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Equitable PCI Bank vs. RCBC, G.R. No. 182248.
December 18, 2008
Parameters by which an arbitral award may be set aside.
In Asset Privatization Trust v. Court of Appeals, 300 SCRA 579 (1998),
the Court passed on similar issues as the ones tendered in the instant
petition. In that case, the arbitration committee issued an arbitral
award which the trial court, upon due proceedings, confirmed despite
the opposition of the losing party. Motions for reconsideration by the
losing party were denied. An appeal interposed by the losing party to
the CA was denied due course. On appeal to this Court, we
established the parameters by which an arbitral award may be set
aside, to wit: As a rule, the award of an arbitrator cannot be set aside
for 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. x x x x Finally, it should be stressed that while a
court is precluded from overturning an award for errors in
determination of factual issues, nevertheless, if an examination of the
record reveals no support whatever for the arbitrators’
determinations, their award must be vacated. In the same manner, an
award must be vacated if it was made in “manifest disregard of the
law."
Errors in law and fact would not generally justify the
reversal of an arbitral award.
Following Asset Privatization Trust, errors in law and fact would not
generally justify the reversal of an arbitral award. A party asking for
the vacation of an arbitral award must show that any of the grounds
for vacating, rescinding, or modifying an award are present or that the
arbitral award was made in manifest disregard of the law. Otherwise,
the Court is duty-bound to uphold an arbitral award.
To justify the vacation of an arbitral award on account of
“manifest disregard of the law,” the arbiter’s findings must
clearly and unequivocally violate an established legal
precedent.
To justify the vacation of an arbitral award on account of “manifest
disregard of the law,” the arbiter’s findings must clearly and
unequivocally violate an established legal precedent. Anything less
would not suffice.
Chung Fu Industries (Phils.), Inc. vs. Court of Appeals,
G.R. No. 96283. February 25, 1992
The finality of the arbitrator’s award is not absolute and
without exceptions.
It is stated explicitly under Art. 2044 of the Civil Code that the finality
of the arbitrators’ award is not absolute and without exceptions.
Where the conditions described in Articles 2038, 2039 and 2040
applicable to both compromises and arbitrations are obtaining, the
arbitrators’ award may be annulled or rescinded. Additionally, under
Sections 24 and 25 of the Arbitration Law, there are grounds for
vacating, modifying or rescinding an arbitrator’ award. Thus, if and
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when the factual circumstances referred to in the above-cited
provisions are present, judicial review of the award is properly
warranted.
Even decisions of administrative agencies which are
declared ‘final’ by law are not exempt from judicial review
when so warranted.
Even decisions of administrative agencies which are declared ‘final’ by
law are not exempt from judicial review when so warranted. Thus, in
the case of Oceanic Bic Division (FFW), et al. v. Flerida Ruth P.
Romero, et al., this Court had occasion to rule that: “x x x x Inspite of
statutory provisions making ‘final’ the decisions of certain
administrative agencies, we have taken cognizance of petitions
questioning these decisions where want of jurisdiction, grave abuse of
discretion, violation of due process, denial of substantial justice or
erroneous interpretation of the law were brought to our attention.
Voluntary arbitrators by the nature of their functions act
in a quasi-judicial capacity.
It should be stressed too, that voluntary arbitrators, by the nature of
their functions, act in a quasi-judicial capacity. It stands to reason,
therefore, that their decisions should not be beyond the scope of the
power of judicial review of this Court.
Korea Technologies Co., Ltd. vs. Lerma, G.R. No.
143581. January 7, 2008
While it is established in this jurisdiction is the rule that
the law of the place where the contract is made governs -
lex loci contractus - Art. 2044 of the Civil Code sanctions
the validity of mutually agreed arbitral clause or the
finality and binding effect of an arbitral award.
Established in this jurisdiction is the rule that the law of the place
where the contract is made governs. Lex loci contractus. The contract
in this case was perfected here in the Philippines. Therefore, our laws
ought to govern. Nonetheless, Art. 2044 of the Civil Code sanctions
the validity of mutually agreed arbitral clause or the finality and
binding effect of an arbitral award. Art. 2044 provides, “Any stipulation
that the arbitrators’ award or decision shall be final, is valid, without
prejudice to Articles 2038, 2039 and 2040.” Arts. 2038, 2039, and 2040
above cited refer to instances where a compromise or an arbitral
award, as applied to Art. 2044 pursuant to Art. 2043, may be voided,
rescinded, or annulled, but these would not denigrate the finality of
the arbitral award.
The Philip-pines has incorporated the Model Law in
Alternative Dispute Resolution Act of 2004.
For domestic arbitration proceedings, we have particular agencies to
arbitrate disputes arising from contractual relations. In case a foreign
arbitral body is chosen by the parties, the arbitration rules of our
domestic arbitration bodies would not be applied. As signatory to the
Arbitration Rules of the UNCITRAL Model Law on International
Commercial Arbitration of the United Nations Commission on
International Trade Law (UNCITRAL) in the New York Convention on
June 21, 1985, the Philippines committed itself to be bound by the
Model Law. We have even incorporated the Model Law in Republic Act
No. (RA) 9285, otherwise known as the Alternative Dispute
Resolution Act of 2004 entitled An Act to Institutionalize the Use of
an Alternative Dispute Resolution System in the Philippines and to
Establish the Office for Alternative Dispute Resolution, and for Other
Purposes, promulgated on April 2, 2004. Secs. 19 and 20 of Chapter 4
of the Model Law are the pertinent provisions.
