions coupled with provisional remedies.
 Actions barred by the statute of limitations (section 412(b), RA 7160).
In actions between members of the same family, earnest efforts toward a
compromise must have been made before bringing a case before the court to
prevent the case being dismissed (Article 151, Family Code).

Main stages
9. What are the main stages of typical court proceedings?

Starting proceedings
Civil proceedings are commenced before the court that has jurisdiction over the
subject matter of the action by the filing of a complaint or petition. Jurisdiction is
defined as the power and authority of a court to hear and decide a case. A court's
jurisdiction over the subject matter of the action is conferred only by the Constitution
or by statute. The nature and subject matter of an action are determined by the
material allegations of the complaint or petition in relation to the law involved and the
character of the reliefs applied for, whether or not the claimant/petitioner is entitled
to any or all of such reliefs. These material allegations also determine which court or
agency (with quasi-judicial power) of the government has jurisdiction over the claim.
As jurisdiction is a matter of substantive law, the established rule is that the statute
in force at the time of the commencement of the action determines the jurisdiction of
the court (Bank of the Philippine Island v Hong, G.R. No. 161771, 15 February
2012).
All criminal actions are commenced by a Criminal Complaint or Information (known
in some jurisdictions as the Criminal Indictment), which is prosecuted under the
direction and control of the public prosecutor. However, in Municipal Trial Courts or
Municipal Circuit Trial Courts, when the assigned public prosecutor is not available,
the offended party, any peace officer, or public officer charged with the enforcement
of the law violated can prosecute the case. This authority ceases on actual
intervention of the public prosecutor or on elevation of the case to the Regional Trial
Court (section 5, Rule 110, Rules of Court).

Notice to the defendant and defence

For civil cases, on filing of the complaint or petition, the court will issue summons
directed to the defendant/respondent notifying him of the action brought against him,
which must be served together with the complaint or petition to the defendant (Rule
14, Rules of Court). Where the defendant/respondent is a domestic corporation, the
summons and the complaint/petition must be served on either the:
 President.
 Managing partner.
 General manager.
 Corporate secretary.
 Treasurer.
 In-house counsel.
However, in cases where personal service cannot be effected, service can be
effected through substituted service (section 11, Rule 14, Rules of Court).
For criminal cases, jurisdiction over the person of the accused can be acquired
either through:
 Compulsory process (for example, a warrant of arrest).
 Voluntary appearance (for example, when the accused surrenders to the
police or to the court).
It is only when the court has already acquired jurisdiction over his person that an
accused can invoke the processes of the court. Therefore, an accused must first be
placed in the custody of the law before the court can validly act on his petition for
judicial reliefs (Miranda v Tuliao, G.R. No.158763, 31 March 2006).

Subsequent stages
A proceeding for a civil claim is initiated by filing of a complaint or petition in the
court that has jurisdiction over the civil action (see above, Starting proceedings). A
defendant/respondent is then given 15 days to file an answer under Rule 11 or a
motion to dismiss under Rule 16 of the Rules of Court. The claimant/petitioner can
then file a reply to address new issues brought up in the answer. However, this is
not mandatory. Upon motion of the defendant/respondent, the filing of a rejoinder is
allowed, subject to the discretion of the court. If a motion to dismiss is filed, the court
allows the claimant/petitioner to file his opposition or comment within the given time.
Thereafter, upon submission of the last pleading (reply/rejoinder) and assuming that
a motion to dismiss was not filed or, if filed, was denied, and an answer is later on
filed, the claimant/petitioner must file a motion to set the case for a mandatory pre-
trial conference, according to Rule 18 of the Rules of Court.
A pre-trial conference is generally held for (section 2, Rule 18, Rules of Court):
 The possibility of amicable settlement.
 Simplification of issues.
 The necessity or possibility of amendment of pleadings.
 The possibility of obtaining stipulation of facts and documents.
 Limitation of the number of witnesses.
 Advisability of preliminary reference of issues to a commissioner.
 Propriety of rendering judgment on the pleadings, summary judgment, or
dismissal of the action.
 The advisability of suspending the proceedings.
 Other matters that may aid in the prompt disposition of the action.
Under the Judicial Affidavit Rule (AM No. 12-8-8-SC), all judicial affidavits of the
witnesses of the parties and all documentary or object evidence must be filed with
the court and served on the other parties no later than five days before the
scheduled date of pre-trial or preliminary conference. Upon the termination of the
pre-trial conference, the court will issue a pre-trial order. In cases where the action
will proceed to trial, the pre-trial order will define and limit the issues to be tried, and
will control the subsequent course of the proceedings. Under the Consolidated and
Revised Guidelines to Implement the Expanded Coverage of Court-Annexed
Mediation (CAM) and Judicial Dispute Resolution (JDR) (AM No. 11-1-6-SC-
PHILJA), there are certain cases which must be brought to mediation before
commencing trial. Under section 15(1) of the 1987 Philippine Constitution, the
following time periods apply when deciding cases:
 Supreme Court: within 24 months.
 Lower collegiate courts: within 12 months.
 Trial courts: within 90 days from initial hearing.
However, these periods are rarely observed due to the disproportion between the
number of courts and the huge number of pending cases.
Unless the court for special reasons provides otherwise, the trial will be limited to the
issues stated in the pre-trial order and will proceed in the following way:
 The claimant must produce evidence in support of the complaint or petition.
 The defendant/respondent must then produce evidence in support of the
defences, counterclaims, cross-claims and third-party complaints.
 The third party defendant, if any, must produce evidence of his defences,
counterclaims, cross-claims and fourth-party complaints.
 The fourth party, and so forth, if any, must produce evidence of the material
facts pleaded by them.
 The parties against whom any counterclaim or cross-claim has been pleaded
must produce evidence in support of their defences, in the order to be prescribed
by the court.
The parties can then respectively produce rebutting evidence only, unless the court,
for good reasons and in the furtherance of justice, permits them to produce evidence
for their original case. Upon admission of the evidence, the case is deemed
submitted for decision, unless the court directs the parties to argue orally or to
submit their respective memoranda or any further pleadings (section 5, Rule 30,
Rules of Court).
For criminal cases, the court where the Criminal Complaint or Information was filed
or assigned for trial must conduct an arraignment in open court by furnishing the
accused with a copy of the Criminal Complaint or Information, reading it in the
language or dialect known to him, and asking him whether he pleads guilty or not
guilty. This applies to criminal cases heard by the following courts:
 Sandiganbayan (the special anti-graft court).
 Regional Trial Court.
 Metropolitan Trial Court.
 Municipal Trial Court in Cities.
 Municipal Trial Court.
 Municipal Circuit Trial Court.
When the accused is under preventive detention, his case will be raffled and its
record transmitted to the judge to whom the case was raffled within three days from
the filing of the information or complaint. The accused will be arraigned within ten
days from the date of the raffle (section 1 (e), Rule 16, Rules of Court). Otherwise,
the arraignment will be held within 30 days from the date the court acquires
jurisdiction over the person of the accused (section 1 (g), Rule 16, Rules of Court).
At the trial, the prosecution can call witnesses other than those named in the
Criminal Complaint or Information. The accused must be present at the arraignment
and must personally enter his plea. Both arraignment and plea will be made of
record, but failure to do so will not affect the validity of the proceedings. When the
accused refuses to plead or makes a conditional plea, a plea of not guilty will be
entered on his behalf (section 1, Rule 116, Rules of Court).
Within 30 days from the date the court acquires jurisdiction over the person of the
accused, unless a shorter period is provided for in special laws or circulars of the
Supreme Court, it must issue an order scheduling a pre-trial conference to consider
the following (section 1, Rule 118 of the Rules of Court):
 Plea bargaining.
 Stipulation of facts.
 Marking for identification of evidence of the parties.
 Waiver of objections to admissibility of evidence.
 Modification of the order of trial if the accused admits the charge but
interposes a lawful defence.
 Other matters that will promote a fair and expeditious trial of the criminal and
civil aspects of the case.
The trial will commence within 30 days from receipt of the pre-trial order (section 1,
Rule 119, Rules of Court). It will proceed in the following order (section 11, Rule
119, Rules of Court):
 The prosecution will present evidence to prove the charge and, in the proper
case, the civil liability.
 The accused can present evidence to prove his defences and damages, if
any, arising from the issuance of a provisional remedy in the case.
 The prosecution and the defence can, respectively, present rebuttal and sur-
rebuttal evidence unless the court, in furtherance of justice, allows the
presentation of additional evidence bearing upon the main issue.
 On admission of the evidence of the parties, the case is deemed submitted for
decision unless the court directs them to argue orally or to submit written
memoranda.
 When the accused admits the act or omission charged in the Criminal
Complaint or Information but interposes a lawful defence, the order of trial can be
reversed.
Under the Speedy Trial Act (RA No. 8493), trial courts are mandated to arraign the
accused within 30 days from the filing of the criminal complaint/information in court
and to complete the trial within a period of 180 days from the first day of trial.
However, as previously stated, due to the heavy caseload of the courts and their
insufficient number, the courts are usually unable to comply with the prescribed
periods.

