ATTERilTTTIVE DTSFU.

:rE

e,F
IARB|TRATTON, MED|ATTON AND CONC|LIAT|ON UNDER REPUBLTC ACT NO. 92e51

2005 Edition
REYNALDO B. ARALAR

TABLE OF CONTENTS
REPUBLIC ACT NO. 9285
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 CHAPTER

1-

GENERAL PROVISION

1 Section 7. Title 1 Section 2. Declsration of Policy 2 The Alternative Dispute Resolution Act of 2004 Party autonomy in dispute resolution explained ......... 2 How the State shall achieve alternative dispute

resolution

The case of Magellan Capital Management Corporation vs. Zosa (355 SCRA 1,57).......,........... 3
Section 3. Definition of

Alternative Dispute Resolution System defined Arbitration defined and explained ........... ADR provider defined Commercial arbitration defined Arbitrator defined
E-Commerce Act

Terms

..

12 13 13
1,4
1.4

Section 4. Electronic Signatttres in Global and

..........

1.4

Effect of Signatures in Global and E-Commerce Electronic Signature defined

Act....

1,4

1,4

15 Section 5. Liability of ADR Liability of ADR providers / practitioners ...................... 15

ProaiderslPractitioners

St't'tiorr

l), ('lraptt.r r), lJook l, l{evist.rl Aci rn i rr istra ti ve Code

3l.t(

15

St't'tiorr 15. l'ltt ol Mtlitliot ................. l'l.tt't' of ntt'd iation

Scctiorr 16. L)ffcct ofAgreement to Submit Dispute to Me dia t ion under lns t itutional Rul es ............ "Model Law" on mediation .............. Effect of submission to mediation by institution.......... Section 17. Enforcement of Mediated Settlement Agreements ... Deposit of mediated settlement agreement ................... Enforcement if mediator is sole arbitrator Award defined Convention state defined The case of Metro ConstructiorL Inc. vs. Chatham Properties, Inc. (365 SCRA 697)...........

26
26

Section 6. Exception to the Apptication of this Act ... Non-applicability of Republic Act No. 92g5

15
1,6

CHAPTER 2 _ MEDIATION
Section 7. Scope Scope of Chapter 2, Republic Act No. 92gS Mediation defined Mediation-Arbitration defined
Section 8. Application and Interpretation
L7 L7 77

26 26 27

27
28

L7
77 18 18 18 79

28 28
29

Considerations in applying and construing mediation provisions Integrity defined

Section 9. Confidentiality of lnformation Confidentiality defined and explained Privileged communication defined ...... Section 70. Waiaer of Confidentiality Waiver defined and waiver of confidentiality explained Section 77. Exceptions to priailege Instances when there is no privilege against disclosure Section 12. Prohibited Mediator REorts Prohibited mediation r"po.ir ..... Section 13. Mediator's Disclosure and Conflict of Interest,....... Mediator's disclosure and confl ict of interest ............ -. Section '1.4. Participation in Mediation Designation of lawyer or non-lawyer to assist in mediation Rescind and rescission defined and explained

29

CHAPTER 3 - OTHER ADR FORMS

Section 78. Referral of Dispute to Other ADR Forms Other forms of ADR defined
36 36

20 20
21
21.

CHAPTER 4 - INTERNATIONAL COMMERCIAL

ARBITRATION

23 23
23 24

Section 79. Adoption of the Model Law on Int er nat ional Commercial Arb itration ............. "Model Law" on international commercial mediation Section 20.lnterpretation of Model Law "Model Act" defined and distinguished from

J/

37
3/ 38 38

"Model Law" How to interpret "Model Law"

Section
2'1..

24
25

Commercial Arbitr ation .............

Commercial arbitration defined

Section 22. Legal Representation in lnternstional
25

38 39

25

Arbitration Representation in international arbitration

39 39

vi

vii

Sct'tiorr 23. ('ott.l'idutIidiIy oI ArliInrtiott 1,,"(t(,((tIilrs............ llule on confidentitrlity of arbitratior-r proceedings .................
Section 24. Referral to Arbitration ..............

3e

St'r'lirrrr .l.l.

40 40
41 41 41
41.

Ayltlitbililry lo l)ortrtslir Arlrilruliotr Applit'ability ol'Modcl l,aw arrd l{epublic Act No. 92t15 to domestic arbitration
CHAPTER 6 _ ARBITRATION OF CONSTRUCTION DISPUTES

5tt

58

Court referral to arbitration proceedings........... No referral of arbitration allowed

Section 25.Interpretation of the Act Interpretation of Republic Act No. 9285 The case of Philrock, Inc. vs. Construction Industry Arbitration Commission (359 SCRA 633)
Section 26. Meaning of "Appointing Authority', ..........

42
51 51

Scction 34. Arbitration of Construction Disputes: Goaerning Laut ............ Governing law on construction arbitration disputes.... Effect of decisions of voluntary arbitrators ................. Section 35. Coaerage of the Law Matters included in exclusive original jurisdiction of CIAC Section 36. Authority to Act as Mediator or Arbitrator Authority defined
Section 37. Appointment of Foreign Arbitrator

59 59

59 59
60

Appointing authority defined and explained .............

Section

27.IMat Functions

may be Performed by
51

60
6-1.

Appointing Authority Function defined Section 28. Grant of Interim Measure of protection Court may grant interim measure Interim defined When arbitral tribunal deemed constituted
Section 29. Further Authority for Arbitrator to Grant Interim Measure of protection Interim measures of protection by arbitrator ..............

52 52 54 54 54

61.

International party defined Who shall appoint foreign mediator...

Section 38. Applicability to Construction Arbitration .............. Applicability to construction arbitration Construction Industry Arbitration Commission (CIAC) jurisdiction Section 39. Court to Dismiss Case Inaolaing a Construction Dispute General rule is dismissal of construction arbitration dispute

6L

62
62 62

62

54
55 55 55 56 56 63

Section 30. Place of Arbitration Rules on place of arbitration Section 31. Language of the Arbitration Language or languages of arbitration .........

63

CHAPTER 7 - IUDTCTAL REVTEW OF ARBITRAL AYARDS

CHAPTER 5 - DOMESTIC ARBITRATION

Section 32. Law Goaerning Domestic Arbitration Domestic Arbitration defined
58 58

A. DOMESTIC AWARDS
Section 40. Confirmation of Award ............. Section 22, Republic Act No. 876 governs domestic awards
1X

64
64

vlll

st't'liorr 23. ('rtrtf'ilttttiulirtl o.l' Arbitruliott I)rot,t,r,tlit,ts.... Itulc orr confidentiality of arbitration proceedings
Section 2a. Referral to Arbitration ......... Court referral to arbitration proceedings No referral of arbitration allowed Section 25. lnterpretation of the Act Interpretation of Republic Act No. 92g5 The case of Philrock, Inc. vs. Construction Industry Arbitration Commission (359 SCRA 6gg).......... Section 26. Meaning of "Appointing Authority,, ............ Appointing authority defined and explained
Section
40
47 41
47 41

St't't

iorr'.1i.

iufu il i I y I o I )orttt'sl ic Arbi I ru I iot, ........ Applit'ability of Modcl l,arw and ltepublic Act
A1t1il

5n

No. 92tt5 to domestic arbitration

CHAPTER 6 - ARBITRATION OF CONSTRUCTION DISPUTES

Section 34. Arbitration of Construction Disputes: Goaerning Law Governing law on construction arbitration disputes Effect of decisions of voluntary arbitrators ....... Section 35. Coaerage of the Law Matters inclu ded in exclusive original jurisdiction of CIAC Section 36. Authority to Act as Mediator or Arbitrator Authority defined Section 37. Appointment of Foreign Arbitrator ......... International party defined Who shall appoint foreign mediator............. Section 38. Applicability to Construction Arbitr ation .............. Applicability to construction arbitration ......... Construction Industry Arbitration Commission (CIAC) jurisdiction......... Section 39. Court to Dismiss Case Inaolaing a Construction Dispute General rule is dismissal of construction arbitration dispute

59 59

51

51

60 60
67 61
61,

27.IMat Functions

may be performed by
51

Appointing Authority ........ Function defined

52 52 54 54 54

section 28. Grant of Interim Measure of protection Court may grant interim measure Interim defined When arbitral tribunal deemed constituted

62 62 52

section2eFirtheril:*::;:lf#,ir;:,iiiii,nr,
Interim measures of protection by arbitrator
Section 30. Place of Arbitration Rules on place of arbitration Section 37. Language of the Arbitration Language or languages of arbitration
54 55 55 55 56 56

63

CHAPTER 7 - IUDICIAL REVIEW OF ARBITRAL AI^ARDS

CHAPTER 5 - DOMESTIC ARBITRATION

Section 32. Law Goaerning Domestic Arbitration Domestic Arbitration defined
v111

A. DOMESTIC AWARDS
58 58

Section 40. Confirmation of Award Section 22, Republic Act No. 876 governs domestic awards .............
1X

64 64

l;irral arrcl cxccutory judgment explairrecl ......... Corrfirmation defined Iru nction of ordering execution of judgment ............... The case of Del Monte Corporation-USA vs. Court of Appeals (351 SCRA 373) Section 41. Vacation award ............ Section 25, Republic Act No. 876 on grounds for vacating domestic awards ............ Methods of vacating an award ...........

65 65
66

Set'tiorr 47. Vnrut utttl jurisdit'ttott .........

Vt,r'rut'and jurisdiction for recognition etc. of an arbitral award Venue and jurisdiction distinguished Section 48. Notice of Proceeding to Parties ............ Notice defined and explained Notice of proceedings to parties............

77 78
78 78 79

71 77 71

CHAPTER 8 - MISCETLANEOUS PROVISIONS

Section a9. Office for Alternatiae Dispute Resolution .............. Office of Alternative Dispute Resolution established .......... Objectives of the Office for Alternative Dispute Resolution.......... Section 50. Powers and Functions of the Office for Alternatiae Dispute Resolution ................ Power defined Functions of the Office of Alternative Dispute Resolution explained Formulation of standards for ADR training Certification defined Section 57. Appropriations Appropriation defined Appropriation for Republic Act No. 9285 Section 52. lmplementing Rules and Regulations (/RR) Rules and regulations defined and explained Functus oficio defined Section 53. Applicability of the Katarungang Pambarangay .... Katarungang Pambarangay provisions not repealed Section 54. Repealing clause .......... Repealing clause defined
XI

B. FOREIGN ARBITRAL AWARDS

Section a2. Application of the New York Conaention ...............