Under Sec. 24 of R.A. 9285, the Regional Trial Court does
not have jurisdiction over disputes that are properly the
subject of arbitration pursuant to an arbitration clause,
and mandates the referral to arbitration in such cases.
Under Sec. 24, the RTC does not have jurisdiction over disputes that
are properly the subject of arbitration pursuant to an arbitration
clause, and mandates the referral to arbitration in such cases, thus:
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SEC. 24. Referral to Arbitration. - A court before which an action is
brought in a matter which is the subject matter of an arbitration
agreement shall, if at least one party so requests not later than 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.
Even if foreign arbitral awards are mutually stipulated by
the parties in the arbitration clause to be final and
binding, the same are not immediately enforceable or
cannot be implemented immediately they must still be
confirmed by the Regional Trial Court.
Foreign arbitral awards while mutually stipulated by the parties in the
arbitration clause to be final and binding are not immediately
enforceable or cannot be implemented immediately. Sec. 35 of the
UNCITRAL Model Law stipulates the requirement for the arbitral
award to be recognized by a competent court for enforcement, which
court under Sec. 36 of the UNCITRAL Model Law may refuse
recognition or enforcement on the grounds provided for. RA 9285
incorporated these provisos to Secs. 42, 43, and 44 relative to Secs.
It is now clear that foreign arbitral awards when confirmed
by the Regional Trial Court are deemed not as a judgment
of a foreign court but as a foreign arbitral award, and
when confirmed, are enforced as final and executory
decisions of our courts of law - the concept of a final and
binding arbitral award is similar to judgments or awards
given by some quasi-judicial bodies, like the National
Labor Relations Commission and the Mines Adjudication
Board.
It is now clear that foreign arbitral awards when confirmed by the
RTC are deemed not as a judgment of a foreign court but as a foreign
arbitral award, and when confirmed, are enforced as final and
executory decisions of our courts of law. Thus, it can be gleaned that
the concept of a final and binding arbitral award is similar to
judgments or awards given by some of our quasi-judicial bodies, like
the National Labor Relations Commission and Mines Adjudication
Board, whose final judgments are stipulated to be final and binding, but
not immediately executory in the sense that they may still be judicially
reviewed, upon the instance of any party. Therefore, the final foreign
arbitral awards are similarly situated in that they need first to be
confirmed by the RTC.
While the Regional Trial Court (RTC) does not have
jurisdiction over disputes governed by arbitration mutually
agreed upon by the parties, still the foreign arbitral award
is subject to judicial review by the RTC which can set aside,
reject, or vacate it.
While the RTC does not have jurisdiction over disputes governed by
arbitration mutually agreed upon by the parties, still the foreign
arbitral award is subject to judicial review by the RTC which can set
aside, reject, or vacate it. In this sense, what this Court held in Chung
Fu Industries (Phils.), Inc., 206 SCRA 545 (1992), relied upon by
KOGIES is applicable insofar as the foreign arbitral awards, while final
and binding, do not oust courts of jurisdiction since these arbitral
awards are not absolute and without exceptions as they are still
judicially reviewable. Chapter 7 of RA 9285 has made it clear that all
arbitral awards, whether domestic or foreign, are subject to judicial
review on specific grounds provided for.
Grounds for judicial review different in domestic and
foreign arbitral awards·for foreign or international
arbitral awards, the grounds for setting aside, rejecting or
vacating the award by the Regional Trial Court (RTC) are
provided under Art. 34(2) of the United Nations
Commission on International Trade Law (UNCITRAL)
Model Law, while for final domestic arbitral awards, they
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may only be assailed before the RTC and vacated on the
grounds provided under Sec. 25 of RA 876.
The differences between a final arbitral award from an international
or foreign arbitral tribunal and an award given by a local arbitral
tribunal are the specific grounds or conditions that vest jurisdiction
over our courts to review the awards. For foreign or international
arbitral awards which must first be confirmed by the RTC, the
grounds for setting aside, rejecting or vacating the award by the RTC
are provided under Art. 34(2) of the UNCITRAL Model Law. For final
domestic arbitral awards, which also need confirmation by the RTC
pursuant to Sec. 23 of RA 876 and shall be recognized as final and
executory decisions of the RTC, they may only be assailed before the
RTC and vacated on the grounds provided under Sec. 25 of RA 876.
An arbitration clause, stipulating that the arbitral award is
final and binding, does not oust our courts of jurisdiction
as the international arbitral award is still judicially
reviewable under certain conditions provided for by the
United Nations Commission on International Trade Law
(UNCITRAL) Model Law on International Commercial
Arbitration (ICA) as applied and incorporated in RA 9285.
Petitioner is correct in its contention that an arbitration clause,
stipulating that the arbitral award is final and binding, does not oust
our courts of jurisdiction as the international arbitral award, the
award of which is not absolute and without exceptions, is still
judicially reviewable under certain conditions provided for by the
UNCITRAL Model Law on ICA as applied and incorporated in RA
9285.
Where an arbitration clause in a contract is availing,
neither of the parties can unilaterally treat the contract as
rescinded since whatever infractions or breaches by a
party or differences arising from the contract must be
brought first and resolved by arbitration, and not through
an extrajudicial rescission or judicial action.