Interim remedies
10. What actions can a party bring for a case to be dismissed before a full trial? On what grounds
must such a claim be brought? What is the applicable procedure?

A party can file a motion to dismiss before filing the answer to the civil complaint or
petition or pleading asserting a claim on the following grounds (section 1, Rule 16,
Rules of Court):
 The court has no jurisdiction over the person of the defending party.
 The court has no jurisdiction over the subject matter of the claim.
 The venue is improperly laid.
 The claimant has no legal capacity to sue.
 There is another action pending between the same parties for the same
cause.
 The cause of action is barred by a prior judgment or by the statute of
limitations.
 The pleading asserting the claim states no cause of action.
 The claim or demand set forth in the claimant's pleading has been paid,
waived, abandoned, or otherwise extinguished.
 The claim on which the action is founded is enforceable under the provisions
of the statute of frauds.
 There was no compliance with a condition precedent for filing the claim.
Similarly, a violation of the rule against forum shopping is also a ground for the
dismissal of the cases filed by the offending party.
Further, if for no justifiable cause, the claimant/petitioner fails to appear on the date
of the presentation of his evidence in chief on the complaint or petition, or to
prosecute his action for an unreasonable length of time, or to comply with the Rules
of Court or any order of the court, the complaint or petition can be dismissed upon
motion of the defendant/respondent or upon the court's own motion, without
prejudice to the right of the defendant to prosecute his counterclaim in the same or
in a separate action. This dismissal will have the effect of adjudication upon the
merits, unless otherwise declared by the court (section 3, Rule 17, Rules of Court).
In cases where an answer fails to tender an issue, or otherwise admits the material
allegations of the adverse party's pleading, the court can, on motion of that party,
direct judgment on such pleading, except in actions for declaration of nullity or
annulment of marriage or for legal separation (section 1, Rule 34, Rules of Court).
Motions for summary judgments can also be filed by the claimant/petitioner or the
defendant/respondent, if the court finds that the responsive pleading filed by the
adverse party with respect to a claim, counterclaim or cross-claim or to a petition for
declaration of relief does not tender a genuine issue as to any material fact and that
one party is entitled to a judgment as a matter of law (section 1, Rule 35, Rules of
Court). The motion for summary judgment must be accompanied by supporting
affidavits, depositions, or admissions and served on the adverse party ten days
before the scheduled hearing. At least three days before the scheduled hearing, the
adverse party can file his opposition or comment with opposing affidavits,
depositions or admissions. After the hearing, the judgment sought will be rendered
forthwith if the pleadings, supporting affidavits, depositions, and admissions on file
show that, except as to the amount of damages, there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a matter of law
(Rule 35, Rules of Court).
For criminal cases, any time before entering his plea, the accused can move to
quash the Criminal Complaint or Information (section 3, Rule 117, Rules of Court).
The accused can move to quash the Criminal Complaint or Information on any of the
following grounds (section 3, Rule 117, Rules of Court):
 The facts charged in the Criminal Complaint/Information do not constitute an
offence.
 The court trying the case has no jurisdiction over the offence charged.
 The court trying the case has no jurisdiction over the person of the accused.
 The officer who filed the Information had no authority to do so.
 The Criminal Complaint or Information does not conform substantially to the
prescribed form.
 More than one offence is charged in the Criminal Complaint or Information,
except when a single punishment for various offences is prescribed by law.
 The criminal action or liability has been extinguished.
 The Criminal Complaint or Information contains allegations which, if true,
would constitute a legal excuse or justification.
 The accused has been previously convicted or acquitted of the offence
charged, or the case against him was dismissed or otherwise terminated without
his express consent.
A criminal case can be provisionally dismissed with the express consent of the
accused and with notice to the offended party. The provisional dismissal of offences
punishable by imprisonment not exceeding six years or a fine of any amount, or
both, must become permanent one year after issuance of the order without the case
having been revived. With respect to offences punishable by imprisonment of more
than six years, their provisional dismissal must become permanent two years after
issuance of the order without the case having been revived (section 8, Rule 117,
Rules of Court).
11. Can a defendant apply for an order for the claimant to provide security for its costs? If yes, on
what grounds?

As a general rule, costs are paid by the losing party, but the courts have the power
to order that the payment of costs be shared by both parties (section 1, Rule 142,
Rules of Court). However, there is no procedural rule that provides that a party can
request the court to direct the other party to provide security for costs.
12. What are the rules concerning interim injunctions granted before a full trial?

The Rules of Court provide for interim remedies with respect to commercial cases
which a party can avail at any stage of an action or proceeding prior to the judgment
or final order, for example:
 Preliminary attachment.
 Preliminary injunction.
 Receivership.
 Claim and delivery (replevin).
At the commencement of the action or at any time before entry of judgment, a
claimant or any proper party can have the property of the adverse party attached as
security for the satisfaction of any judgment that can be recovered (section 1, Rule
57, Rules of Court).
A preliminary prohibitory injunction is an order granted at any stage of an action or
proceeding prior to the judgment or final order, requiring a party or a court, agency
or a person to refrain from committing a particular act or acts. It can also require the
performance of a particular act or acts, which is called a preliminary mandatory
injunction (section 1, Rule 58, Rules of Court).
With respect to interim receivership, one or more receivers of the property subject of
the action or proceeding can be appointed by the trial court, by the Court of Appeals
or by the Supreme Court (section 1, Rule 59, Rules of Court).
As regards the issuance of a writ of claim and delivery (replevin), a party seeking the
recovery of possession of personal property can, at the commencement of the
action or at any time before the answer is filed, apply for an order for the delivery of
such property to him, in the manner provided by law (section 1, Rule 60, Rules of
Court).

Damages as a result
Regarding interim remedies, the party applying for the order must give a bond
executed to the adverse party in the amount fixed by the court in its order granting
the issuance of the writ, conditioned that the latter will pay all the costs that may be
awarded to the adverse party and all damages that he can sustain by reason of the
writ issued, if the court finally judges that the applicant was not entitled to the writ
(section 4, Rule 57; section 4, Rule 58; section 2, Rule 59; section 2, Rule 60, Rules
of Court).