New York Convention defined Application of the New York Convention ........ Vacate defined and explained
Section 43. Recognition and Enforcement of Foreign Arbitral '\wards not Coaered by the New York Conaention .......... Recognition defined Enforcement defined Recognition and enforcement of non-New York Convention awards Comity and "ju dicial comity" defined and explained lleciprocity defined and explained

72 72
73 73

81
81

73 74
74

81

82 82 82 82 83 83 84 84

74
75

St't'lion 44. Foreign Arbitral Award not Foreign ludgment ............ liffect of a foreign arbitral award............ St'ction 45. Rejection of a Foreign Arbitral Award I low foreign arbitral award rejected Scction 46. Appeal from Court Decisions on Arbitral Autards Appeal defined Appeal from decisions on arbitral awards

75
75

76
76

76 77 77

85 85

Section 55. Separability clause Separability clause defined ........... Separability clause in Republic Act No. 9285 Section 56. Effectiuity

85
85 85

APPENDICES

REPUBLIC ACT NO. 9285

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
87

Appendix " A"

Republic Act No. 9285 (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) .......... Executive Order No. 1008 (Creating an Arbitration Machinery in the Construction Industry of the Philippines) Republic Act No. 876 (An Act to Authorize the Making of Arbitration and Submission Agreements, to Provide for the Appointment of Arbitrators and the Procedure for Arbitration in Civil Controversies, and For Other Purposes) .........

Appendix "8"

CHAPTER

GENERAL PROVISION
105

Appendix "C"

SECTION 1. fifle. This Act shall be known as the "Alternative Dispute Resolution Act of 2004." SEC. 2. Declaration of Policy. hereby - It ispromote declared the policy of the State to actively party autonomy in the resolution of disputes or the freedom of the parties to make their own arrangements to resolve their disputes. Towards this end, the State shall encourage and actively promote the use of Alternative Dispute Resolution (ADR) as an important means to achieve speedy and impartial iustice and declog court dockets. As such, the State shall provide means for the use of ADR as an efficient tool and an alternative procedure for the resolution of appropriate cases. Likewise, the State shall enlist active private sector participation in the settlement of disputes through ADR. This Act shall be without preiudice to the adoption by the Supreme Court of any ADR system, such as mediation, conciliation, arbitration, or any combination thereof as a means of irchir.vinti specdy :rnd efficient means of resolving

110

Appendix "D"

Republic Act No. 8792 (An Act Providing for the Recognition and Use of Electronic Commercial and Non-Commercial Transactions, Penalties for Unlawful Use thereof, and For Other Purposes) ..........
Rules on Electronic Evidence .................

121 165

Appendix "E"

Appendix "F" -

Uncitral Model Law on International Commercial Arbitration ........

xil

173

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-- Cieneral prcvi.sion

pending before all courts in the Philippines which shall be governed by such rules as the Supreme Court may approve from time to time,
cases

the Philippines which shall be governecl by such rules

as the

supreme court may approve from time to time.

The Alternative Dispute Resolution Act of 2OO4. The Alternative Dispute l{esolution Act of 2004 (ADR) is Republic Act No. 9285.It was approved on April 2,2004, Republic Act No. 9285 is entitled "An Act to Institutionalize the Use of an Alternative Dispute l(esolution System in the Philippines and to Establish the Office for Alternative Dispute Resolution and For Other f'urposes."r

Party autonomy in dispute resolution explained.

Autonomv means the state of independence. It is a declared policy of the State "to actively promote party autonomy in the resolution of disputes for the freedom of the parties to make their own arrangements to resolve their disputes. Towards this end, the State shall encourage and promote the use of Alternative Dispute Resolution (ADR) as an important means to achieve speedy and impartial justice and declog court dockets."2

The case of Magellan capitat Management corporation vs. Zosa (355 SCRA tSTl. In this case, the supreme Court heLJ that ,,under Act No. 876, otherwise known as the Arbitration Law, it is the Regional Trial Court which exercises jurisdiction on questions relatlng to arbitrati on." Moreover, "arbitration proceedingr are desigrr"d to level the playing field among the parties in pursuit of mltually acceptable solution to their conflicting claims, and any arrangemenf or scheme that would give undue advantage to a party in the negotiating table is anathema to the very puriose of arbitration and should be resisted.." portions or [r,L dlcision follows.
We rule against the petitioners.

How the State shall achieve alternative dispute resolution.

The State shall use the alternative dispute resolution as an important means and efficient tool "to achieve speedy and impartial justice and alternative procedure for the resolution of appropriate cases" by:

(1) (2)

Enlisting the active private sector participation in the settlement of disputes through ADR. Without prejudice to the adoption by the Supreme

Court of any ADR system such as mediation,

on the illegality of the Employment Agriement's ', Atbitration (llause" initially invoked by him ir-r seeking his termination bt'nefits under section 8 of the employment contract. And under Itepublic Act No. 876, otherwise known as the ,,Arbitration l,aw," it is the regional trial court which exercises jurisdiction ()v('|r cluestions relating to arbitration. we thus advert to the followirrg discussions made by the Court of Appeals, speaking llu'u Justice Minerva P. Gonzaga-Reyes, in c.a.-c.n. b.p. No.
43059, uiz.:

1-rctitioner MCHC, as claimed by petitioners in their assignment of errors. Respondent zosa's amended complaint focusesl-reavily

Crmmission (SEC, for brevity). The controversy does not in .rnyway involve the election lapporntment of officers of

fall under the jurisdiction of the securities and Exchange

It is error for the petitioners to claim that the

case should

conciliatiory arbitration or any combination thereof as a means of resolving cases pending before all courts in
rSee

)lbid.

title and Sectron

l,

Republic Act No. 9'285.

jrlriscliction lics with thc SEC, which is raised for tlrc first tlme i' llris prt'liliolr, stlffict'it to stittt'thtrt tlrc Amt'nclccJ (ltllrprlai't s(lltiln'ly 1'rul irr issur. lllr.tlucslion wht'llrt'r llrt'Ar-[ritr-ittiorr (]lirtrst.
,I

"As regards thc fourth assigned error, asserting that

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is valid and effective between the parties. Although the

of co.rtrorrersy which spawned the action concerns the validity on issue the officer, the termination of th^e service of a corporate the validity and effectivity of the arbitration clause is determinable by the ,"gulu, courts, and do not fall within the exclusive and oiiginat jurisdiction of the SEC." "The determination and validity of the agreement is not a matter intrinsically connected with the regulation and internal affairs of corporations (see Pereyra as. lAC,181 SCRA244; Sales to be decided us. sEC,169 SCR A7ll);it is rattrer an ordinary case in accordance with the general laws, and do not require any (Viray as' particular expertise or triining to interpret and apPly cA, r91. SCRA 308)."3 Furthermore, the decision of the court of Appeals in CAof G.R. s.P. No. 43059 affirming the trial court',s assumPtion which case" the "law of jurisdiction over the case has b"ecome the now binds the petitioners. The "law of the case" doctrine has been when an clcfincc-l as "a i".* applied to an established rule that cause to the remands .rprpclliltt' court passes on a question and tlrt' lowt'r court for furth", pro."edings, the question there settled lx,t.ont(.s tltt. law tlf the caie uPon subsequent appeal"' To note' tlrt'('A's clt,cisi.n in CA-G.R. SP No.43059 has already attained finality as t viclt,ncc.l by a Rcsolution of this Court ordering entry tlf juclgnrcrlt tlf si.ricl case, to wit:

August II,1997 and withdrawal of intention to file petition for review on certiorari, the Court Resolved to DECLARE THIS CASE TERMINATED and DIRECT the Clerk of Court to INFORM the parties that the judgment sought to be reviewed has become final and executory, no appeal therefore having been timely perfected.'
and that the same has, on September 17, t997, become final and executory and is hereby recorded in the Book of Entries of fudgments." Petitioners, therefore, are barred from challenging anew, through another remedial measure and in any other forum, the authority of the regional trial court to resolve the validity of the arbitration clause, lest they be truly guilty of forum-shopping which the courts consistently consider as a contumacious practice that derails the orderly administration of justice. Equally unavailing for the petitioners is the review by this Court, via the instant petitiory of the factual findings made by the trial court that the composition of the panel of arbitrators would, in all probability, work injustice to respondent Zosa. We have repeatedly stressed that the jurisdiction of this Court in a petition for review on certiorariunder Rule 45 ofthe Revised Rules of Court is limited to reviewing only errors of law, not of fact, unless the factual findings complained of are devoid of support by the evidence on record, or the assailed judgment is based on misapprehension of facts.a
Even if procedural rules are disregarded, and a scrutiny of merits the of the case is undertakery this Court finds the trial ctlurt's observations on why the composition of the panel of arbitrators should be voided, incisively correct so as to merit our .lpprovals. Thus, "From the memoranda of both sides, the Court is of the view lhat thr. defendants [petitioner] MCMC and MCHC represent the silmc intercst. Thcrc is ncl cluarrel thatboth defendants are entirely
'r( or,, 1,,,, 1,,t,,,, I

"Entry of judgement
This is to certify that on September 8, 1997 a decision/ resolution rendered in the above-entitled case was filed in this Office, the dispositive part of which reads as follows:
,G.R. No. 129615 (Magellan Capital Management Corporation, et al. vs. Court of Appeals, Rolando zosa, et Considering the petitioner's manifestation dated al.).

rLoevillo C. Agustin
scRA 457

vs.