What this Court held in University of the Philippines v. De Los
Angeles, 35 SCRA 102 (1970) and reiterated in succeeding cases, that
the act of treating a contract as rescinded on account of infractions by
the other contracting party is valid albeit provisional as it can be
judicially assailed, is not applicable to the instant case on account of a
valid stipulation on arbitration. Where an arbitration clause in a
contract is availing, neither of the parties can unilaterally treat the
contract as rescinded since whatever infractions or breaches by a
party or differences arising from the contract must be brought first
and resolved by arbitration, and not through an extrajudicial rescission
or judicial action.
The pendency of an arbitral proceeding does not foreclose
resort to the courts for provisional reliefs - the RTC has
authority and jurisdiction to grant interim measures of
protection.
In the recent 2006 case of Transfield Philippines, Inc. v. Luzon Hydro
Corporation, 490 SCRA 14 (2006), we were explicit that even “the
pendency of an arbitral proceeding does not foreclose resort to the
courts for provisional reliefs.” We explicated this way: As a
fundamental point, the pendency of arbitral proceedings does not
foreclose resort to the courts for provisional reliefs. The Rules of the
ICC, which governs the partiesÊ arbitral dispute, allows the
application of a party to a judicial authority for interim or
conservatory measures. Likewise, Section 14 of Republic Act (R.A.)
No. 876 (The Arbitration Law) recognizes the rights of any party to
petition the court to take measures to safeguard and/or conserve any
matter which is the subject of the dispute in arbitration. In addition,
R.A. 9285, otherwise known as the “Alternative Dispute Resolution
Act of 2004,” allows the filing of provisional or interim measures with
the regular courts whenever the arbitral tribunal has no power to act
or to act effectively. It is thus beyond cavil that the RTC has authority
and jurisdiction to grant interim measures of protection.
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LM Power Engineering Corporation vs. Capitol
Industrial Construction Groups, Inc., G.R. No. 141833.
March 26, 2003
The inclusion of an arbitration clause in a contract does
not ipso facto divest the courts of jurisdiction to pass upon
the findings of arbitral bodies, because the awards are still
judicially reviewable under certain conditions.
We side with respondent. Essentially, the dispute arose from the
partiesÊ incongruent positions on whether certain provisions of their
Agreement could be applied to the facts. The instant case involves
technical discrepancies that are better left to an arbitral body that has
expertise in those areas. In any event, the inclusion of an arbitration
clause in a contract does not ipso facto divest the courts of
jurisdiction to pass upon the findings of arbitral bodies, because the
awards are still judicially reviewable under certain conditions.
Being an inexpensive, speedy and amicable method of
settling disputes, arbitration - along with mediation,
conciliation and negotiation - is encouraged by the
Supreme Court; Arbitration is regarded as the “wave of the
future” in international civil and commercial disputes;
Consistent with the policy of encouraging alternative
dispute resolution methods, courts should liberally
construe arbitration clauses.
Being 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. Brushing aside a
contractual agreement calling for arbitration between the parties
would be a step backward. Consistent with the above-mentioned
policy of encouraging alternative dispute resolution methods, courts
should liberally construe arbitration clauses. Provided such clause is
susceptible of an interpretation that covers the asserted dispute, an
order to arbitrate should be granted. Any doubt should be resolved in
favor of arbitration.
Recourse to the CIAC may now be availed of whenever a
contract “contains a clause for the submission of a future
controversy to arbitration”.
On the other hand, Section 1 of Article III of the new Rules of
Procedure Governing Construction Arbitration has dispensed with
this requirement and recourse to the CIAC may now be availed of
whenever a contract “contains a clause for the submission of a future
controversy to arbitration,” in this wise: “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.” The foregoing amendments in the Rules were formalized by
CIAC Resolution Nos. 2-91 and 3-93.
Insular Savings Bank vs. Far East Bank and Trust
Company, G.R. No. 141818. June 22, 2006
 Supreme Court. By enabling parties to resolve their disputes amicably,
Under Article 2044 of the New Civil Code, the validity of
any stipulation on the finality of the arbitrators’ award or
decision is recognized; The decision of the Arbitration
Committee is subject to judicial review.
As provided in the PCHC Rules, the findings of facts of the decision
or award rendered by the Arbitration Committee shall be final and
conclusive upon all the parties in said arbitration dispute. Under
Article 2044of the New Civil Code, the validity of any stipulation on
the finality of the arbitratorsÊ award or decision is recognized.
However, where the conditions described in Articles 2038, 2039 and
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2040 applicable to both compromises and arbitrations are obtaining,
the arbitrators’ award may be annulled or rescinded. Consequently,
the decision of the Arbitration Committee is subject to judicial review.
An aggrieved party before the Arbitration Committee has
several judicial remedies available - it may petition the
RTC to issue an order vacating the award on the grounds
provided for under Section 24 of the Arbitration Law, or
file a petition for review under Rule 43 of the Rules of
Court with the Court of Appeals, or file a petition for
certiorari under Rule 65.
Petitioner had several judicial remedies available at its disposal after
the Arbitration Committee denied its Motion for Reconsideration. It
may petition the proper RTC to issue an order vacating the award on
the grounds provided for under Section 24 of the Arbitration Law.
Petitioner likewise has the option to file a petition for review under
Rule 43 of the Rules of Court with the Court of Appeals on questions
of fact, of law, or mixed questions of fact and law. Lastly, petitioner may
file a petition for certiorari under Rule 65 of the Rules of Court on
the ground that the Arbitrator Committee acted without or in excess
of its jurisdiction or with grave abuse of discretion amounting to lack
or excess of jurisdiction. Since this case involves acts or omissions of
a quasi- judicial agency, the petition should be filed in and cognizable
only by the Court of Appeals.