Security
To obtain an interim remedy, the claimant must give a bond executed to the adverse
party in the amount fixed by the court in its order granting the issuance of the writ,
conditioned that the latter will pay all the costs that can be awarded to the adverse
party (section 4, Rule 57; section 4, Rule 58; section 2, Rule 59; section 2, Rule 60,
Rules of Court).
13. What are the rules relating to interim attachment orders to preserve assets pending judgment
or a final order (or equivalent)?
The rules governing attachment are found under Rule 57 of the Rules of Court,
which allows a proper party to have the property of the adverse party attached as
security for the satisfaction of any judgment that may be recovered.
After a writ of preliminary attachment has been issued and enforced, the party
whose property has been attached, or the person appearing on his behalf, can apply
for the discharge of the attachment wholly or in part on the security given. The court
will, after due notice and hearing, order the discharge of the preliminary attachment
if the applicant makes a cash deposit, or files a counter-bond executed to the
attaching party with the clerk of the court where the application is made, in an
amount equal to that fixed by the court in the order of preliminary attachment,
exclusive of costs. However, if the preliminary attachment is sought to be discharged
with respect to a particular property, the counter-bond must be equal to the value of
that property as determined by the court. In either case, the cash deposit or the
counter-bond will secure the payment of any judgment that the attaching party can
recover in the action. A notice of the deposit will be served on the attaching party.
Upon the discharge of a preliminary attachment in accordance with the provisions of
this section, the property attached, or the proceeds of any sale of this property, will
be delivered to the party making the deposit or giving the counter-bond, or to the
person appearing on his behalf, the deposit or counter-bond standing in place of the
property released. If such counter-bond for any reason is found to be or become
insufficient, and the party furnishing the counter-bond fails to file an additional
counter-bond, the attaching party can apply for a new order of preliminary
attachment (section 12, Rule 57, Rules of Court).

Availability and grounds

The writ of preliminary attachment is available at the commencement of the action or
at any time before entry of a judgment and on the following grounds (section 1, Rule
57, Rules of Court):
 In an action for the recovery of a specified amount of money or damages,
other than moral and exemplary, on a cause of action arising from law, contract,
quasi-contract, delict or quasi-delict against a party who is about to depart from
the Philippines with intent to defraud his creditors.
 In an action for money or property embezzled or fraudulently misapplied or
converted to his own use by a public officer, or an officer of a corporation, or an
 attorney, factor, broker, agent, or clerk, in the course of his employment, or by
any other person in a fiduciary capacity, or for a willful violation of duty.
 In an action to recover the possession of property unjustly or fraudulently
taken, detained or converted, when the property, or any part of it, has been
concealed, removed, or disposed of to prevent it being found or taken by the
applicant or an authorised person.
 In an action against a party who has been guilty of a fraud in contracting the
debt or incurring the obligation upon which the action is brought, or in the
performance of it.
 In an action against a party who has removed or disposed of his property, or
is about to do so, with intent to defraud his creditors.
 In an action against a party who does not reside and is not found in the
Philippines, or on whom summons can be served only by publication.
An order of preliminary attachment is granted only when, based on the contents of
the applicant's affivdavit on the affidavit of his writ:
 A sufficient cause of action exists.
 The case is one of those mentioned in section 7, Rule 57, Rules of Court,
where a writ of preliminary attachment can be issued. .
 There is no other sufficient security for the claim sought to be enforced by the
action.
 The amount due to the applicant, or the value of the property the possession
of which he is entitled to recover, is as much as the sum for which the order is
granted above all legal counterclaims.
The affidavit and the bond required must be duly filed with the court before the order
is issued (section 3, Rule 57, Rules of Court).

Prior notice/same-day
A temporary restraining order (TRO) can be granted without prior notice to the
defendant and can be issued on the same day if the matter is of extreme urgency
and the applicant will suffer grave injustice and irreparable injury. The executive
judge of a multiple sala court or the presiding judge of a single sala court can issue
ex parte a TRO effective for only 72 hours from issuance. In a multiple sala court,
the case must be immediately raffled. However, the judge before whom the case is
pending must immediately conduct a summary hearing to determine whether the
TRO can be extended to a maximum period of 20 days (including the 72-hour
period) until the application for preliminary injunction can be heard and resolved
(section 5, Rule 58, Rules of Court).

Main proceedings
Provisional remedies cannot be used to support a case that is taking place in a
foreign country. The Philippine Supreme Court has consistently held that "our courts
do not take judicial notice of foreign judgments and laws". Justice Herrera explained
that, as a rule, "no sovereign is bound to give effect within its dominion to a
judgment rendered by a tribunal of another country" (Corpuz v Sto. Tomas, G.R. No.
186571, 11 August 2011).
For local arbitration proceedings, a party to an arbitration agreement can petition the
court for interim measures of protection (Rule 5.1, Special Rules of Court on
Alternative Dispute Resolution). A petition for an interim measure of protection can
be made (Rule 5.2, Special Rules of Court on Alternative Dispute Resolution):
 Before arbitration is commenced.
 After arbitration is commenced, but before the constitution of the arbitral
tribunal.
 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.
Likewise, the court must assist in the enforcement of an interim measure of
protection issued by the arbitral tribunal which it is unable to effectively enforce
(Rule 5.16, Special Rules of Court on Alternative Dispute Resolution).
For foreign arbitration, while the Philippines is a signatory to the UN Convention on
the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York
Convention), the New York Convention cannot be invoked since it only pertains to
final arbitral awards. However, the concerned party in the foreign arbitral
proceedings abroad can be allowed to file in the Philippines, similar to domestic
arbitration proceedings, the appropriate action to ask for assistance in implementing
the interim measures it issued based on comity.
The foreign parties will need to obtain a provisional remedy before the Philippine
court by filing the appropriate case in our jurisdiction. The Philippine court cannot
take judicial notice of foreign provisional remedies and the foreign laws to which they
are based on.

Preferential right or lien

A writ of preliminary attachment creates a provisional lien in favour of the attaching
creditor which will entitle him to be among those given priority with respect to the
distribution of the assets of the defendant (Article 2242, Civil Code). In fact,
preference is given to a duly registered attachment over a subsequent notice of lis
pendens (that is, the rule that the first party in time to issue proceedings at court
secures the jurisdiction of the court in a particular country), even if the beneficiary of
the notice acquired the subject property before the registration of the writ of
preliminary attachment (Du v Stronghold Insurance, G.R. No. 156580, 14 June
2004).

Damages as a result
The claimant will only be liable if the court later on determines that it was not entitled
to the issuance of a writ of preliminary attachment. The liability will be charged on
the bond that was required by the court (section 4, Rule 57, Rules of Court).

Security
Before a writ of preliminary attachment can be issued by a court, the party applying
for the order, as previously mentioned, must give a bond executed in favour of the
adverse party in the amount fixed by the court. This will serve as security in the
event the application for the preliminary attachment turns out to be frivolous or
baseless (section 4, Rule 57, Rules of Court).
14. Are any other interim remedies commonly available and obtained?