Court of Appeals and Filinvest Finance Corpor'ttit-.rtt' 217

(t9e7l.

ol llrl licltrpor

rs

ol lltr,Vltr;ltr M,rty vs (A. )')l \( llA lfl'r Ilg..tl)

r-)

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. n,f ',ii','

|"?;,

??j;,
"

"

two different corporations with personalities distinct and separate from each other and that a corporation has a personality distinct and separate from those persons composing the corporation as well as from that of any other legal entity to which it may be related. "Butas the defendants [herein petitioner] represent the same interest, it could never be expected, in the arbitration proceedings, that they would not protect and preserve their own interest, much less, would both or either favor the interest of the plaintiff. The arbitration law, as all other laws, is intended for the good and welfare of everybody. In fact, what is being challenged by the plaintiff herein is not the law itself but the provision of the Employment Agreement based on the said law, which is the arbitration clause but only as regards the composition of the panel of arbitrators. The arbitration clause in question provides, thus: 'In the event that any dispute, controversy or claim arise out of or under any provisions of this Agreement, then the parties hereto agree to submit such dispute, controversy or claim to arbitration as set forth in this Section and the determination to be made in such arbitration shall be final and binding. Arbitration shall be effected by a panel of three arbitrators. The Manager, Employee, and Corporation shall designate one (1) arbitrator who shall in turry nominate and elect as who among them shall be the chairman of the committee. Any such arbitration, including the rendering of an arbitration award, shall take place in Metro Manila. The arbitrators shall interpret this Agreement in accordance with the substantive laws of the Republic of the Philippines. The arbitrators shall have no power to add to, subtract from or otherwise modify the terms of this Agreement or to grant injunctive relief of any nature. A.y judgment upon the award of the arbitrators may be entered in any court having jurisdiction thereof, with costs of the arbitration to be borne equally by the parties, except that each party shall pay the fees and expenses of its own counsel in the arbitration.' (Emphasis supplied)

considered as one and should be entitled to only one arbitrator to represent them in the arbitration proceedings. Accordingly, the arbitration clause, insofar a9 t]re compositlon of the pi'et of arbitrators is concerned should be declared void and of no effect, because the law r?Ir, "Any clause giving one of the parties power to choose more arbitrators than th;the; is void and of no effect.,, (Article 2045, Civil Code).

"From thg foregoing arbitration clause, it appears that the two (2) defendants [petiiioners] (MCMC and MCircl have one (1) arbitrator each tocomporu ih" paner of three (g) uJitrators. As the defendant MCMC is the Minager of defendant MCHC, its decision or vote in the arbitratiott prJ."eding would naturally und ::{ainly be in favor of its employlr and theiefendant MCHC would have to protect and preserve its own interesu hence, the two (2) votes of both defendants (MCMC and MCHC) would certainly be against the lone arbitrator for the plaintifi [herein defendantl. Hence, apparently, plaintiff [defendant] wouli never get or receive justice and fairness in the arbitration proceedings frg- the panel of arbitratoi's as provided in th" ii"r"quoted arbitration clause. In fairness and justice to the plaintiff [defendant], the two defendants (MCMC and MCHCi [herein petitionersl which represent the same interest should be

- MCHC) and thggejn petitionersJ and the plaintiff iherein defendantJ should be iettred in the arbitration proceeding in .ccordance with the EmploymentAgreemen! but,rrrd". the panel of three (3) arbitrators, otr"it) arbitiator to represent the plaintiff, .ne (1) arbitrator to represent both defendants (MCivtc ana MCHC) [herein_petitioners] and the third arbitrator to be chosen by the plaintiff [defendant Zosa] and defendants (petitioners). "xxx XXX XXX,,
In this connection, petitioners' attempt to put respondent in t'stoppel in assailing the arbitration clause must be struck down. li.r.ne, this issue of estoppel, as likewise noted by the Court of Appcals, f.und it,s way for the first time only on'upp"alwellst'ltlt'cl is tht' rtlle tlrat issttt's/ not raisr.ci betow carrlr.t ba rcs,tved

1Tt

dlspute or controversy between the defendants (MCMC

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agreements on review in higher courts.s Secondly, employment Aty such as the onJ at bar are usually contracts of adhesion' the party ambiguity in its provisions is generally resolved against case of re5e{ relatively who irafi"d the document. Tius, in ihe
and Fr' Benedicto Phit. Federation of Credit Cooperatiaes,lnc. @FCCI) Abril,6 we had the occasion to stress layomaus. NLRC and Victoria

of that "where a contract of employment' being a contract be should adhesion, is ambiguous, any ambiguity therein And, finally' construed stricily ag"ainst the party who prepared it'" (as proceedings aibitiation respond entZo,sirrib*itt"a himsetf to panel the of there *u, .or," yet) before bewailing the composition "arbitration of arbitrators. ie in fact,lost no time in assailing the proceedings
unchecked.

arbitration clause" upon realizing the inequities thatmay mar the

if

the Jxisting iit't"-np of arbitrators remained

we need only to emph asize in closing t_hil arbitration among the proceedings are designed io level the playing field to their parties in pursuit oi a mutually acceptable solution give ionflictir.g .lui-s. Any arrangement or scheme that would anathema table.is undue advantage to a'party ii the negotiating be to the very p.r?por" 3f uiUittation ind should, therefore,
resisted. WHEREFORE, premises considered, the petitig"- it_l"reby 18' 1997 DISMISSED and the decision of the trial court dated Inly is AFFIRMED.
SO ORDERED.

SEc.s.DefinitionofTetms._Forpurposesof
this Act, the term:

Resolution System" a means any Process or procedure -used to resolve dispute oi controversy, otn"t than by adiudication of
sCasolita, Sr. vs' Court of Ap peals,27SSCRA 257 (1997|; Manalilivs. Court of Appeals,

(a) "Alternative Dispute

280 SCRA 400

6300 SCRA 72 (t998)

l9e7l

presiding iudge of a court or an officer of a government agency/ as defined in this Act, in which a neutral third party participates to assist in the resolution of issues, which includes arbitration, mediation, conciliation, early neutral evaluation, mini-trial, or any combination thereof; (b) 'ADR Provider" means institutions or persons accredited as mediator, conciliator, arbitrator, neutral evaluato+ or any person exercising similar functions in any Alternative Dispute Resolution system. This is without prejudice to the rights of the parties to choose nonaccredited individuals to act as mediatoq, conciliator, arbitrato1" ot neutral evaluator of their dispute. Whenever referred to in this Act, the term "ADR practitioners" shall refer to individuals acting as mediator, conciliator, arbitrator or neutral evaluator; (c) "Authenticate" means to sigR, execute oradopt a symbol, or encrypt a record in whole or in part intended to identify the authenticating party and to adopt, accept or establish the authenticity of a record or term; (d) " Arbittation" means a voluntaty dispute resolution process in which one or more arbitrators, appointed in accordance with the agreement of the parties, or rules promulgated pursuant to this Act, resolve a dispute by rendering an award; (e) "Arbitrator" means the person appointed to render an award, alone or with others, in a dispute that is the subiect of an arbitration agreemenf (f) " Award" means any partial or final decision by an arbitrator in resolving the issue in a controversy; (S) "Commercial Arbitration" An arbitration is "commercial" if it covers matter arising from all relationships of a commercial nature, whether contractual rlr nol;
()

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means any information, relative to the subiect of mediation or arbitration, expressly intended by the source not to be disclosed, or obtained under circumstances that would create a feasonable expectation on behalf of the source that the information shall not be disclosed' It shall include (L) communication, oral or written, made in a dispute resolution proceedings, including any memoranda, notes or work product of the neutral party or non-party participant, as defined in this Acu oral or written statement made or which occurs iZ) "tt during mediation or for purposes of considering conduiting, participating, initiating, continuing or reconvening mediaiion or retaining a mediatol, and (3) pleadings, motions, manifestations, witness statements, reports filed or submitted in an arbitration or for expert evaluation; (i) "Convention Award" means a foreign arbitral award made in a Convention State; (i) .,,Convention State'' means a State that is a member of the New York Convention;
Model Law shall mean a Regional Trial Cour! (l) "Court-Annexed Mediation" means any mediation process conducted under the auspices of the court, alter such court has acquired iurisdiction of the dispute;

(h) "Confidential information"

maries of their cases and receive a nonbonding assessment by an experienced, neutral person, with expertise in the subiect in the substance of the dispute;

(o) "Government Agency" means any governmental entity, office or officeq, other than a court, that is vested by law with quasi-iudicial power or the power to resolve or adjudicate disputes involving the government, its agencies and instrumentalities, or private persons; (p) "International Party" shall mean an entity
whose place of business is outside the Philippines. It shall not include a domestic subsidiaty of such international party or a co-venturer in a joint venture with a party which has its place of business in

the Philippines. The term foreign arbitrator shall mean a person who is not a national of the Philippines; (q) "Mediatiorr" means a voluntary process in which a mediatol, selected by the disputing parties,

(k)"Coutt"asreferredtoinArticle6ofthe

the parties in reaching a voluntary agreement

regarding a dispute;

facilitates communication and negotiation, and assists

(r)

"Mediator" means a person who conducts

mediation;

participates in a mediation and whose consent is

necessary to resolve the dispute;

(s) "Mediation Party" means a person who

(m)"Court'ReferredMediation"meansmediato be conducted in accordance tion ordered by ^court with the Agreement of the Parties when an action is prematurely commenced in violation of such agree-

"Mediation-Arbitration" or Med-Arb is a two'step dispute resolution process involving both

mediation and arbitration; (u) "Mini-trial" means a structured dispute resolution method in which the merits of a case are argued before a panel comprising senior decision makers with <lr without the presence of a neutral third

(t)

menf
"Early Neutral Evaluation" means an ADR process wherein parties and their lawyers are brought iogether early in a pre-trial phase to present sum-

(n)

10

il

AlrrRrunrvr Dtspurr RrsolurloN Acr or 2004

Rrpueuc

Acr No. 9285

Provision

Chapter I

-General

person after which the parties seek a negotiated settlemenf (v) "Model Law" means the Model Law on International Commercial Arbitration adopted by the united Nations Commission on International Trade Law on 21 fune 1985; (w)"NewYorkConvention"meanstheUnited Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards apProved in L958 and ratified by the Philippine Senate under Senate Resolution No. 71; (x) "Non-Convention Award" means a foreign arbitral award made in a state which is not a Convention State; (y) "Non-Convention State" means a State that is not a member of the New York Convention; (zl "Non-Party Particip ant" means a person' other than a party or mediato{, who participates in a rnediation proceeding as a witness' resource Person or exper! (aa) "Procee ding" means a iudicial, administrative, or other adiudicative process, including related pre-hearing or post-hearing motions' conferences and discover/i (bb) "Records" means an information written on a tangible medium or stored in an electronic or other similir medium, retrievable in a perceivable form; and (cc) "Roster" means a list of persons qualified to provide ADR services as neutrals or to serve as arbitrators.

by adjudication of a presiding judge or officer of a government agencyt" as defined in Republic Act No. 9285 , "inwhich a neutral third party participates to assist in the resolution of issue, which

includes arbitration, mediation, conciliation, early neutral evaluation, mini-trial or any combination thereof ."7 The
arbitratiory mediation, contemplated in Republic Act No. 9285 is different from similar amicable settlement processes envisioned in Republic Act No. 7160, in the lupon or pangkat.