The proper recourse of an aggrieved party from the denial
of its motion for reconsideration by the Arbitration
Committee is to file either a motion to vacate the arbitral
award with the RTC, a petition for review with the Court
of Appeals under Rule 43, or a petition for certiorari
under Rule 65.
The proper recourse of petitioner from the denial of its motion for
reconsideration by the Arbitration Committee is to file either a
motion to vacate the arbitral award with the RTC, a petition for
review with the Court of Appeals under Rule 43 of the Rules of
Court, or a petition for certiorari under Rule 65 of the Rules of
Court. In the case at bar, petitioner filed a petition for review with the
RTC when the same should have been filed with the Court of Appeals
under Rule 43 of the Rules of Court. Thus, the RTC of Makati did not
err in dismissing the petition for review for lack of jurisdiction but not
on the ground that petitioner should have filed a separate case from
Civil Case No. 92-145 but on the necessity of filing the correct
petition in the proper court. It is immaterial whether petitioner filed
the petition for review in Civil Case No. 92- 145 as an appeal of the
arbitral award or whether it filed a separate case in the RTC,
considering that the RTC will only have jurisdiction over an arbitral
award in cases of motions to vacate the same. Otherwise, as
elucidated herein, the Court of Appeals retains jurisdiction in petitions
for review or in petitions for certiorari. Consequently, petitionerÊs
arguments, with respect to the filing of separate action from Civil
Case No. 92-145 resulting in a multiplicity of suits, cannot be given
due course.
Alternative dispute resolution methods or ADRs- like
arbitration, mediation, negotiation and conciliation - are
encouraged by the Supreme Court.
Alternative dispute resolution methods or ADRs - like arbitration,
mediation, negotiation and conciliation - are encouraged by the
they provide solutions that are less time-consuming, less tedious, less
confrontational, and more productive of goodwill and lasting
relationships. It must be borne in mind that arbitration proceedings
are mainly governed by the Arbitration Law and suppletorily by the
Rules of Court.
Reyes vs. Balde II, G.R. No. 168384. August 7, 2006
The Construction Industry Arbitration Commission (CIAC)
has original and exclusive jurisdiction over disputes arising
from or connected with construction contracts entered
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into by parties that have agreed to submit their dispute to
voluntary arbitration.
In the case of Philrock, Inc. v. Construction Industry Arbitration
Commission, 359 SCRA 632 (2001), the Court has ruled that CIAC
has original and exclusive jurisdiction over disputes arising from or
connected with construction contracts entered into by parties that
have agreed to submit their dispute to voluntary arbitration. Section 1,
Article III of the CIAC Rules of Procedure Governing Construction
Arbitration likewise provides that recourse to the CIAC may be
availed of whenever a contract contains a clause for the submission of
a future controversy to arbitration, thus: 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.
The presence of the arbitration clause in the parties’
contract vests jurisdiction on the Construction Industry
Arbitration Commission (CIAC) on all controversies arising
from such contract.
We agree with the findings of the Court of Appeals that the Design-
Build Construction Agreement mutually entered into by the parties
contain an arbitration clause, to wit: ARTICLE 10. ARBITRATION. All
questions in dispute under the Agreement shall be submitted in
accordance with the provisions of Philippine Law on Arbitration and
provided for in Article 2042 of the New Civil Code of the Philippines
and the provisions of Republic Act No. 876. Clearly, the presence of
the arbitration clause in the partiesÊ contract vests jurisdiction on the
CIAC on all controversies arising from such contract. The arbitral
clause in the agreement is a commitment by the parties to submit to
arbitration the disputes covered therein. Because that clause is
binding, they are expected to abide by it in good faith. Where the
jurisdiction of CIAC is properly invoked, the failure or refusal of
herein petitioner to arbitrate shall not affect the proceedings.
Arbitration proceedings shall continue notwithstanding the absence
or lack of participation of petitioner, and the award shall be made
after receiving the evidence of the claimant.
E.O. No. 1008 which vests jurisdiction to the Construction
Industry Arbitration Commission (CIAC) over construction
disputes is a special law - hence, it takes precedence over
Batas Pambansa Blg. 129 or the Judiciary Reorganization
Act of 1980, a general law which vests jurisdiction to the
Regional Trial Courts over civil actions in which the subject
of the litigation is incapable of pecuniary estimation.
With respect to petitioner’s contention that the action is purely civil
in nature hence, jurisdiction rests with the Regional Trial Court, the
same must fail. Since the action is rooted on alleged violations of the
agreement, it is embraced by the term “construction dispute.” As
CIAC aptly ruled: As regards Respondent’s assertion that the claims in
the civil case are not arbitrable, this Commission again begs to digress.
A cursory perusal of the claims in civil case would show that such fall
within the scope of CIAC jurisdiction, to wit: (1) accounting of all
payments made for the purchase of construction materials; (2) cost of
additional work; (3) balance on the contract price; (4) interest; (5)
rescission of contract; (6) moral damages; (7) exemplary damages; and
(8) cost of suit. Besides, Section 23 of E.O. No. 1008 expressly
provides that all provisions of existing laws, proclamations, decrees,
letters of instructions and executive orders contrary to or
inconsistent with E.O. No. 1008 are repealed or modified accordingly.