In addition to preliminary attachment, the other interim remedies available in

commercial cases are (Rules 58 to 60, Rules of Court):
 Preliminary injunction.
 Receivership.
 Claim and delivery (replevin).
The writ of preliminary injunction is available at any stage of an action or proceeding
prior to the judgment or final order and on the following grounds (section 3, Rule 58,
Rules of Court):
 The applicant is entitled to the relief demanded, and the whole or part of such
relief consists in restraining the commission or continuance of the act or acts
complained of, or in requiring the performance of an act or acts either for a limited
period or perpetually.
 The commission, continuance or non-performance of the act or acts
complained of during the litigation would probably cause injustice to the applicant.
 A party, court, agency or a person is doing, threatening, or is attempting to do,
or is procuring or suffering to be done some act or acts that are probably in
violation of the rights of the applicant respecting the subject of the action or
proceeding, which would render the judgment ineffective.
No preliminary injunction can be granted without hearing and prior notice to the party
or person sought to be enjoined. If it appears from the facts shown by affidavits or by
the verified application that great or irreparable injury would result to the applicant
before the matter can be heard on notice, the court to which the application for
preliminary injunction was made, can issue a temporary restraining order (TRO) to
be effective only for a period of 20 days from service on the party or person sought
to be enjoined, except as provided. Within the 20-day period, the court must order
the party or person to show, at a specified time and place, why the interim injunction
must not be granted, determine within the same period whether or not the
preliminary injunction must be granted, and accordingly issue the corresponding
order (section 5, Rule 58, Rules of Court).
When an application for a writ of preliminary injunction or a TRO is included in a
complaint or any initiatory pleading, the case, if filed in a multiple sala court, can be
raffled only after notice to and in the presence of the adverse party or the person to
be enjoined. Notice must be preceded by, or served at the same time as the
summons, together with a copy of the complaint or initiatory pleading and the
applicant's affidavit and bond, upon the adverse party in the Philippines (section
4(c), Rule 58, Rules of Court). However, where the summons cannot be served
personally or by substituted service despite diligent efforts, or the adverse party is a
resident of the Philippines temporarily absent or is a non-resident, the requirement
of prior or contemporaneous service of summons does not apply.
If the TRO is issued by the Court of Appeals or a member of it, the TRO will be
effective for 60 days from service on the party or person sought to be enjoined. A
restraining order issued by the Supreme Court or a member of it will be effective
until further orders (section 5, Rule 58, Rules of Court).
The appointment of a receiver is available as long as an action is pending and on
the following grounds (section 1, Rule 59, Rules of Court):
 It appears from the verified application, and such other proof as the court may
require, that the party applying for the appointment of a receiver has an interest in
the property or fund that is the subject of the action or proceeding, and that such
property or fund is in danger of being lost, removed, or materially injured unless a
receiver is appointed to administer and preserve it.
 It appears in an action by the mortgagee for the foreclosure of a mortgage
that the property is in danger of being wasted or dissipated or materially injured,
and that its value is probably insufficient to discharge the mortgage debt, or that
the parties have so stipulated in the contract of mortgage.
 After judgment, to preserve the property during the pendency of an appeal, or
to dispose of it according to the judgment, or to aid execution when the execution
has been returned unsatisfied or the judgment obligor refuses to apply his
property in satisfaction of the judgment, or otherwise to give effect to the
judgment.
 In other cases when it appears that the appointment of a receiver is the most
convenient and feasible means of preserving, administering, or disposing of the
property in litigation.
Claim and delivery (replevin) can be applied for at the commencement of the action
or at any time before the answer is filed, provided that the applicant shows by his
own affidavit, or that of some other person who personally knows the fact (section 2,
Rule 60, Rules of Court):
 That the applicant is the owner of the personal property claimed, particularly
describing it, or is entitled to the possession of it.
 That the personal property is wrongfully detained by the adverse party,
alleging the cause of detention according to the best of his knowledge,
information, and belief.
 That the personal property has not been distrained or taken for a tax
assessment or a fine pursuant to law, or seized under a writ of execution or
 preliminary attachment, or otherwise placed under the custody of the court
(custodia legis), or if so seized, that it is exempt from such seizure or custody.
 The actual market value of the personal property.

Final remedies
15. What remedies are available at the full trial stage? Are damages just compensatory or can they
also be punitive?

At the full trial stage, the available interim remedies can be applied for at any time
prior to judgment or final order (see Questions 13 and 14 for further details of the
available interim remedies).
A breach of an obligation generally gives rise to a cause of action for specific
performance and compensatory damages (Article 1170, Civil Code). However, if the
act sought to be performed has become impossible or illegal, the payment of
compensatory damages will be determined by the court (Article 1204, Civil Code).
Actual or compensatory damages can be requested provided the pecuniary loss
suffered by the requesting party is duly proven. No proof of pecuniary loss is
required for the award of the following, with the exception of liquidated damages, as
these are left to the discretion of the court (Article 2216, Civil Code):
 Moral damages. Moral damages can be awarded in cases where the winning
party suffered from, among others (Article 2217, Civil Code):
 mental anguish;
 fright;
 serious anxiety;
 besmirched reputation;
 wounded feelings;
 moral shock;
 social humiliation; and
 physical suffering.
 Nominal damages. Nominal damages are awarded essentially to recognise
the right of the claimant that has been violated and not to compensate him for any
pecuniary loss suffered (Article 2221, Civil Code).
 Temperate damages. Temperate or moderate damages can be awarded in
cases where the pecuniary loss suffered by a party cannot be proved with
certainty (Article 2224, Civil Code).
 Liquidated damages. Liquidated damages are those expressly agreed upon
by the parties in their contract, to be paid in the case of breach (Article 2226, Civil
Code).
 Exemplary damages. If a litigant is judged by the court to be entitled to any
of the mentioned damages, exemplary or corrective damages can also be
awarded by way of example or correction (Article 2226, Civil Code).
In claiming for any kind of damages, being civil in nature, the required standard of
proof is preponderance of evidence. Preponderance of evidence is the weight,
credit, and value of the aggregate evidence on either side and is usually considered
to be synonymous with "greater weight of the evidence" or "greater weight of the
credible evidence". It refers to evidence that is more convincing to the court as
worthier of belief than that which is offered in opposition (Heirs of Bucton v Spouses
Go, G.R. No. 188395, 20 November 2013).

Evidence
Disclosure
16. What documents must the parties disclose to the other parties and/or the court? Are there any
detailed rules governing this procedure?

As a general rule, there is no Philippine legal provision that specifically requires the
disclosure of documents. However, in response to a motion from either party, the
court can order any party to produce documents that are not privileged and that
constitute or contain evidence material to any matter involved in the action (section
1, Rule 27, Rules of Court) (see Question 17 for further information on privileged
documents). Further, under the Judicial Affidavit Rule (AM No. 12-8-8-SC), all
judicial affidavits of the witnesses of the parties and all documentary or object
evidence must be filed with the court and served on the other parties no later than
five days before the scheduled date of the pre-trial or preliminary conference.

Privileged documents
17. Are any documents privileged? If privilege is not recognised, are there any other rules
allowing a party not to disclose a document?

Privileged documents
While there is no specific provision regarding documents that are privileged, the
1987 Philippine Constitution recognises the importance of privacy of communication
and correspondence as part of its Bill of Rights. Any evidence obtained in violation
of the Bill of Rights will be inadmissible in proceedings. However, these
constitutional provisions are intended to provide protection against arbitrary and
discriminatory use of political power by the state. Therefore, these provisions were
intended to be used against the government or any of its branches or instruments,
and not against private individuals (Allado v Diokno, G.R. No. 113630, 05 May
1994).
The Rules of Court relating to evidence further recognise disqualification by reason
of privileged communication, for example (section 24, Rule 130, Rules of Court):
 Communication between husband and wife.
 Communication between attorney and client.
 Communication between physician and patient.
 Communication between priest and penitent.
 Public officers and public interest.