Arbitration defined and explained.

Arbitration meatts a voluntary dispute resolution process in which one or more arbitrators, appointed in accordance with the agreement of the parties, or rules promulgated pursuant to l{epublic Act No. 9285, resolve a dispute by renderingt an award. lJefore Republic Act No. 9285, arbitratiory in its broad sense, is understood to mean a substifution, by consent of the parties, of another tribunal or the tribunals provided by the ordinary processes of law. It is a domestic tribunal, as contradistinguished from regularly organized court proceeding according to the course of the common law, depending upon the voluntary act of the parties disputant in the selection of the judges of their own choice.e ADR provider defined.

An " ADR proaider" means institutions or persons accredited irs medi atot, conciliator, neutral evaluator, or any person cxercising similar functions in any Alternative Dispute Resolution system. This is without prejudice to the rights of the parties to choose non-accredited individuals to act as mediato(, conciliator arbitrator or neutral evaluator. Non-accredited individuals, therefore, who are chosen by the parties to a dispute themselves are also considered by law as "ADR providers."ro

Alternative Dispute Resotution system defined.

An Alternntiae Dispute Resolution System means " uny process or procedure used to resolve a dispute or controversy, other than
t2

/\r.t.\t.r tron l[.r1. f?erpublir Act No. 9285 "\t'r'\r'r ttort i(rlJ, llrirl ')( lr,rrr l rnrlc vr l.rw l llrtott & lior k lnsur,tnr a, 4)r"')('(' ltot t l{lrf , h'r'1 rt tl rltr Ar I No '/,/tl',
"('r

Pl-ttl.'tt>l>

l3

AnEnrunrve Drspurr RrsoLurtoru

Act or 2004

REpuaLrc

Acr No. 9285

Provision

Chapter I

-General

Comme rcial arbitration defined.

An arbitration is "commercial" if it covers matters arising

from all relationships of a commercial nature, whether contractual or not.ll

or electronic document. For purposes of the Rules on Electronic Evidence, an electronic signature includes digital signafures.rs

Arbitrator defined.
" Arbitrator" means the person appointed to render an award, alone or with others, in a dispute subject to an arbitration agreernent.l2 He is a neutral person who resolve disputes between the parties, especially by means of formal arbitration.l3

Liability of ADR Providers I Pr actitioners. The ADR providers and practitioners shall have the same civil liability f or acts done in the performance of their duties as that of public officers as provided in Section 38(1), Chapter 9, Book I of the Administrative Code of L987.
SEC. 5.

SEC. 4. Electronic Signatures in Global and EThe provisions of the Electronic Commerce Act. Signatures in Global and E-Commerce Act, and its Implementing Rules and Regulations shall apply to proceedings contemplated in this Act.

Liability of ADR provide rslpractitioners. The ADR providers and practitioners shall have the same civil liability for acts done in the performance of their public duties
as

that of public officers in Section 38(1). Chapter 9, Book I of the Administrative Code of 1987.16

Section 38f
Code.

ll,

Chapter 9, Book

l,

Revised Administrative

Effect of Signatures in Global and E-Commerce Act.

The provisions of the Electronic Signatures in the Global and

E-Commerce Act, and its implementing rules and regulations, shall apply to proceedings contemplated in Republic Act No. 9285. This is because of advances in electronic communications and Ecommerce.la

The liability of ADR providers and practitioners are similar to the liability of superior public officers as set forth in Section 38(1), Chapter 9, Book I of the Administrative Code of 7987 pertinently provides that:

"(1) A public officer shall not be civilly liable for acts

done in the performance of his official duties, unless there is a clear showing of bad faith, malice or gross negligence."
SEC. 6. Exception to the Application of this Act. The provisions of this Act shall not apply to resolution or settlement of the following: (a) labor disputes covered by Presidential Decree No. 442, otherwise known as the "Labor Code of the Philippines," as amended and its Implementing Rules and Regulations; (b) the civil status of persons; (c)
r"\r,r'\r'r lrolr l(1), llLrlt'./. lltrk'ort Ek'r"tronic Fvtrlenct', A.M l''\r.r, \r'r lrolr 'r, h'r'1 rt tlrltr Ar t Nt t '))tltt
O

Electronic signature defined. " Electronic signature" refers to any distinctive mark, characteristic andlor sound in electronic form, representing the identity of a person and attached to and logically associated with an electronic date message, or electronic document or any methodology or procedure employed or adopted by uperson and executed or adopted by such Person, with the intention of
authenticating, signing, or apProving an electronic data message
rrSee Section 3(g), lbid.
i2See Section 3(e), lbid.

l3Black3 Law Dictionary, 7th Edition,

raSee

p. I 00.

OT'01, )uly l

/, )0Ol

Section 4. Republic Act No. 9285

t4

t5

ALrERrunrve DrspurE

ResolurrorlAcr or

'2004

the validity of marriage; (d) any ground for legal separation; (e) the iurisdiction of courts; (f) future legitime; ($ criminal liability; and (h) those which by law cannot be compromised. Non-applicability of Republic Act No. 9285.
The provisions of Republic Act No. 9285 "shall not apply to

CHAPTER 2

MEDIATION
SEC. 7. Scope. provisions of this Chapter - The shall cover voluntary mediation, whether ad hoc or institutional, other than court-annexed. The term "mediation" shall include conciliation.

resolution or settlement of the following: (1) labor disputes covered by Presidential Decree No. 442, otherwise known as the "Labor Code of the Philippines," as amended and its implementing Rules and Regulations; (2) the civil status of persons; (3) the validity of marri age; (4) any ground for legal
separation; (5) the jurisdiction of the courts; and (5) future legitime; (7) criminal liability; and (8) those which by law cannot be compromised. Republic Act No. 9285 does not apply to noncompromiseable cases, because the law prohibits it.17

Scope of Chapter 2, Republic Act No. 9285.

The provisions of Chapter 2, Republic Act No. 9285, shall cover voluntary mediation, whether adhoc or institutional, other

than court annexed. The term mediation shall include

conciliation. Mediation is aoluntary the parties.l
rf.

mutually agreed upon by

Mediation defined.
"Medistion" means a voluntary process in which a mediatot sclected by the disputing parties, facilitates communication and rrcgotiation, and assists the parties in reaching a voluntary irgreement regarding a dispute.2 "Mediator" means a person who t'onducts mediation.3

Mediation-Arbitration defined. Mediation-arbitration is a two-step dispute resolution [)rocess involving both mediation and arbitration.a
SEC. 8. Application and Interpretation. In applying and construing the provisions of- this
''\r,r'\r'r trotr l(r1). llrirl '\('('',r'r ltotr l(tf, llrtrl
rTSee

'\,r' \,\ ti,)rr,

Rr,lrulrlrr Act

No

9285.

Section 6, Republic Act No 9285.

r',(,(",(,r lrrrrr t(l),

ll rrrl

16

t7

AnERrunrvr Drspurr Rrsorurroru

Acr or 2004

Rrpusuc-

Acr No. 9285

Chapter 2

Mediation

Chapter, consideration must be given to the need to promote candor of parties and mediators through confidentiality of the mediation process, the policy

other person from disclosing a mediation communication.

(c) Confidential information shall not be

subject to discovery and shall be inadmissible in any adversarial proceeding, whether judicial or quasijudicial. However, evidence or information that is otherwise admissible or subject to discovery does not become inadmissible or protected from discovery solely by reason of its use in a mediation.

of fostering prompt, economical, and amicable resolution of disputes in accordance with principles of integrity of determination by the parties, and the policy that the decision-making authority in the mediation process rests with the parties.
Considerations
provisions.

in applying and construing mediation

(d) In such an adversarial proceeding, the

following persons involved or previously involved in a mediation may not be compelled to disclose confidential information obtained during the mediation: (1) the parties to the dispute; (2) the mediator or mediators; (3) the counsel for the parties; (4) the non-party participants; (5) any persons hired or engaged in connection with the mediation as secretary, stenographer, clerk or assistan! and (5) any other person who obtains or possesses confidential information by reason of his/her profession.

In applying and construing mediation provisions,

consideration must be given: (L) to the need to promote candor of the parties and mediators through confidentiality of the mediation process; (2) the policy of fostering prompt, economical and amicable resolutions of disputes in accordance with the principles of integrity of determination by the parties; and (3) the policy that the decision-making authority in the mediation process rests with the parties.s

lntegrity defined. Integrity means the soundness of moral principles and

character of a public officer in the discharge of the trust reposed in such officer.6

(e) The protections of this Act shall continue to apply even if a mediator is found to have failed to
impartially. (f) A mediator may not be called to testify to provide information gathered in mediation. A mediator who is wrongfutly subpoenaed shall be reimbursed the full cost of his attorney's fees and
act

SEC. 9. Confidentiality of lnformation. Information obtained through mediation proceedings shall be subiect to the following principles and guidelines: (a) Information obtained through mediation shall be privileged and confidential. (b) A party, a mediatol, or a non-party participant may refuse to disclose and may prevent any
sSee Section 6, Republic Act No. 9285 'Dizon vs. Dollete, I 20 SC-I?A 456.

related expenses.