E.O. No. 1008 which vests jurisdiction to the CIAC over construction
disputes is a special law; hence, it takes precedence over Batas
Pambansa Blg. 129 or the Judiciary Reorganization Act of 1980, a
general law which vests jurisdiction to the Regional Trial Courts over
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civil actions in which the subject of the litigation is incapable of
pecuniary estimation.
Being an inexpensive, speedy and amicable method of
settling disputes, arbitration - along with mediation,
conciliation and negotiation- is encouraged by the
Supreme Court.
It bears to stress that being 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. Brushing aside a contractual agreement calling
for arbitration between the parties would be a step backward.
BF Corporation vs. Court of Appeals, G.R. No. 120105.
March 27, 1998.
Formal Requirements of an Agreement to Arbitrate; To
“subscribe” means to write underneath, as one’s name; to
sign at the end of a document.
The formal requirements of an agreement to arbitrate are therefore
the following: (a) it must be in writing and (b) it must be subscribed by
the parties or their representatives. There is no denying that the
parties entered into a written contract that was submitted in
evidence before the lower court. To “subscribe” means to write
underneath, as one’s name; to sign at the end of a document. That
word may sometimes be construed to mean to give consent to or to
attest.
The failure of a party to initial the ‘Conditions of
Contract’ does not affect compliance with the formal
requirements for arbitration agreements where that
particular portion of the covenants between the parties is
included by reference in the Articles of Agreement.
The Court finds that, upon a scrutiny of the records of this case, these
requisites were complied with in the contract in question. The Articles
of Agreement, which incorporates all the other contracts and
agreements between the parties, was signed by representatives of
both parties and duly notarized. The failure of the private respondent’s
representative to initial the ‘Conditions of Contract’ would therefor
not affect compliance with the formal requirements for arbitration
agreements because that particular portion of the covenants between
the parties was included by reference in the Articles of Agreement.
The potentials of arbitration as one of the alternative
dispute resolution methods that are now rightfully vaunted
as “the wave of the future” in international relations, is
recognized worldwide.
It should be noted that in this jurisdiction, arbitration has been held
valid and constitutional. Even before the approval on June 19, 1953 of
Republic Act No. 876, this Court has countenanced the settlement of
disputes through arbitration. Republic Act No. 876 was adopted to
supplement the New Civil Code’s provisions on arbitration. Its
potentials as one of the alternative dispute resolution methods that
are now rightfully vaunted as “the wave of the future” in international
relations, is recognized worldwide. To brush aside a contractual
agreement calling for arbitration in case of disagreement between the
parties would therefore be a step backward.
ABS-CBN Broadcasting Corporation vs. World
Interactive Network Systems (WINS) Japan Co., Ltd.,
G.R. No. 169332. February 11, 2008
RA 876 itself mandates that it is the Court of First
Instance, now the RTC, which has jurisdiction over
questions relating to arbitration, such as a petition to
vacate an arbitral award.
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RA 876 itself mandates that it is the Court of First Instance, now the
RTC, which has jurisdiction over questions relating to arbitration, such
as a petition to vacate an arbitral award.
As RA 876 did not expressly provide for errors of fact and/
or law and grave abuse of discretion (proper grounds for a
petition for review under Rule 43 and a petition for
certiorari under Rule 65, respectively) as grounds for
maintaining a petition to vacate an arbitral award in the
RTC, it necessarily follows that a party may not avail of
the latter remedy on the grounds of errors of fact and/or
law or grave abuse of discretion to overturn an arbitral
award.
The law itself clearly provides that the RTC must issue an order
vacating an arbitral award only “in any one of the . . . cases”
enumerated therein. Under the legal maxim in statutory construction
expressio unius est exclusio alterius, the explicit mention of one thing
in a statute means the elimination of others not specifically
mentioned. As RA 876 did not expressly provide for errors of fact
and/or law and grave abuse of discretion (proper grounds for a
petition for review under Rule 43 and a petition for certiorari under
Rule 65, respectively) as grounds for maintaining a petition to vacate
an arbitral award in the RTC, it necessarily follows that a party may
not avail of the latter remedy on the grounds of errors of fact and/or
law or grave abuse of discretion to overturn an arbitral award.
Adamson v. Court of Appeals (232 SCRA 602) gave ample
warning that a petition to vacate filed in the RTC which is
not based on the grounds enumerated in Section 24 of RA
876 should be dismissed.
Adamson v. Court of Appeals, 232 SCRA 602 (1994), gave ample
warning that a petition to vacate filed in the RTC which is not based
on the grounds enumerated in Section 24 of RA 876 should be
dismissed. In that case, the trial court vacated the arbitral award
seemingly based on grounds included in Section 24 of RA 876 but a
closer reading thereof revealed otherwise. On appeal, the CA
reversed the decision of the trial court and affirmed the arbitral
award.
The Court held that a voluntary arbitrator is properly
classified as a “quasi-judicial instrumentality” and is, thus,
within the ambit of Section 9(3) of the Judiciary
Reorganization Act, as amended.
In Luzon Development Bank v. Association of Luzon Development
Bank Employees, 249 SCRA 162 (1965), the Court held that a
voluntary arbitrator is properly classified as a “quasi-judicial
instrumentality” and is, thus, within the ambit of Section 9 (3) of the
Judiciary Reorganization Act, as amended.
The proper remedy from the adverse decision of a
voluntary arbitrator, if errors of fact and/or law are
raised, is a petition for review under Rule 43 of the Rules
of Court.