Other non-disclosure situations

However, there are other privileged matters that are not mentioned by the Rules of
Court. Among them are (RA 53, as amended):
 Voters must not be compelled to disclose for whom they voted.
 Trade secrets.
 Information contained in tax census returns.
 Bank deposits, with certain exceptions (Air Philippines Corporation v
Pennswell, Inc, G.R. No. 172835, 13 December 2007).
 State secrets.
 Identity of government informers or information as to identity of persons who
provided information of violations of law.
 Internal deliberations related to intra-governmental documents reflecting
advisory opinions, recommendations and deliberations (Senate v Ermita, G.R.
No. 169777, 20 April 2006).
 Identity of the source of any news report or information appearing in
newspaper, magazine or periodical of general circulation which was provided in
confidence to the publisher, editor or reported unless their revelation is demanded
by the security of the state.
Information obtained through mediation and arbitration must be privileged and
confidential, such as:
 Communications, oral or written, made in a dispute resolution proceedings,
including any memoranda, notes or work product of the neutral party or non-party
participant.
 Oral or written statements made or occurring during mediation or for purposes
of considering, conducting, participating, initiating, continuing or reconvening
mediation or retaining a mediator.
 Pleadings, motions manifestations, witness statements, reports filed or
submitted in an arbitration or for expert evaluation (section 9, 3(h), RA 9285).
The records, evidence and arbitral award in arbitration proceedings are confidential
and must not be published, subject to exceptions provided by law (section 23, RA
9285).

Examination of witnesses
18. Do witnesses of fact give oral evidence or do they just submit written evidence? Is there a
right to cross-examine witnesses of fact?

Oral evidence
Parties in civil cases must submit the judicial affidavits of their witnesses and attach
their documentary evidence rather than their direct testimonies. However, each
witness must be presented in court in order to identify/authenticate his judicial
affidavit and for his cross-examination by the adverse counsel, and questioning by
the presiding judge. Further, nothing precludes a party from asking additional direct
examination questions to the witness while he is in the witness stand (Judicial
Affidavit Rule).

Right to cross-examine
The right of a party to confront and cross-examine the opposing party's witness in a
judicial litigation, whether civil or criminal, or in proceedings before administrative
tribunals with quasi-judicial powers, is a fundamental right that is part of due process
in the Philippines (Fulgado v Court of Appeals, G.R. No. 61570, 12 February 1990).

Third party experts

19. What are the rules in relation to third party experts?

The Rules of Court expressly allow the use of expert witnesses in matters requiring
special knowledge, skill, experience or training (section 49, Rule 130, Rules of
Court).

Appointment procedure
Expert witnesses are generally appointed by the parties. However, on motion, courts
can also appoint expert witnesses. The parties must disclose the identities of the
witnesses they will be presenting, including expert witnesses, in their pre-trial brief.
Failure to disclose the name or description of the witnesses, can bar them from
testifying during the trial stage (Tiu v Middleton, G.R. No. 134998, 19 July 1999).
The opinion of a witness on a matter requiring special knowledge, skill, experience
or training that he is shown to posses, can be received in evidence (section 49, Rule
130, Rules of Court).

Role of experts
Expert witnesses are generally expected to provide independent advice to the
courts, especially court-appointed witnesses. The credibility of the expert witness
and the evaluation of his testimony is left to the discretion of the trial court (Perez v
People, G.R. No. 191265, 14 September 2011).

Right of reply
The right to cross-examine an expert witness is part of due process in the
Philippines. For ordinary witnesses, a party has the right to cross-examine the
expert witness of the adverse party regarding any matter stated in the direct
examination or connected with it and the exhibits testified to by the expert witness
(section 6, Rule 132, Rules of Court; section 7, Judicial Affidavit Rule). Under the
current Rules of Court, a party can also produce rebuttal evidence (section 5, Rule
30, Rules of Court). Under the proposed New Rules of Civil Procedure, which is
currently undergoing pilot testing in certain courts designated by the Supreme Court,
a party can also submit reply judicial affidavits in respect of matters not addressed
by his or her judicial affidavits within 15 days from receipt of the adverse party's
judicial affidavits (section 22.2 (b), Rule 22, Pilot Revised Rules of Civil Procedure).

Fees
The fees of an expert witness are paid by the person appointing the expert (that is,
either the party or the court).

Appeals
20. What are the rules concerning appeals of first instance judgments in large commercial
disputes?

Which courts
Generally, appeals of first instance judgments in large commercial disputes are
made to the Court of Appeals. However, if the appeal is based on pure questions of
law, appellate jurisdiction belongs to the Supreme Court (Rule 41, Rules of Court).

Grounds for appeal

Any question of law or fact that has been raised in the lower court and that is within
the issues framed by the parties are allowed grounds for appeal (section 15, Rule
44, Rules of Court).

Time limit
The appeal must be brought within 15 days from notice of the judgment or final order
to be appealed. Where a record on appeal is required, the appellant must file a
notice of appeal and a record on appeal within 30 days from notice of the judgment
or final order (section 3, Rule 41, Rules of Court).

Class actions
21. Are there any mechanisms available for collective redress or class actions?

A class suit in the Philippines relates to cases where claimants are able to prove that
the subject matter of the controversy is one of common or general interest to many
persons so that it is impracticable to implead all as parties. Therefore, a certain class
that the court finds to be sufficiently numerous and representative to fully protect the
interests of all concerned can sue or defend for the benefit of all (section 12, Rule 3,
Rules of Court). There are no specific rules for funding a class suit. However, the
general prohibition on champertous contracts or agreements where an attorney
agrees to pay expenses of proceedings to enforce the client's rights are applicable
to class suits (Bautista v Gonzales, A.M. No. 1625, 12 February 1990)
(see Question 5).

Costs
22. Does the unsuccessful party have to pay the successful party's costs and how does the court
usually calculate any costs award? What factors does the court consider when awarding costs?

Generally, the costs are awarded to the successful party. However, the court has the
discretion to rule that either party must pay the costs of an action, or that the costs
are divided, provided that the reasons given are valid and equitable. No costs are
allowed against the Republic of the Philippines unless otherwise provided by law
(section 1, Rule 142, Rules of Court).
Certain factors must be considered in awarding costs, including (Sections 3-4, 12-
13, Rule 142, Rules of Court):
 Where an action or appeal is found to be frivolous, double or treble costs can
be imposed.
 For assertions of truth in a pleading without reasonable cause and found
untrue, reasonable expenses as may have been necessarily incurred by the other
party by reason of such untrue pleading.
 If a witness fails to appeal as required by a subpoena, costs of the warrant of
arrest and arrest of the witness must be paid by the witness if failure is wilful or
without just cause.
 When a person is cited to appear before the court to be examined in probate
proceedings, the court can impose costs for citing the person.
23. Is interest awarded on costs? If yes, how is it calculated?

Interest is awarded on the total amount of a monetary judgment, which can include
the recovery of the costs of litigation. Interest in the amount of 6% per annum will be
imposed on the judgment of the court awarding a sum of money when it becomes
final and executory until its satisfaction (Dario Nacar v Gallery Frames and/or Felipe
Bordey, Jr. , G.R. No. 189871, 13 August 2013).
The Supreme Court also ruled that the amount for just compensation must earn
legal interest at 12% per annum from the date of taking until 30 June 2013. After 30
June 2013, the legal interest will be 6% per annum from 1 July 2013 until the finality
of the court's ruling. The total amount of just compensation earns legal interest of
6% per annum from the finality of the court's ruling until full payment (Republic of the
Philippines et al. v Mupas, G.R No. 181892, 209696 and 209731, 08 September
2015). The distinction is due to the Central Bank of the Philippines (Bangko Sentral
ng Pilipinas) Circular No. 799, which came into effect on 1 July 2013, reducing the
rate of legal interest from 12% to 6% per annum.