Confidentiality defined and explained. ConfidentialitU means secrecy, the state of having the rlissemination of certain information restricted. The guidelines orr confidentiality of information ohtained in mediation proceedings rtrc sct forth irr Scction c), Rcpublic Act No. 9285.In the law on
t'v
i

cl

crrcr', thcy il r(' c()nsi cl t'rt.cl pri

l()

lt'gt'd

c()

nl m u n i ca tiotr.

l8

AnERrumvr Dtspurr Rrsorurtoru

Acr or 2004

Rrpueuc

Acr No. 9285

Chapter 2

Mediation

Privileged communication defined. Priaileged communication is a doctrine that utterances made in the course of judicial proceedings, including all kinds of pleadings, petitions and motions belong to the class of io-tttnttications that are absolutely privileged, if the same are relevant, pertinent, or material to the cause at hand or subject of inquiry.T lt is communication which in the context of legal or other recognized professional confidentiality. The fact that certain communication is termed privileged allows the speakers to resist legal pressures to disclose its contents.
A privilege may information of arising from the confidentiality be waived in a record, or orally during a Proceeding by the mediator and the mediation parties. A privilege arising from the confidentiality of information may likewise be waived by a non-party participant if the information is provided by such nonparty participant. A peison who discloses confidential information shall be precluded from asserting the privilege under Section 9 of this Chapter to bar disclosure of the rest of the information necessary to a complete understanding of the previously disclosed information. If a person suffers loss or damage as a result of the disclosure of the confidential information, he shall be entitled to damages in a iudicial proceeding against the person who made the disclosure. A person who discloses or makes a rePresentation about a mediation is precluded from asserting the privilege under section 9, to the extent that the communication prejudices another person in the proceeding and it is necessary for the person
SEC. 70.Waiaer of Confidentiality.
/See Black3 Law Dictionary, Tth Edition,

preiudiced to respond to the representation of disclosure.

Waiver defined and waiver of confidentiality explained. Waiaer means the voluntary relinquishment or abandonment, express or implied of a right.8 In Section 10, Republic Act No. 9285, a privilege arising from the confidentiality of information may be waived in a record, or orally during a
proceeding by the mediator and the mediation parties. Howeveq, a privilege arising from the confidentiality of information may likewise be waived by a non-party participant if the information is provided by the non-party participant.e (a) There is Exceptions to Privilege. no privilege against disclosure under Section 9 if mediation communication is: SEC.

ll.

in an agreement evidenced by record ^ authenticated by all parties to the agreemen! (2) available to the public or that is made during a session of a mediation which is open, or is required by law to be open, to the public; (3) a threat or statement of a plan to inflict bodily injury or commit a crime of violence; (4) intentionally used to plan a crime,
attempt to commit, or commit a crime, or conceal an ongoing crime or criminal activity; sought or offered to prove or disprove abuse, neglect, abandonment, or exploitation in a proceeding in which a public agency is protecting the interest of an individual protected by law; but this exception does not apply where a child protection matter is referred to mediation
'f\er' []l,rcks l,rw l)iclrorr.rry, 7lh Fclilion. p 1574 ''\r'r' lrl ,rtrrl /tll.l 1t,u,r(lr,rl rl rs. \r'r ltotr lO, lit'1 lt tlllt< Ar I No '/,/tJtr

(1)

(5)

l2B5

20

2l

ArrnruRrve Dlspure Rrsorurotrt Acr or 2004

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Acr No. 9285

chapter 2

Mediation

by court or public agency participates in the " protection mediation; child

sought or offered to prove or disprove a claim or complaint of professional misconduct

not render that evidence, or any other mediation

communication, admissible for any other purpose. lnstances when there is no privilege against disclosure.
Section L1(a), Republic Act No. 9285 enumerates the instances when there is no privilege against disclosure. In those instances,lO the privilege can be used as shield against the law itself which is against public policy. A law cannot be used against the law. Section

(6)

or malpractice fited against mediator in

proceeding; or

(71 sought or offered to prove or disprove claim or complaint of professional misconduct or malpractice filed against a party, nonparty participant, or representative of a party based on conduct occurring during a mediation.
a

l1(a) enumerates the instances when allowing disclosure

outweighs the reasons for existence of the privilege.ll

under Section 9 if a court or administrative agency, finds, after a hearing in camera, that the party seeking discovery of the proponent of the evidence has shown that the
evidence is not othenryise available, that there is a need

(b) There is no privilege

for the evidence that substantially outweighs the interest in protecting confidenti ality, and the
mediation communication is sought or offered in: (1) a court proceeding involving a crime or felony; or

SEC. 12. Prohibited Mediator Reports. A mediator may not make a report, assessment, evaluation, recommendation, findin g, or other communication regarding a mediation to a court or agency or other authority that may make a ruling on dispute that is the subject of a mediation, except: a) where the mediation occurred or has terminated, or where a settlement was reached. b) as permitted to be disclosed under Section 13 of this Chapter.

(21 a proceeding to prove a claim or

defense under the law is sufficient to reform or avoid a liability on a contract arising out of the

Prohibited mediation reports.

A mediator may not make a report, assessment, evaluatiory r('commendatiory finding, or other communication regarding a lrtt.diation to a court or agency or other authority that may make rr finding on a dispute that is the subject of a mediatiory except: (l) where the mediation occurred or has terminated, or where llrt' scttlement was reached; and (2) as permitted to be disclosed tttrtler Section L3 of Republic Act No. 9285.12

mediation. (c) A mediator may not be compelled to provide evidence of a mediation communication or testify in such proceeding.

(d) If a mediation communication is not

privileged under an exception in subsection (a) or (b), only the portion of the communication necessary for the application of the exception for non-disclosure

may be admitted. The admission of particular evidence for the limited purpose of an excePtion does
22

"'\r\,\r'r lron
I '(,1 ' (rr'( '1 lt( )t

rr\r'r' \r,r lrorr I l (lr), llrrrl

I I(,r), llt'Jltrltlrr Ar t
h'r'1 rt

No

gTBr>

I I /,

tlrltr Ar I

No

t,),/ll',

23

AneRrunrvE Dlspure ResoruloN

Acr or 2004

Rrpuslrc Acr

Chapter Z

No. 9285
Mediation

SEC. 13. Mediator's Disclosure and Conflict of lnterest The mediation shall be guided by the following- operative principles: Before accepting a mediation, an individual who is requested to serve as a mediator shall: (1) make an inquiry that is reasonable under the circumstances to determine whether there are any known facts that a reasonable individual would consider likely to affect the impartiality of the mediatory including a financial or personal interest in the outcome of the mediation and any existing or past relationship with a party or foreseeable participant in the mediation; and (2) disclose to the mediation parties any such fact known or learned as soon as is practical before accepting a mediation. G) If a mediator learns any fact described in paragraph (a)(1) of this section after accepting a mediation, the mediator shall disclose it as soon as practicable.

(a)

determine whether there are any known facts that a reasonabre individual would consider likely to affect trru imfu;"irry of the mediatiory including the financial interest in the outcome of the mediation and any existing or past relationship with a party o. fores.eeable participant in t-he mediation; and (2) disclose to the mediation parties any such fact known or learned as soon as practical before accepting a mediation.13 The purpose of this provision is transparency on the part of the mediator to convince theparties that he has .,o p".ronul ug"r-,da to pursue in the course of the mediation.
sEC. 14. participation in Mediation.- Except as otherwise provided in this Act, a party may desiglate a lawyer or any other person to piovide assistan"ce ir, the mediation. A waiver of this right shall be made in writing by t_h" party waiving it. A-waiver of participation or legal representation may be rescinded at iny time.

At the request of a mediation party,an individual who is requested to serve as mediator shall disclose his/her qualifications to mediate a dispute. This Act does not require that a mediator shall have special qualifications by background or profession unless the special qualifications of a mediator are required in the mediation agreement or by the mediation parties.

may be rescinded at any time.la

Designation of lawyer or non-tawyer to assist in mediation. A lawyer or a non-lawyer may be designated to provide . trssistance in the mediation, as otherwise provided in "*.upi Itepublic Act No. 929s. A waiver or thi, right shall'be .r,ua" ir., writing by thep u:ty waiving it. A waiver of"legal ,"pr"r"r-,ration

Mediator3 disclosure and conflict of interest. At the request of a mediation party, an individual who is requested to serve as a mediator shall disclose his/her qualifications to mediate a dispute. But before accepting a mediatiory an individual who is requested to be a mediator shall: (1) make an inquiry that is reasonable under the circumstances to
24

Rescind and rescission defined and exprained. To rescind means to abrogate, annul, avoid or cancel a trrntract.ls Rescission is aparty's.rnilut".ul unmaking of a contract for a legally sufficient reisory such as the other pJay;, ;;erial lrreach. Rescissio,Le.is generally available as a remedy or defense frrr a nondegaliting party and restores the parties to their prt'con tractu aI positions. 16
,

i(i',-s,,

rr\r,( , ,,r,r

r-it
llott

.t.

14,

lir,1 rr tl

r'lll,

'"l,tl tl lr,tyv., Wr,,,l ( o,rsl lrlt,lrrsrtr,l)((,(,. rrl l,l,l 3tj. lr li, l, rw I )tr lror r,tty, /ltr r,r lrlror r. 1r I j()lt
2,5

tt,1l rtrlrr Ar I No 9)t)5 rltr Ar I No ,/,/{J,r

AlrrRrunrvr Dlspurr Rrsolurtoru Acr

or 2004

Rrpueuc

Acr No. 9285

Chapter 2

Mediation

SEC. L5- Place of Mediati

freetoagreeonthept"."ofmediation.Failingsuch
agreement,theplaceofmediationshallbeanyplace cJnvenient anilappropriate to all parties'
Place of mediation' of the parties' The place of mediation shall be by agreement of mediation shall In case of airugr"-"trll;t of the parties, ih" ptut" to all parties' This place be any place convenient and upptoptiate shall alio be bY the Parties'l7

Effect of submission to mediation by institution. An agreement to submit a dispute to mediation by an institution shall include an agreement to be bound by the internal mediation and the administrative policies of such institution including the rules thereof.le In case of conflict between the institutional mediation rules and Republic Act No. 9285, the latter shall prevail.2o
SEC. 17. Enforcement of Mediated Settlement Agreements. shall be guided by the - The mediation following operative principles:

SEc.t6.EffectofAgreementtoSubmitDisputeto An a gre ement di Me ati o n un iir rnsiltiti o n al Rule s.