This rule was cited in Sevilla Trading Company v. Semana, 428 SCRA
239 (2004), Manila Midtown Hotel v. Borromeo, 438 SCRA 653
(2004), and Nippon Paint Employees Union-Olalia v. Court of Appeals,
443 SCRA 286 (2004). These cases held that the proper remedy from
the adverse decision of a voluntary arbitrator, if errors of fact and/or
law are raised, is a petition for review under Rule 43 of the Rules of
Court. Thus, petitioner’s contention that it may avail of a petition for
review under Rule 43 under the circumstances of this case is correct.
Any agreement stipulating that “the decision of the
arbitrator shall be final and unappealable” and “that no
further judicial recourse if either party disagrees with the
whole or any part of the arbitrator’s award may be availed
of” cannot be held to preclude in proper cases the power
of judicial review which is inherent in courts.
5
As may be gleaned from the above stated provision, it is well within
the power and jurisdiction of the Court to inquire whether any
instrumentality of the Government, such as a voluntary arbitrator, has
gravely abused its discretion in the exercise of its functions and
prerogatives. Any agreement stipulating that “the decision of the
arbitrator shall be final and unappealable” and “that no further judicial
recourse if either party disagrees with the whole or any part of the
arbitrator’s award may be availed of” cannot be held to preclude in
proper cases the power of judicial review which is inherent in courts.
We will not hesitate to review a voluntary arbitrator’s award where
there is a showing of grave abuse of authority or discretion and such
is properly raised in a petition for certiorari and there is no appeal,
nor any plain, speedy remedy in the course of law.
Chang vs. Assurance Corporation, No. 3567. August 20,
1907.
Fire Insurance; Condition Precedent.
A policy of fire insurance contained a clause providing that in the
event of a loss under the policy, unless the company should deny all
liability, as a condition precedent to the bringing of any suit by the
insured upon the policy the latter should first submit the question of
Iiability and indemnity to arbitration. Such a condition is a valid one in
law, and unless it be first complied with no action.can be brought. 

Waiver.
If in the course of the settlement of a loss, however, the action of the
company or its agents amounts to a refusal to pay, the company will
be deemed to have waived the condition precedent with reference to
arbitration and a suit upon the policy will He. 

Chan Linte vs. Law Union and Rock Ins. Co., etc., No.
16398. December 14, 1921

Arbitration After Action.
The plaintiff, having agreed to arbitration after his action was
commenced, and having submitted his proofs to the arbitrator, in the
absence of fraud or mistake, is estopped and bound by the award.
Effect Of Voluntary Submission.
Where a plaintiff commenced an action to recover upon an insurance
policy and then voluntarily submits the amount of his loss to
arbitration, under the terms and provisions of the policy, he cannot
ignore or nullify the award, and treat it as void upon the ground that
he is not satisfied with the decision.
Allen vs. Province of Tayabas, No. 12283. July 25, 1918.
Arbitration Agreements.
Unless the agreement is such as absolutely to close the doors of the
courts against the parties, which agreement would be void (Wahl and
Wahl vs. Donaldson, Sims & Co. [1903], 2 Phil., 301), courts will look
with favor upon such amicable arrangements and will only with great
reluctance interfere to anticipate or nullify the action of the arbitrator. 

Pleading And Practice; Remedies Of Contractor.
The possible remedies of the contractor are set out in the decision.
As a condition precedent to action by the courts, fraud or bad faith
on the part of the responsible Government official, or arbitrary or
unreasonable refusal of the certificate or approval must be alleged and
proved. 

Vega vs. San Carlos Milling Co., No. 21549. October 22,
1924
Arbitration; Courts; Jurisdiction ; Condition.
The contracting parties may covenant to submit to arbitration
whatever controversy may arise from the contract, but such a
covenant does not deprive the courts of jurisdiction to take
cognizance of a cause arising therefrom, even though before the
difference was not first submitted to arbitration, unless it has been
expressly stipulated, or is necessarily inferred from the text of the
contract that before any action is instituted, the case must be
ADR | Mediation | Arbitration
submitted to arbitration as a condition precedent to bringing the
action. 
 A.M. No. 01- 10-5-SC-PHILJA regards mediation as part of
Del Monte Corporation-USA vs. Court of Appeals, G.R.
No. 136154. February 7, 2001
Even before the enactment of Republic Act 876, the
Supreme Court has countenanced the settlement of
disputes through arbitration; Unless the agreement is such
as absolutely to close the doors of the courts against the
parties, which agreement would be void, the courts will
look with favor upon such amicable arrangement and will
only interfere with great reluctance to anticipate or nullify
the action of the arbitrator.
There is no doubt that arbitration is valid and constitutional in our
jurisdiction. Even before the enactment of RA 876, this Court has
countenanced the settlement of disputes through arbitration. Unless
the agreement is such as absolutely to close the doors of the courts
against the parties, which agreement would be void, the courts will
look with favor upon such amicable arrangement and will only
interfere with great reluctance to anticipate or nullify the action of the
arbitrator. Moreover, as RA 876 expressly authorizes arbitration of
domestic disputes, foreign arbitration as a system of settling
commercial disputes was likewise recognized when the Philippines
adhered to the United Nations “Convention on the Recognition and
the Enforcement of Foreign Arbitral Awards of 1958” under the 10
May 1965 Resolution No. 71 of the Philippine Senate, giving reciprocal
recognition and allowing enforcement of international arbitration
agreements between parties of different nationalities within a
contracting state.