Enforcement of a local judgment

24. What are the procedures to enforce a local judgment in the local courts?

The prevailing party must first file a motion to issue a writ of execution, within five
years from the date of entry of the judgment. After this period, the winning party
must commence a separate action, but before it is barred by the statute of limitation
(section 6, Rule 39, Rules of Court).
The court will then issue the corresponding writ of execution (section 8, Rule 39,
Rules of Court). The clerk of court, as the ex officio sheriff, must, through any of the
sheriffs under his control and supervision, implement the writ of execution,
depending on the nature of the judgment. The writ of execution will be returned to
the issuing court for report if it has been satisfied in part or in full. If the writ is not
satisfied in full, the officer must report to the court every 30 days until the judgment
is satisfied in full, or until it expires (section 14, Rule 39, Rules of Court). If the writ of
execution is unsatisfied based on the return submitted, the prevailing party is entitled
to an order requiring an examination of the losing party concerning his property and
income or of any person who has the property of the losing party (sections 36 and
37, Rule 39, Rules of Court). Finally, the satisfaction of the judgment, if completed,
will be entered in the court docket and in the execution book (section 44, Rule 39,
Rules of Court).

Cross-border litigation
25. Do local courts respect the choice of governing law in a contract? If yes, are there any areas of
law in your jurisdiction that apply to the contract despite the choice of law?
As a general rule, local courts defer to the parties' choice of law provision in their
contracts (Saudi Arabian Airlines (Saudia) v Rebesencio, G.R. No. 198587, 14
January 2015). However, Philippine law prevails when the parties' choice of law is
contrary to law, morals, good customs, public order or public policy, such as labour
disputes involving matters of public policy (Saudi Arabian Airlines (Saudia) v
Rebesencio, supra; Pakistan International Airlines Corporation v Ople, G.R. No.
61594, 28 September 1990; Article 1306, Civil Code). Notably, a foreign law must be
properly pleaded and proved as a fact. In the absence of pleading and proof, the
laws of a foreign country or state will be presumed to be the same as Philippine law,
which is known as processual presumption (Wildvalley Shipping Co., Ltd. v Court of
Appeals, G.R. No. 119602, 6 October 2000).
26. Do local courts respect the choice of jurisdiction in a contract? Do local courts claim
jurisdiction over a dispute in some circumstances, despite the choice of jurisdiction?

The jurisdiction of courts over the subject matter of an action is conferred by law and
the Constitution and is not subject to stipulation by the parties. Unless otherwise
stated, when the case is filed in a Philippine court and where the court has
jurisdiction over the subject matter, the parties and the res judicata, it can proceed
to try the case even if the rules of conflict of laws, the convenience of the parties or
the pertinent contractual provision point to a foreign forum. This is an exercise of
sovereign prerogative of the country where the case is filed (Raytheon International,
Inc v Rouzie, Jr. , G.R. No. 162894, February 26 2008).
27. If a foreign party obtains permission from its local courts to serve proceedings on a party in
your jurisdiction, what is the procedure to effect service in your jurisdiction? Is your jurisdiction
party to any international agreements affecting this process?

At present, there is no express law or rule of procedure governing the service of

processes or pleadings to a party in the Philippines relating to cases pending in
foreign states.
The Philippines is not a signatory to the HCCH Convention on the Service Abroad of
Judicial and Extrajudicial Documents in Civil and Commercial Matters 1965 (Hague
Service Convention). In the absence of any prohibition, service of process in the
Philippines is allowed to be effected by mail, agent, such as local attorney, or
through letters rogatory (see http://travel.state.gov/content/travel/en/legal-
considerations/ judicial/country/philippines.html). In this regard, the Litigation
Division of the Office of Legal Affairs of the Department of Foreign Affairs (DFA)
advises that the following is the process for serving summons issued by a foreign
court against a defendant in the Philippines:
 The court from the foreign state should send the summons to the department
or ministry of foreign affairs of the foreign state.
 The department or ministry of foreign affairs of the foreign state will forward
the summons to the foreign state's embassy in the Philippines.
 The foreign state's embassy in the Philippines should transmit the summons
to the local DFA, specifically, to the Division IV – Service of Process and Litigation
division of the Office of Legal Affairs of the DFA.
 The DFA must forward the summons to the trial court that has jurisdiction
over the person of the defendant.
 The trial court then orders its process server to serve the summons on the
defendant, who is then required to execute and submit a proof of service.
 The proof of service is then sent to the DFA, which in turn, forwards it to the
foreign state's embassy in the Philippines.
 The foreign state's embassy in the Philippines then transmits the proof of
service to the department or ministry of foreign affairs of the foreign state, who
should then forward the proof of service to the court that issued the summons.
28. What is the procedure to take evidence from a witness in your jurisdiction for use in
proceedings in another jurisdiction? Is your jurisdiction party to an international convention on
this issue?

The Philippines does not appear to be a party to any international convention

regarding the collection of evidence, for example the HCCH Convention on the
Taking of Evidence Abroad in Civil and Commercial Matters 1970 (Hague Evidence
Convention). As a general rule, in the absence of a treaty or international
obligations, no sovereign is bound to give effect within its dominion to a judgment
rendered or order issued by a tribunal of another country. However, in this regard,
the rules of comity, utility and convenience of nations may apply, considering that
there is an established usage among civilised states under which final judgments or
orders of foreign courts of competent jurisdiction are reciprocally respected and
enforced under certain conditions that may vary in different countries.
Similarly, Philippine authorities have advised the US Embassy that voluntary
depositions of willing witnesses in civil and commercial matters can be taken before
US consular officers in the Philippines, although our country is not a party to the
Hague Evidence Convention. Voluntary depositions can be conducted in the
Philippines regardless of the nationality of the witness, provided no compulsion is
used. Oral depositions or depositions on written questions can be taken by US
consular officers or by private attorneys from the US or the Philippines at the US
Embassy or at another location such as a hotel or office, either on notice or under a
commission. If the services of a US consular officer are required to administer an
oath to the witness, interpreter and stenographer, such arrangements must be made
in advance with the US embassy directly
(see http://travel.state.gov/content/travel/en/legal-
considerations/judicial/country/philippines.html).
The same procedure for the taking of depositions of willing witnesses in civil and
commercial matters with respect to other foreign countries will probably be followed
based on comity and reciprocity.
However, as previously stated, according to the Service of Process and Litigation
Division of the Office of Legal Affairs of the DFA, in order to take evidence from a
witness in the Philippines, a letters rogatory issued by a foreign court is required,
which will then be forwarded to the concerned embassy within the Philippines. In
turn, the letter must be forwarded to the DFA, which must then forward it to the
appropriate court that has jurisdiction over the place of residence of the potential
witness.
There is no particular law or rule on the taking of evidence from a witness for use in
proceedings in another jurisdiction. However, the Philippines is a party to various
mutual legal assistance treaties (MLATs) involving criminal matters, which includes
provisions on, among others:
 Gathering evidence, records, or documents.
 Taking the testimonies or statements of persons.
 Executing requests for searches and seizures.
 Facilitating the personal appearance of witnesses.
 Transferring persons in custody for testimony or other purposes.
 Obtaining and producing judicial or official records.
 Tracing, restraining, forfeiting, and confiscating the proceeds and instruments
of criminal activities, including assisting in proceedings related to forfeiture of
assets, restitution, and collection of fines.
 Providing and exchanging information on law, documents, and records.
A common provision of the various MLATs is the obligation of the requested state to
take measures in tracing, freezing, seizing, and forfeiting the proceeds of any
criminal activity, including corruption, that may be found in that state.