(a) A settlement agreement following

succes-

tosubmitadisputetomediationbyaninstitution

to be bound by the internal shall include an agreement -"att ittistrative policies of such mediation and

institution.Further'anagreementtosubmitadispute shall mediation under instit-utional mediation rules

to

bedeemedtoincludeanagreementtohavesuchrules the govern the mediation oi th" dispute and for mediator,theparties,theirrespectivecounsel,and non-party participants to abide by such rules' In case of conflict between the institutional the mediation rules and the provisions of this Act, latter shall Prevail' "Model
La\A/"

on mediation'

Model Law on The ,,Model Law,, on mediation means the bv^Jl" United International Commercial Arbitration adopted on11 Law fune 1983' Nations Commission on International Trade nations such International Agreements are agreements between as treati"r, .orr.i"ntions and protocols'18

sful mediation shall be prepared by the parties with the assistance of their respective counsel, if any, and by the mediator. The parties and their respective counsels shall endeavor to make the terms and condition thereof complete and make adequate provisions for the contingency of breach to avoid conflicting interpretations of the agreement. (b) The parties and their respective counsels, if anlr shall sign the settlement agreement. The mediator shall certify that he/she explained the contents of the settlement agreement to the parties in a language known to them. (c) If the parties so desire, they may deposit such settlement agreement with the appropriate Clerk of a Regional Trial Court of the place where one of the parties resides. Where there is a need to enforce the settlement agreement, a petition may be filed by any of the parties with the same court, in which case, the court shall proceed summarily to hear the petition,
l''ll,notn l.rw I)rr ttolt.uy, )OO I I r,hliort, /,'\r'r. \r.r ltott I(r, \uf )t,I
1t. )Gt>

lSee Section 16. Republic Act No' 9285' rsSee Section 3{v}, Republic Act No' 9285

27

Aurnru,qrvr Drspure Rrsorurroru Acr

or 2004

Rrpust_rc

Acr No. 9285

Chapter 2

Mediation

in accordance with such rules of procedure promulgated by the Supreme Court.

as may be

(d) The parties may agree in the settlement agreement that the mediator shall become a sole arbitrator for the dispute and shall treat the settlement agreement as an arbitral award which shall be subiect to enforcement under Republic Act No. 875, otherwise known as the " Arbitration Lawi'notwithstanding the provisions of Executive Order No. L008 for mediated disputes outside of the CIAC.
Deposit of mediated settlement agreement. If the parties so desire, they may deposit the mediated settlement agreement with the appropriate Clerk of the Regional Trial Court of the place where one of the parties resides. Where there is need to enforce the settlement agreement, a petition may be filed by any of the parties with the same court, in which case, the court shall proceed summarily to hear the petition, in accordance with such rules of procedure as may be promulgated by the Supreme Court.21 Enforcement if mediator is sole arbitrator. The parties may agree in the settlement agreement that the mediator shall become a sole arbitrator for the dispute and treat the mediation agreement as an arbitral award which shall be subject to enforcement under Republic Act No. 876, otherwise known as the "Arbitration Law," notwithstanding the provisions of Executive Order No. L000 for mediated disputes outside of the
CIAC.22

resulting from arbitration or mediation. ,'Conoention Awqrd,, means a foreign arbitral award in a Convention state.2a Convention state defined.
Conaention state means a state that is a member of the New York Convention.2s

Award defined.
Award means any partial or final decision by an arbitrator in resolving the issue in a controversy.23An arbitral awardis an award
2rSee Section l7 (cl, Republic
22See

The case Metro construction, lnc. vs. chatham properties, lnc. f365 SCRA 697t. In this case, the supreme Court held that: ,,Executive order (E.o.) No. 1008 vests upon the cIAC original and exclusive jurisdiction ove,r disputes arising from, or connected with, contracts entered into by the parties involved in construction in the Philippines, whether the dispute arises before or after the completion of the contract, or ifter abandonment or breach thereof." Moreovel, "Circular No. 1-91 covers the CIAC. A quasijudicial agency or body has been defined as ar-, orgin of governmenf other than a court and other than a legislafure,"which affects the rights of the parties through adjudication or rulemaking." Portions of the decision foilo*. In sum, under Circular No. 1-19, appeals from the arbitral nwards of the CIAC may be brought to the Court of Appeals, and to the supreme Court alone.ln" grounds for the appeal ure 1yt likewise broadened to include appeali on questions of facts and nppeals involving mixed questions of fact and law. The jurisdiction of the Court of Appeals over appeals from _ final orders or decisions of the CIAC is further fortiiied by the rrmendments to B.P F.Lg.729, as introduced by R.A. No. 7902. with lhe amendments, the Court of Appeals is vlsted with appellate u risdiction over all final judgments, decisions, resolutions,trders or awards of Regional Trial courts and quasi-judicial agencies, irrstrumentalities, boards or commissions, except,,those"within llrt'appellate iurisdiction of the supreme Court in accordance with
f

Act No. 9285 Section l7 (d), Republic Act No. 9285 i rSee Section 39(fl, Republic Act No 9285

''"r,r',,r, f,,,i,- )(tl. IltttI '"'',r,(,.,('r Itorr I(1f. llrtrI

?()

28

furrRrunrvr Dtspurr RrsolurtoN Acr

or 2404

Rrpuauc

Acr No. 9285

Chapter 2

Mediation

the Constitution, the Labor Code of the Philippines under presidential Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the third Paragraph and subparagraph (a) of tf,e fburth paragraph of Section 17 of the judiciary Act of L948." While, agairy the CIAC was not specifically namgd in said provision, its inclusion therein is irrefutable. The CIAC was not fxpressly covered in the exclusion. Further, it is a quasi-judicial uglrr.y or instrumentality. The decision inLuzonDeaelopment Bank ,i. Lrron Deaelopment Bank Employees26 sheds light on the mattel,
thus: Assumin garguendo thatthe voluntary arbitrator or the panel of voluntary uibitiutors may not strictly be considered as a quasijudicial ugut.y, board or commission, still both he and the panel

include the CIAC in the enumeration of quasi-judicial agencies comprehended therein. Section 3 of the former and Section 3, Rule 43 of the latteq, explicitly expand the issues that may be raised in an appeal from quasi-judicial agencies or instrumentalities to the Court of Appeals within the period and in the manner therein provided. Indisputably, the review of the CIAC award may involve either questions of fact, of law or of fact and law.
In view of all the foregoing, we reject MCI's submission that Circular No. L-91, B.P. Blg.l29, as amended by R.A. 7902, Revised Administrative Circular L-95, and Rule 43 of the 1997 Rules of Civil Procedure failed to efficaciously modify the provision on appeals in E.O. No. 1008. We further discard MCI's claim that these amendments have the effect of merely changing the forum for appeal from the Supreme Court to the Court of Appeals. There is no controversy on the principle that the right to appeal is statutory. Howeve{, the mode or manner by which this right may be exercised is a question of procedure which may be altered and modified provided that vested rights are not impaired. The Supreme Court is bestowed by the Constitution with the power and prerogative, inter alia, to promulgate rules concerning pleadings, practice and procedure in all courts, as well as to review rules of procedure of special courts and quasi-judicial bodies, which, however, shall remain in force until disapproved by the Supreme Court.27 This power is constitutionally enshrined to enhance the independence of the Supreme Court.28
The right to appeal from judgments, awards, or final orders of the CIAC is granted in E.O. No. 1008. The procedure for the cxercise or application of this right was initially outlined in E.O. No. 1008. While R.A. No. 7902 and circulars subsequently issued by the Supreme Court and its amendments to the 1,997 Rules on Procedure effectively modified the manner by which the right to appeal ought to be exercised, nothing in these changes impaired
//Arti< k'Vlll. Serction 5 of the l987 Constitution. /rr5({, F ( lrer;,tr.ry vs Secrctary of Justice, 301 SCRA 96 (19991: See arlso GSIS vs. Court (/(/ l) r rl z\1r1 tr',{s. ) ) ) S( liA t'rti'r ( I

ur" .o*frehlnded within the concept of a 'quasi-judicial instrumentality.' It may even be stated that it was to meet the

very situation present"a uy the quasi-judicial functions of the voluntary arbitrators here, as *elfas the subsequent arbitt-atot f arbitral iribunal operating under the Construction Industry Arbitration Commission, that the broader term'instrumentalities' was purposely included in (Section 9 of B.P. Blg.129 as amended
by R.A. No. 7902).

An'instrumentality' is anything used as a means or agency' Thus, the terms governmental'agency' or'instrumentality' are synonymous in tf,e sense that either of them is a means by which a government acts, or by which a certain government act or fuiction is performed. The word 'instrumentality,' *it! respect to a state, contemplates an authority to which the state delegates goverrunental Power for the performance of a state function' Aty remaining doubt on the procedural mutation of the provisions on upp"it in E.O. No. 1008, ais-a-ais Circular No. 1-91 and R.A. No. ZSOZ, was completely removed with the issuance by the Supreme Court of Revised Administrative Circular No. L95 and the 1997 Rules of Civil Procedure. Both categorically
26249 SCP'A

t62 (19951.

30

3l

AnrRrunrvr Dtspurr Rrsolurtoru Acr

or 2004

Rrpueuc

Acr No. 9285

Chapter 2

Mediation

vested rights. The new rules do not take away the right to appeal

of MCI engineers and the subcontracting of various phases of the

allowed in E.O. No. L008. They only prescribe a new procedure to enforce the right.2e No litigant has a vested right in a particular remedy, which may be changed by substitution without impairing vestedrights; hence, he can have none in rules of procedure which relate to remedy.3o The foregoing discussion renders academic MCI's assertion on the binding effect of its stipulation with CHATHAM in the TOR that the decision of the CIAC shall be final and nonappealable except on questions of law. The agreement merely adopted Section L9 of E.O. No. 1008, which, as shown above, had been modified. The TOR, any contract or agreement of the parties cannot amend, modify, limit, restrict or circumscribe legal remedies or the jurisdiction of courts. Rules of procedure are matters of public order and interest and unless the rules themselves so allow, they cannot be altered, changed or regulated by agreements between or stipulations of the parties for their singular
convenience.3l

work, constituted an implied takeover of the project. The CIAC then concludes that the cut-off date for delineating the fiscal liabilities of the parties is 23 May 1996 when CHATHAM evaluated MCI's work accomplishment at 94.72% and then suspended all further progress payments to MCI. For these reasons, the CIAC found it trifling to determine whether MCI was in delay based on the Overall Schedule. Howeveq, the CIAC discovered that MCI was in-as-in delay for 294 days in the concreting milestone and held the latter liable for liquidated damages in the amount of P3,062,498.78. The Court of Appeals made a contrary conclusion and declared that MCI was in delay for 193 days based on the overall schedule of completion of the project and should incur liquidated damages in the amount of P24,1,25,000.00.

It is undisputed that the CIAC and the Court of Appeals

found MCI liable for liquidated damages but on different
premises. Based on the CIAC's assessment, MCI's responsibility was anchored, on its delay in the concreting milestone, whlle the

Having reSolved the existence of the authority of the Court of Appeals io review the decisions, awards, or final orders of the CIAC, the Court shall now determine whether the Court of Appeals erred in rendering the questioned decision of 30
Septemb er L999.