Only parties to the Agreement, their assigns or heirs have
the right to arbitrate or could be compelled to arbitrate.
The Agreement between petitioner DMC-USA and private
respondent MMI is a contract. The provision to submit to arbitration
any dispute arising therefrom and the relationship of the parties is
part of that contract and is itself a contract. As a rule, contracts are
respected as the law between the contracting parties and produce
effect as between them, their assigns and heirs. Clearly, only parties to
the Agreement, i.e., petitioners DMC-USA and its Managing Director
for Export Sales Paul E. Derby, Jr., and private respondents MMI and its
Managing Director LILY SY are bound by the Agreement and its
arbitration clause as they are the only signatories thereto. Petitioners
Daniel Collins and Luis Hidalgo, and private respondent SFI, not
parties to the Agreement and cannot even be considered assigns or
heirs of the parties, are not bound by the Agreement and the
arbitration clause therein. Consequently, referral to arbitration in the
State of California pursuant to the arbitration clause and the
suspension of the proceedings in Civil Case No. 2637-MN pending the
return of the arbitral award could be called for but only as to
petitioners DMC-USA and Paul E. Derby, Jr., and private respondents
MMI and LILY SY, and not as to the other parties in this case, in
accordance with the recent case of Heirs of Augusto L. Salas, Jr. v.
Laperal Realty Corporation, which superseded that of Toyota Motor
Philippines Corp. v. Court of Appeals.
Where the issue before the Court could not be speedily and
efficiently resolved in its entirety if simultaneous
arbitration proceedings and trial, or suspension of trial
pending arbitration, is allowed, the trial court should hear
and adjudicate the case in a single and complete
proceeding.
The object of arbitration is to allow the expeditious determination of
a dispute. Clearly, the issue before us could not be speedily and
efficiently resolved in its entirety if we allow simultaneous arbitration
proceedings and trial, or suspension of trial pending arbitration.
Accordingly, the interest of justice would only be served if the trial
court hears and adjudicates the case in a single and complete
proceeding.
6
Chan Kent vs. Micarez, G.R. No. 185758. March 9, 2011
pre-trial where parties are encouraged to personally
attend the proceedings.
A.M. No. 01-10-5-SC-PHILJA regards mediation as part of pre-trial
where parties are encouraged to personally attend the proceedings.
The personal non-appearance, however, of a party may be excused
only when the representative, who appears in his behalf, has been duly
authorized to enter into possible amicable settlement or to submit to
alternative modes of dispute resolution.
Real Bank, Inc. vs. Samsung Mabuhay Corporation, G.R.
No. 175862. October 13, 2010

Mediation is part of pre-trial and failure of the plaintiff
to appear thereat merits sanction on the part of the
absent party.
In Senarlo v. Judge Paderanga, 617 SCRA 247 (2010), this Court
accentuated that mediation is part of pre-trial and failure of the
plaintiff to appear thereat merits sanction on the part of the absent
party. This court held: A.M. No. 01-10-5-SC- PHILJA dated 16 October
2001, otherwise known as the Second Revised Guidelines for the
Implementation of Mediation Proceedings and Section 5, Rule 18 of
the Rules of Court grant judges the discretion to dismiss an action for
failure of the plaintiff to appear at mediation proceedings.
Trinidad vs. Office of the Ombudsman, G.R. No.
166038. December 4, 2007
Criminal liability cannot be the subject of a compromise; A
complaint for misconduct, malfeasance or misfeasance
against a public officer or employee cannot just be
withdrawn at any time by the complainant.
Petitioner contends, however, that AEDC is barred from filing a
criminal complaint against him due to the dismissal on April 30, 1999
by the Regional Trial Court of Pasig City, Branch 261 of Civil Case No.
66213, a case filed by the AEDC for declaration of nullity of
proceedings, mandamus, and injunction which sought to disqualify the
Paircargo Consortium and to award the NAIA IPT III Project to
AEDC. The case was dismissed upon the parties’ joint motion with a
mutual quitclaim and waiver. It is a firmly recognized rule, however,
that criminal liability cannot be the subject of a compromise. For a
criminal case is committed against the People, and the offended party
may not waive or extinguish the criminal liability that the law imposes
for its commission. And that explains why a compromise is not one of
the grounds prescribed by the Revised Penal Code for the extinction
of criminal liability. Even a complaint for misconduct, malfeasance or
misfeasance against a public officer or employee cannot just be
withdrawn at any time by the complainant. This is because there is a
need to maintain the faith and confidence of the people in the
government and its agencies and instrumentalities. The ineluctable
conclusion, therefore, is that the order dismissing the above-
mentioned civil case does not bar petitionerÊs criminal prosecution.
A preliminary investigation is not the proper forum to
determine the alleged breach of the rule on confidentiality
of arbitration proceedings as provided under the
International Chamber of Commerce (ICC) Internal Rules
and Republic Act No. 9285 (Alternative Dispute Resolution
Act of 2004).