Enforcement of a foreign judgment

29. What are the procedures to enforce a foreign judgment in the local courts?

It is necessary for an action to be filed with the appropriate local court in order to
enforce a foreign judgment in our country. The procedural rules on local actions are
applied by the courts on petitions to enforce foreign judgments.
In both actions in rem and in personam, the foreign judgment can be repelled in the
local courts on the grounds of lack of jurisdiction, lack of notice to the party,
collusion, fraud, or clear mistake of law or fact. Therefore, the party aggrieved by the
foreign judgment is entitled to defend against an action for the enforcement of such
decision in the Philippines. It is essential that there is an opportunity to challenge the
foreign judgment, in order for the court in our jurisdiction to properly determine its
efficacy (section 48, Rule 39, Rules of Court; Mijares v Ranada, G.R. No. 139325,
12 April 2005).
While there is no obligatory rule derived from treaties or conventions that requires
the Philippines to recognise foreign judgments, or allow a procedure for their
enforcement, generally accepted principles of international law, by virtue of the
incorporation clause of the 1987 Constitution, form part of the laws of the land even
if they do not derive their efficiency from treaty obligations. There is a general right
recognised within Philippine body of laws, and affirmed by the Constitution, to seek
recognition and enforcement of foreign judgments, as well as a right to defend
against such enforcement on the grounds of lack of jurisdiction, lack of notice to the
party, collusion, fraud, or clear mistake of law or fact (section 48, Rule 39, Rules of
Court; Mijares v Ranada, G.R. No. 139325, 12 April 2005).
Therefore, the local courts can only recognise and/or enforce a foreign judgment or
order after, in an action filed for this purpose, a conclusive and final finding is
rendered that:
 The foreign court or tribunal has jurisdiction over the case.
 The parties were properly notified.
 There was no collusion, fraud, or clear mistake of law or fact.

Alternative dispute resolution

30. What are the main alternative dispute resolution (ADR) methods used in your jurisdiction to
settle large commercial disputes? Is ADR used more in certain industries? What proportion of
large commercial disputes is settled through ADR?

The Philippine law on arbitration includes the Civil Code of the Philippines, RA 876,
the Arbitration Law, RA 9285 entitled the Alternative Dispute Resolution Act of 2004
(2004 ADR Act) and the Supreme Court's A.M. No. 07-11-08-SC dated 01
September 2009 entitled Special Rules of Court on Alternative Dispute Resolution
(Special ADR Rules). Notably, the 2004 ADR Act implements the UNCITRAL Model
Law on International Commercial Conciliation 2002 (UNCITRAL Model Conciliation
Law)
The Philippine ADR 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 the 2004 ADR Act, in which a
neutral third person participates to assist in the resolution of issues (Article 1.6, Rule
2 of the Implementing Rules and Regulations of the Alternative Dispute Resolution
Act of 2004 (IRR of the 2004 ADR Act)). There are several types of ADR processes
commonly used in the Philippines:
 Arbitration.
 Mediation.
 Conciliation.
 Other familiar ADR modes.
Arbitration is defined under Article 1.6, Rule 2 of the IRR of the 2004 ADR Act as a
voluntary dispute resolution process in which one or more arbitrators, appointed in
accordance with the agreement of the parties or the IRR, to resolve a dispute by
rendering an award. Other sub-classifications of arbitration are:
 Commercial arbitration.
 International arbitration.
 Ad hoc arbitration.
 Domestic arbitration.
 Institutional arbitration.
Unless otherwise stipulated in the contract containing the arbitration clause, an
arbitral award is binding on both parties.
Mediation, on the other hand, is a voluntary process in which a mediator, selected
by the disputing parties, facilitates communication and negotiation, and assists the
parties in reaching a voluntary agreement regarding a dispute. Under the 2004 ADR
Act, the term "mediation" includes conciliation. Mediation and conciliation are further
sub-classified into:
 Ad hoc mediation.
 Institutional mediation.
 Court-annexed mediation.
 Court-referred mediation.
Similar to an arbitral award, unless otherwise stipulated, an agreement reached
during mediation is also binding on both parties.
Other ADR modes include early neutral evaluation, mini-trial, mediation–arbitration,
or any combination of these. Unless otherwise previously agreed, early neutral
evaluation is not binding on the parties while mini-trial and mediation-arbitration
decisions are binding on both parties.
Among these types of ADR, the more popular processes are arbitration and
mediation. In the case of LM Power Engineering Corporation v Capitol Industrial
Construction Groups, Inc, G.R. No. 141833, 26 March 2003, the Supreme Court
explained the advantages of making use of arbitration and mediation: "[b]eing an
inexpensive, speedy and amicable method of settling disputes, arbitration - along
with mediation, conciliation and negotiation - is encouraged by the Supreme Court.
Aside from unclogging judicial dockets, arbitration also hastens the resolution of
disputes, especially of the commercial kind. It is thus regarded as the 'wave of the
future' in international civil and commercial disputes".
Currently, a great number of commercial disputes in the Philippines relating to
business transactions involving an international component are being resolved
through commercial arbitration. This trend, that is, the referral of cases with an
international component to arbitration, started around two decades ago. Most of the
time, the parties utilise international arbitral institutions for arbitration.
31. Does ADR form part of court procedures or does it only apply if the parties agree? Can courts
compel the use of ADR?

As a rule, an arbitration agreement is consensual and is binding only upon the

parties who agree to it. As an exception and in accordance with section 7(2) of the
UNCITRAL Model Law on International Commercial Conciliation 2002 (UNCITRAL
Model Conciliation Law), a third party that did not sign a contract incorporating an
arbitral clause can be compelled to arbitrate if the contract in question contains a
reference to a document containing an arbitration clause and the reference is such
as to make that arbitration clause part of the contract.
Where the parties have agreed to submit their dispute to arbitration, courts must
refer the parties to arbitration under the 2004 ADR Act, bearing in mind that such
arbitration agreement is the law between the parties and they are expected to abide
by it in good faith (Rule 2.2(A), Special Rules of Court on Alternative Dispute
Resolution).
With a strong and categorical government policy of promoting alternative modes of
dispute resolution, including mediation and arbitration, a government-initiated
mandate to include arbitration clauses in government contracts and the Supreme
Court's recent issuance of procedural rules clarifying and limiting court intervention
in disputes with arbitration agreements, commercial arbitration is gaining ground in
the mainstream Philippine domestic dispute resolution arena. In particular, the
construction industry is the sector that commonly uses arbitration, due to the
established presence of the Philippine Construction Industry Arbitration Commission
(CIAC) since 1989.
32. How is evidence given in ADR? Can documents produced or admissions made during (or for
the purposes of) the ADR later be protected from disclosure by privilege? Is ADR confidential?