Court of Appeals' evaluation concentrated on MCI's delay in

completing the project based on the oaerall schedule of work. The variance in the evaluation spells a staggering difference in the party who should ultimately be held liable and the net amount involved.

Settled is the general rule that the findings of facts of the Court of Appeals are binding on us. There are reco gnized exceptions to the rule, such as when the findings are contrary to those of the trial court, as in this case. Hence, we have to take a closer re-examination of this case.

The CIAC is certain that the evidence overwhelmingly tended to prove that the manner by which CHATHAM took charge in the procurement of materials, fielding of labor, control
2eSee

Fabian vs. Desierto, 295 SCRA 470 {1998}.

30lbid.

3rsee Republic of the Philippines vs. Hernandez, 253 SCRA 509 (19961

A study of the final computation of the net amount due in both the final disquisitions of the CIAC and the Court of Appeals shows that all the other figures therein are constant, save for the .trnount of liquidated damages for which MCI should be rrccountable. If this Court concurs with the CIAC's conclusions, MCI's responsibility for liquidated damages is, as already stated, l'3,062,498.78. Setting this off against CHATHAM's overall fiscal lt'cotrntability would bring the latter's total liability to MCI to l'16,126,922.91. If the Court of Appeals is correct, MCI would be Itt.lcl liable for a much higher P24,125,000 liquidated damages. St'tlirrg tlris off agarinst Cf {ATFIAM's monetary responsibilities, M('l w()ultl still hitvt' to 1-ray ('I lnTHn M l'4,935,575.31.

32

ALrgRrunrvr Dtspuru Rrsorurton

Act ot' 2004

Rrpueuc

Acr No. 9285

Chapter 2 __ Mediation

After painstakingly combing through the voluminous

records, we affirm the findings of the CIAC. The evidence taken as a whole or in their totality reveals that there was an implied takeover by CHATHAM on the completion of the project. The evidence that appears to accentuate the Court of Appeals' decision ironically bolstered the CIAC's conclusion. The testimonies of Engr. Kapunary Engr. Bautista ,Dr.Lar, and the letter of Engr. Ruiz, acknowlbdging the "temporary takeover" by CHATHAM of the project, underscore the palpable fact that there was indeed a iakeover. We confer particular credit to Dr. Lai's testimony that as of 15 Febru ary 1,995, MCI was relieved of bill control of the construction operations, that it was relegated to a mere supplier of labot, materials and equipment, and that the alleged interim takeover actually extended through the completion of the project. Even CHATHAM admits the takeover but sugarcoated the same with words like "interim" and "charging the costs to MCI."32 With these glaring admissions, we can even consider that the takeover was not implied but blatant. Exhibits "4," "4-Ai' "4-ci' "BA/' "8," "4-D," "3," "3-1.," "3M," "Nr " "3-W-Li', "3-Xi', "3-Y," "3-Zi', "5," "s-A:', "s-Bi', "S-Cr" "S-Di' "5-E;' "5-F," "s-Oi' "C-7i' "E-g/' etc., relied upon by the Court of Appeals when considered by themselves and singly, seemingly and initially evince MCI's control over the project. HoweveA they eventually lose evidentiary puissance to support the Court of Appeals' conclusion when reckoned against the totality of the evidence that CHATHAM took charge of the completion of the project, particularly, the fact that CHATHAM suspended all progress billing payments to MCI. The continued presence and participation of MCI in the proiect was, as found by ine CnC, a matter of mutual benefit to and convenience of the parties. WHEREFORE, IN VIEW OF ALL THE FOREGOING, thc assailed 30 September 7999 decision of the Court of Appeals in CA-G.R. SP No. 49429 is hereby PARTIALLY MODIFIED by ll0
SCRA

setting aside the order directing Metro Constructiory Inc. to pay Chatham Properties, Inc. the amount of P4,935,578.37. The arbitral award of the Construction Industry Arbitration Commission in CIAC Case 1,0-98, promulgated on 19 October 7998, directing Chatham Properties, Inc. to pay Metro Constructiory Inc. the sum tIf SIXTEEN MILLION ONE HUNDRED TWENTY-SIX THOUSAND NrNE HUNDRED TWENTY-TWO & 91 / rOO (P 76,126,922.91) PESOS, is accordingly REINSTATED. No pronouncement as to costs.
SO ORDERED.

32litorlua vs. Court of Appeals, 286 SCRA I 36 (l c/98); Rosario vs. Court of Appeals, 464 (l9cl9); Republic vs. Court of Appeals, 314 SCRA 230 (1991)1.

34

:15

CHAPTER

3
I

CHAPTER 4
NTE RNATI

OTHER ADR FORMS

SEC. 18. Referral of Dispute to Other ADRForms.

ONAL COM M E RCI..AL

ARBITRATION
The parties may agree to issues arising in a dispute or during its pendency to refer one or more or all
SEC. 19. Adoption of the Model Law on International Commercial Arbitration. International commercial arbitration shall be governed by the Model Law on International Commercial Arbitration (the "Model Law"l adopted by the United Nations Commission on International Tiade Law on 21]une L985 (United Nations Document A/40117) and recommended f or enactment by the General Assembly in Resolution No. 40172 approved on L1 December 1985, copy of which is hereto attached as Appendix " A."

other forms of ADR such as but not limited to: (a) the evaluation of a third Person' or (b) a mini-trial, (c) mediation-arbitration, or a combination thereof. For purposes of this Act, the use of other ADR forms shall be governed by Chaptet 2 of this Act except where it is combined with arbitration in which case it shall likewise be governed by Chapter 5 of this Act.

Other forms of ADR defined. There are other forms of AD& namely: (1) Evaluation of third person; (2) Mini-trial; (3) mediation-arbitration; or @) a combination thereof. Mini-trial means structured dispute
resolution method in which the merits of a case are argued before a panel comprising senior decision makers with or without the presence of a neutral third person after which the parties seek a negotiated settlement.l Mediation-arbitration or Med-Arb is a two-step dispute resolution process involving both mediation and arbitration.2

"Model Law" on international commercial mediation. International commercial arbitration shall be governed by the Model Law on International Commercial Arbitration, the "Model Law" adopted by the United Nations Commission on lnternational Trade Law on27 fune 1985 and recommended for cnactment by General Assembly Resolution No. 10 172 on 17
December 1985.1

SEC. 20. Interpretation of Model Law. In interpreting the Model Law, regard shall be had to its international origin and to the need for uniformity in its interpretation and resort may be made to the traasux preparatories and the report of the Secretary General of the United Nations Commission on International Trade Law dated 25 March 1985 entitled,
r\r'r'\r'r ltott lll,
lit'1

rSee Section
ZSee

3(u|, RepublicAct No. 9285.

Section 3{t), lbid.

rrtlrltt Ar I

No

'/,/lJrr

36

37

AnrRrunrvr DrspurE RgsolurroN Acr

or 2004
chapter

- H:,'":1,:[,Tffi

3,.?,u,

ri

on

^,.o,,ra

"International Commercial Arbitration: Analytical Commentary on Draft Text identified by reference number A/CN 91264J'
"Model Act" defined and distinguished from "Model Law." AModeI Act is statute drafted by the National Conference of Commissioners in Uniform State Laws and proposed as guidelines for legislation for the states to borrow from or adapt to suit their individual needs. It is different from "Model Law" as
defined here.2

Commercial arbitration defined. An arbitration is "commercial" if it covers matters arising from all relationships of a commercial nafure, whether contracfual or not. Relationships of a commerciar nafure include, but are not limited to the following transactions: (1) any trade transaction for the supply or exchange of goods or services; (2) distribution agreements, construction 9f works, engineering, licensing, investmenf financing; (3) banking and insuiance; (a)",oint venture and other forms of industrial oi business corporuiiorr; and (5) carriage of goods or passengers by air, sea, rail or road.a

How to interpret "Model faw." Interpreting the Model Law, regard shall be had to its international origin and to the need for uniformity in the
I

11l

interpretation and regard may be had to the traaaux preparatories and the report of the Secretary General Commission on International Trade Law dated 25 March 1985 entitled, International Commercial Arbitration: Analytical Documentary on Draft Text identified by reference number AICN 9 lZi+.t

In international arbitration conducted in the nnifgnil"r, a pary may be represented by any person of his choice: proaided, That such representative, unless admitted to the practice of law in tlie philippines, shall not be authorized to appear as counsel in any Philippine court, or any other quasi-judicial body whether or not such appearance ii in relation to thl arbitration in which he appears.
Representation in internationar arbitration. _ Rupresentation in international arbitration could be by a lawyer or non-lawyer. In international arbitration conducted in the Philippines, a party may be represented by any person of his choice: Proaided, That such representative, unless admitted to the practice of law in the Philippines, shall not be authorized to appear as counsel in any Philippine court, or any quasi-judicial'body whether or not such appeatance is in relation to the arbitration in which he appears.s

Arbitrati

sEc. 22. Legal Representation in rnternational

Arbitr ation.- An arbitration matters arising from all relationships of a commercial nature, whether contractual or not. Relationships of a commercial nature include, but are not limited to, the following transactions: any trade transaction for the supply or exchange of goods or services; distribution agreements; construction of works; commercial representation or agency; factoring; leasing; consulting engineeritg licensing; investmenf financing; banking insurance; ioint venture and other forms of industrial or business cooperation; carriage of goods or passengers by ait, sea, rail or road.
SE C. 21. C ommerci al

is "commercial"

if it covers

sEC- zg. Confidentiarity of Arbitration

Pro
s. proceedings, including - The arbitration the records, evidence and the arbitral awird, shail bI
c e e ding

2See Black3 Law Dictionary, 7th Edition, p. I 919. rSee Section 20. Republic Act No. 9285.