As for petitioner’s objection to the admissibility of documents culled
from various proceedings like the legislative hearings before the
Senate Blue Ribbon Committee and the arbitration proceedings
before the International Chamber of Commerce (ICC) International
Court of Arbitration in ICC Case No. 12610/TE/ MW, it is premature
to raise the same. First, there is no showing from the above-quoted
pertinent portion of its assailed Resolution that the Office of the
Ombudsman relied on those documents in support of its findings. At
the preliminary investigation, determination of probable cause merely
entails weighing of facts and circumstances, relying on the calculus of
common sense, without resorting to the calibrations of technical rules
ADR | Mediation | Arbitration
of evidence. It is not the proper forum to determine the alleged
breach by the OSG of the rule on confidentiality of arbitration
proceedings as provided under the ICC Internal Rules and Republic
Act No. 9285 (Alternative Dispute Resolution Act of 2004).
The arbitration tribunal is not an administrative agency
that could assume primary jurisdiction over matters within
a particular sphere of competence, particularly over any
issue the resolution of which is determinative juris et de
jure of the guilt or innocence of the accused.
Even if the Court takes cognizance of the criminal case subsequently
filed with the Sandiganbayan, application by analogy may not be made.
Unlike in Quiambao and Abacan, the arbitration tribunal is not an
administrative agency that could assume primary jurisdiction over
matters within a particular sphere of competence, particularly over
any issue the resolution of which is determinative juris et de jure of
the guilt or innocence of petitioner.
Rizal Commercial Banking Corporation vs Magwin
Marketing Corporation; G.R. No. 152878. May 5, 2003
Compromise Agreements; The proper course of action that
should have been taken by the court a quo, upon
manifestation of the parties of their willingness to discuss
a settlement, is to suspend the proceedings and allow them
reasonable time to come to terms; While the rules allow
the trial court to suspend its proceedings consistent with
the policy to encourage the use of alternative mechanisms
of dispute resolution, the grant to the parties of only 15
days to conclude a deal is, to say the least, a passive and
paltry attempt of the court a quo in its task of persuading
litigants to agree upon a reasonable concession.
As also explained therein, the proper course of action that should
have been taken by the court a quo, upon manifestation of the parties
of their willingness to discuss a settlement, was to suspend the
proceedings and allow them reasonable time to come to terms (a) If
willingness to discuss a possible compromise is expressed by one or
both parties; or (b) If it appears that one of the parties, before the
commencement of the action or proceeding, offered to discuss a
possible compromise but the other party refused the offer, pursuant
to Art. 2030 of the Civil Code. If despite efforts exerted by the trial
court and the parties the negotiations still fail, only then should the
action continue as if no suspension had taken place. Ostensibly, while
the rules allow the trial court to suspend its proceedings consistent
with the policy to encourage the use of alternative mechanisms of
dispute resolution, in the instant case, the trial court only gave the
parties fifteen (15) days to conclude a deal. This was, to say the least, a
passive and paltry attempt of the court a quo in its task of persuading
litigants to agree upon a reasonable concession. Hence, if only to
inspire confidence in the pursuit of a middle ground between
petitioner and respondents, we must not interpret the trial court’s
Orders as dismissing the action on its own motion because the
parties, specifically petitioner, were anxious to litigate their case as
exhibited in their several manifestations and motions.
7
Pa ra mount Insura nce Corp. vs. A.C . Ordoñez
Corporation, G.R. No. 175109. August 6, 2008
Any party who is interested to have the appealed case
mediated may also submit a “written request in any form
to the Court of Appeals.”
For cases pending at the time the said guidelines were issued, the
Division Clerks of Court, with the assistance of the Philippine
Mediation Center, shall identify the cases to be referred to mediation.
Thereafter, the petitioner or appellant shall specify, by writing or by
stamping on the right side of the caption of the initial pleading (under
the case number), that the case is mediatable. Further, any party who
is interested to have the appealed case mediated may also submit a
“written request in any form to the Court of Appeals.” In the instant
case, petitioner failed to write or stamp the notation “mediatable" on
its Memorandum of Appeal. Moreover, it failed to submit any written
request for mediation.
Agbayani vs. Court of Appeals, G.R. No. 183623. June
25, 2012
The compulsory process of arbitration is a pre-condition
for the filing of the complaint in court.
The compulsory process of arbitration is a pre-condition for the filing
of the complaint in court. Where the complaint (a) did not state that
it is one of excepted cases, or (b) it did not allege prior availment of
said conciliation process, or (c) did not have a certification that no
conciliation had been reached by the parties, the case should be
dismissed.
Positos vs. Chua, G.R. No. 179328. December 23, 2009

Non-compliance with conciliation requirement under the
Local Government Code (Republic Act No. 7160) affects
the sufficiency of a party’s cause of action and renders the
complaint susceptible to dismissal on the ground of
prematurity.
As reflected above, respondent’s complaint was dismissed for failure
to comply with the conciliation process. Non-compliance affected the
sufficiency of his cause of action and rendered the complaint
susceptible, as in fact it resulted to dismissal on the ground of
prematurity.



By means of pre-trial, the trial court is fully empowered to

sway the litigants to agree upon some fair compromise.
Clearly, another creative remedy was available to the court a quo to
attain a speedy disposition of Civil Case No. 99- 518 without
sacrificing the course of justice. Since the failure of petitioner to
submit a compromise agreement was the refusal of just one of herein
respondents, i.e., Benito Sy, to sign his name on the conforme of the
loan restructure documents, and the common concern of the courts a
quo was dispatch in the proceedings, the holding of a pre-trial
conference was the best-suited solution to the problem as this stage
in a civil action is where issues are simplified and the dispute quickly
and genuinely reconciled. By means of pre- trial, the trial court is fully
empowered to sway the litigants to agree upon some fair
compromise.