In domestic arbitration and regardless of the agreement of the parties, the arbitrators
have the power to require any person to attend a hearing as a witness. The
arbitrators also have the power to subpoena witnesses and documents when the
relevancy of the testimony and their materiality have been demonstrated. They also
have the power, at any time before rendering the award, to take measures to
safeguard and/or conserve any matter that is the subject of the dispute in arbitration
(section 14, 2004 ADR Act). The arbitrator can require the parties to produce
additional evidence that it deems necessary for the understanding and determination
of the dispute (section 15, Republic Act 876).
Both in international and domestic arbitration, parties can request the court for
assistance in taking evidence and to direct any person, including a non-party to the
arbitration, to (Rule 9.5, Special Rules of Court on Alternative Dispute Resolution):
 Comply with a subpoena ad testificandum (which commands a person to
testify at a deposition, hearing or trial) and/or subpoena duces tecum (which
commands a person to produce, or make available for inspection, documents,
electronically stored information or other tangible items).
 Appear as a witness before an officer for the taking of his deposition upon oral
examination or by written interrogatories.
 Allow the physical examination of the condition of persons, or the inspection
of things or premises and, when appropriate, to allow the recording and/or
documentation of condition of persons, things or premises (that is, through
photography, video recording and other means of recording/documentation).
 Allow the examination and copying of documents.
 Perform any similar acts.
However, the arbitral tribunal has no inherent contempt powers. Accordingly, the
arbitral tribunal must apply to the proper court to enforce the tribunal's orders and
request the imposition of sanctions in instances of non-compliance.
The arbitration proceedings, including the records, evidence and the arbitral award,
are confidential and must not be published (section 23, Republic Act 9285).
33. How are costs dealt with in ADR?

There is no specific law relating to costs in ADR. In practice, both parties bear the
cost of ADR. Further, nothing precludes the parties from agreeing between
themselves as to the allocation of costs. However, in arbitration, whether
commercial or not, it is the arbitral tribunal's discretion on how the cost of the
proceedings will be borne by the parties. The arbitrators have the power to assess in
their award the expenses (or a portion of these) of any party against another party,
when the assessment is deemed necessary (section 20, Republic Act 876).
34. What are the main bodies that offer ADR services in your jurisdiction?

The following are the main bodies that offer ADR services in the Philippines:
 Philippine Mediation Centre. The Philippine Mediation Centre is a body
created by the Philippine Supreme Court to institutionalise and implement the
mediation programmes in the Philippines.
 Philippine Dispute Resolution Centre Inc (PDRCI). The PDRCI is a non-
stock, non-profit organisation incorporated in 1996 out of the Arbitration
Committee of the Philippine Chamber of Commerce and Industry. The PDRCI
aims to promote and encourage the use of arbitration as an alternative mode of
settling commercial disputes and to provide dispute resolution services to the
business community (for further information, e-mail: secretariat@pdrci.org).
 Construction Industry Arbitration Commission (CIAC). The CIAC is the
body created by law to 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 of the contract.
These disputes may involve government or private contracts. For CIAC to acquire
jurisdiction, the parties to a dispute must agree to submit the dispute to voluntary
arbitration (for further information, e-
mail: ciac_ciap@yahoo.com, ciac@dti.gov.ph).
 Office for Alternative Dispute Resolution. The Office for Alternative
Dispute Resolution is the official government agency designated to promote,
develop and expand the use of ADR in the private and public sectors, to assist
the government to monitor, study and evaluate the use by the public and the
private sector of ADR and recommend to Congress necessary statutory changes
to develop, strengthen and improve ADR practices (for further information, e-
mail: oadr_doj@yahoo.com / oadr@oadr.doj.gov.ph).

Proposals for reform

35. Are there any proposals for dispute resolution reform? If yes, when are they likely to come into
force?
To date, there is a pending Senate Bill No. 231 entitled, "The Philippine Arbitration
Act of 2013". This Senate Bill aims to introduce a mandatory arbitration process for
disputes related to:
 Medical malpractice.
 Maritime law.
 Insurance.
 Intellectual property.
 Intra-corporate issues.
This act will not change the current arbitration laws of the Philippines. It merely
expands the issues/matters that are required and mandated to be resolved by
arbitration.
Online resources
Office for Alternative Dispute Resolution
W http://oadr.doj.gov.ph/
Description. The Office for Alternative Dispute Resolution is the official government
agency to promote, develop and expand the use of ADR in the private and public
sectors; and, to assist government to monitor, study and evaluate the use by the
public and the private sector of ADR, and recommend to Congress needful statutory
changes to develop, strengthen and improve ADR practices. This is the official
website of the Office for Alternative Dispute Resolution and is maintained by the
Office. The information is official and up-to-date.

Supreme Court of the Philippines

W http://sc.judiciary.gov.ph/
Description. This is the official website of the Supreme Court of the Philippines and
is maintained by the Court. The information is official and up-to-date.

Contributor profiles
Simeon V Marcelo, Founding Partner and Chief Executive Officer
Cruz, Marcelo, & Tenefrancia

T +63 02 8105858
F +63 02 8103838
E sv.marcelo@cruzmarcelo.com
W www.cruzmarcelo.com
Professional qualifications. Member of the Philippine Bar, May 1980 to date;
Solicitor General and Ombudsman of the Republic of the Philippines, 2001 to 2005
Areas of practice. Commercial litigation and alternative dispute resolution; tax
litigation; telecommunications; information and communications technology;
appellate practice; banking litigation; international civil service law; corporate
recovery/rehabilitation and insolvency.
Non-professional qualifications. Member, Pi Gamma Mu International Social
Science Honor Society; Member, Order of the Purple Feather Honor Society, U.P.
College of Law
Recent transactions
 Member, The World Bank Independent Advisory Board (2008-2014).
 Co-Arbitrator, ICC International Court of Arbitration (2012-2014).
 Consultant, USAID Anti-Corruption Project in the Philippines (2012-2014).
 Head, legal panel that secured recently a very significant favourable award in
an arbitration proceedings conducted by the Construction Industry Arbitration
Commission (2015).
 Chairman of the Arbitration Panel of an ongoing arbitration (2015).
 Gamechanger of the Year (Litigation & Dispute Resolution – Philippines) –
ACQ Global Awards (2015).
Languages. English, Filipino
Professional associations/memberships. Integrated Bar of the Philippines;
Philippine Bar Association; Philippine Dispute Resolution Centre Inc.
Publications.
 Alternative Dispute Resolution – Philippines, Lawyer Monthly, March 2015.
 Getting the Deal Through – Dispute Resolution – Philippines Chapter, Law
Business Research Ltd, 2015.
 Acquisition International - Philippines: Immeasurable Strength, Acquisition
International Global Media Publication, 2014.
 Getting the Deal Through – Enforcement of Foreign Judgments – Philippines
Chapter, Law Business Research Ltd, 2014.
 Virtual Round Table – Litigation & Dispute Resolution 2014, Corporate
Livewire, 2014.
 The Asset Tracing And Recovery Review – Philippines Chapter, The Law
Reviews, 2014.
 Expert Guide – Litigation & Dispute Resolution 2013, Corporate Livewire,
2013.
 ''The long road from Zurich to Manila: The recovery of the Marcos Swiss
dollar deposits'' Recovering Stolen Assets, 2008.
 ''Denying safe havens through judicial cooperation: The experience of the
Philippines'', Knowledge Commitment Action Against Corruption in Asia and the
Pacific, 30 September 2005.
 “Challenges to the Coercive Investigative and Administrative Powers of the
Office of the Ombudsman”, Philippine Law Journal, June 2004.
 “Combating Corruption in the Philippines” Controlling Corruption in Asia and
the Pacific, Asian Development Bank, 05 December 2003.
 “Corporate Recovery in the Philippines”, Asian Revival, published by Asia
Law & Practice [A Division of Euromoney Publications (Jersey) Ltd], 1999.

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