'r\r'r'\r'r lrnt ) l, llt'Jrr rltlir Arl No (),2llrj "\r'r, \rt lrnr / /, lir,1rrrlrlrt Ar I Nr t,))gt, 3()

38

ArrRru,qrvr Dtspurr RrsorulotlAcr or 2004

cha prer o

- fi in'"',fil T: J;3,.?,u, ^,o,,rarion

considered confidential and shall not be published except (1) with the consent of the parties, or (2) for

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

thereafter, refer the parties to arbitration nnless it finds that the arbitration agreement is null 6nd void, inoperative or incapable of being performed.

is allowed herein: Prooided, howeaer, That the court in which the action or the appeal is pending may issue a protective order to prevent or prohibit disclosure of documents or information containing secret processes, developments, research and other information where it is sho*tt that the applicant shall be materially prejudiced by an authorized disclosure thereof.

Court referral to arbitration proceedings. Arbitration proceedings are not mandatory but subject to the will of the parties to a controversy. Strictly, it is consensual. F{owever, "d court before which an action is brought in a matter of an arbitration agreement shall, if at least one pafiy so requests not later than the period of the pre-trial conference, or upon
request of both parties thereafte r, refer the parties to ?n arbitration unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed."T

Rule on confidentiality of arbitration proceedings. Arbitration proceedings are confidential because arbitration is more of an amiiable settlement proceeding rather than a judicial process where discussions and records are privileged_communications. It has to be recorded for practical reasons. Thus, the arbitration proceedings, including the records, evidence and the arbitral awird shall be considered confidential and shall not be published, except (1) with the consent of the partieg, 9r (2) fot ih" ti*ited purpose of disclosing to the court in which the action or appeal is pending may issue a protective order to prevent or p.ohitit disciosure of documents or information containing secret pro."rr"s, developments, research and other information where it is shown that thg applicant shall be materially preiudiced by an auth orrzed, disclosure thereof. For instance trade secrets revealed by any of the parties in an arbitration Proceeding is highly confidential.6

No refercal of arbitration allowed. In instances when the arbitration agreement is null and aoid, inoperatiae or incapable of being performed, at the determination of the court, no referral to arbitration is allowed. For instance, if the subject of the arbitration agreement is prohibited by 1aw.8
SEC. 25. Interpretation of the Act. inter- [n to the preting the Act, the court shall have due regard policy of the law in favor of arbitration. Where action is commenced by or against multiple parties, one or more of whom are parties to an arbitration agfeement, the court shall refer to arbitration those parties who are bound by the arbitration agreement although the civil action may continue as to those who are not bound by such arbitration agreement.

Arbittati which an action is brought in a matter which is the subject matter of an arbitration agreement shall, if at
SEC. 24. Refeffal to

lnterpretation of Republic Act No. 9285.

lrr irrterpreting Republic Act No. 9285, the court shall have tltrt' regarcl to the policy of the law in favor of arbitration. Where
'(r('('(r(

least one party so requests not later than the pre-trial

conferet ce, or upon the request of both parties

6See Section

'rllttt )4,

lir,1 rr tl

rltr Ar I

No ,/,/litr ,l

23, Republic Act No. 9285

"llrlr

40

AnrRNnrvr Dtspurr RrsoruloN Acr

or 2004

chaprer

- fii::jf,f[

T:#3,?,,,

Arb*rarion

action is commenced by or against multiple parties, one of whom are parties to an arbitration agreement, the court shall refer to arbitration those parties who are bound by the arbitration agreement although the civil action may continue as those who are not bound by such arbitration agreement.e The case of Philroc[ lnc. vs. Construction lndustryArbitration Commission 1359 SCRA 6331. In this case, the Supreme Court ruled that: "The Supreme Court will not countenance the effort of any patry to subvert or defeat the objective of voluntary arbitration." Moreoveq "by the nature of their functions, acts in a quasi-judicial capacity, such that their decisions are within the scope of judicial review." Portions of the decision follow.

interest thereon at the rate of 6% fuom26 September 1995 is ProPer.

"D. whether or not the awarding of the amount of p65,000.00 as retrofitting costs is proper. "8.

whether or not the awarding of the amount of p'1,,340,454 for the value of the delivered but the allegedly unworkable concrete which was wasted is proper.
"F.

whether or not the awarding o[f] moral and nominal

damages and attorney's fees and expenses of litigation in favor of respondents is proper.

issues:

rhe petitioneq, in its

::::^ndum,
,,A.

raises the following

Whether or not Petitioner Philrock should be held liable for the payment of arbitration fees." In sum, petitioner imputes reversible error to the CA: (1) for upholding the jurisdiction of the CIAC after the latter had dismissed the case and referred it to the regular courf (2) for ruling that respondent spouses had a cause of aition against petitioneq, and (3) for sustaining the award of damages.

Whether or not the CIAC could take jurisdiction over the case of Respondent Cid spouses against Petitioner Philrock after the case had been dismissed by both the RTC and the CIAC.

"8, Whether or not Respondent Cid sPouses have a cause of action against Petitioner Philrock.

This Court's Ruling

The Petition has no merit.

"c.
Whether or not the awarding of the amount of. P23,276.75 for materials ordered by Respondent Spouses Cid plus
eSee Section

First Issue: lurisdiction

25, Republic Act No. 9285

I'etitioner avers that the CIAC lost jurisdiction over the irrlril.rati()t] casc aftcr botlr parties had withdrawn their consent

42

4i

r
Ar-rrRNnrvr Drspurr Rrsorurroru Acr

or 2004

chaprer--T;i:,'j::,H,T#;3,?,,,Arbitration
to arbitrate. The ]une 73,1995 RTC Order remanding the case to the CIAC for arbitration was allegedly an invalid mode of referring a case for arbitration.
We disagree. Section 4 of Executive Order 1008 expressly
vests in the CIAC original and exclusive jurisdiction over disputes

arguing that the regular court also lost jurisdiction after the arbitral tribunal's April rg, 1,994 order referring the case Back
to the RTC.
section 4. lurisdiction. The CIAC shall have original and exclusive- jurisdiction -over disputes arising from, or connected with, contracts entered into by partieJ involved in construction in the philippines, whethei the dispute arises before or after the completion of the contract, or after the abandonment or breach thereof. These disputes may involve government or private contracts. For the Board to acquire jurisdiction, th_e parties to a dispute must agree to submit the same to volun tary arbitration. "The jurisdiction of the CIAC may include but is not

arising from or connected with construction contracts entered into by parties that have agreed to submit their dispute to voluntary arbitration.

It is undisputed that the parties submitted themselves to the jurisdiction of the Commission by virtue of their Agreement to Arbitrate dated Novemb er 24,1993. Signatories to the Agreement were Attys. Ismael |. Andres and Perry Y. Uy (president of Philippine Rock Products, Inc.) for petitioneq, and Nelia G. Cid and Atty. Esteban A. Bautista for respondent spouses. Petitioner claims, on the other hand, that this Agreement was withdrawn by respondents on April 8, 1994, because of the exclusion of the seven engineers of petitioners in the arbitration case. This withdrawal became the basis for the April 13,1994 CIAC Order dismissing the arbitration case and referring the dispute back to the RTC. Consequently, the CIAC was divested of its jurisdiction to hear and decide the case.

interpretation and I or application of contractual"provisions

limited to violation of specifications for materials and workmanship; violation of the terms of agreement;

This contention is untenable. First, private respondents removed the obstacle to the continuation of the arbitration, precisely by withdrawing their obiection to the exclusion of the seven engineers. Second, petitioner continued participating in the arbitration even after the CIAC Order had been issued. It even concluded and signed the Terms of References on Augu st27,7995, in which the parties stipulated the circumstances leading to the dispute; summarizedtheir respective positions, issues, and claims; and identified the composition of the tribunal of arbitrators. The document clearly confirms both parties' intention and agreement to submit the dispute to voluntary arbitration. In view of this f.act, we fail to see how the CIAC could have been divested of its jurisdiction.
Finally, as pointed out by the solicitor general, petitioner maneuvered to avoid the RTC's final resolution of the clisptrte by

delays; maintenance and defects; payment; default of employer or contractor and changes in contract cost. "Excluded from the coverage of this law are disputes arising froT employer-employee relationships whichshall continue to be covered by the Labor Code of thL philippines.,, (EO 1008)

amount of damages and penalties; commencement time and

In so doing, petitioner conceded and estopped itself from further questioning the jurisdiction of the CIAC. The Court will not countenance the effort of any party to subvert or defeat the objective of voluntary arbitration-for itr o*n private motives. After submitting itself to arbitration proceedings and actively participating thet"T, petitioner is estbpped froir assailing thl jurisdiction of the CIAC, merely because the latter rendered an
nciverse decision.lo

r"\r't'\1x)u\('\

lJ('rrrrt.z

vs ( or lrt ()f nl)[ x\

tls,

)(/t

\(r].A )4).l,rrrrr,rry l(t, l<)g/

4s

r
AueRNnrvr Dtspurr Rrsor-urtoru

Aci or

2OO4

Rrpuauc

Acr No. 9285

Chapter 4

lnternational Commercial Arbitration

Second Issue:

Cause of Action

that all the transit mixers arrived at the site within the allowable time that would ensure the workability of the concrete mix delivered.
"On the other hand, there is sufficiently strong evidence to show that difficulties were encountered in the pouring of concrete mix from certain transit mixers necessitating the

Petitioner contends that respondent spouses were negligent in not engaging the services of an engineer or architect who should -tn"i.lonstruction, in violation of Section 308 of the oversee National Building Code. It adds that even if the concrete it delivered was defective, resPondent sPouses should bear the loss arising from their illegal operation. In short, it alleges that they had no cause of action against it. We disagree. Cause of action is defined as an act or omission by which a party violates the right of another.ll A complaint is dlemed to have itut"d a cause of action provided it has indicated the following: (1) the legal right of the plaintiff, (2) the correlative obligation of"the defendant, ind (3) the act or the omission of the defendant in violation of the said legal right.l2 The cause of action against petitioner was clearly established. Respondents were pr.It"hasers of ready-mix concrete from petitioner. The .o.r.rdt" delivere d by the latter turned out to be of substandard quality. As a result, respondents sustained damages when the siructures they built using such cement developed cracks and honeycombs. Co.s"qrrently, the construction of their residence had to be stopped. Furthel the CIAC Decision clearly spelled out respondents' cause of action against petitioner, as follows: ,,Accordingly, this Tribunal finds drat the mix was of the right proporiior,s at the time it left the plant. This, howevef, doeJ not necessarily mean that all of the concrete mix delivered had remained workable when it reached the jobsite. It should be noted that there is no evidence to show
llCamara vs. Court of Appeals, 310 SCRA 608, 6lB, )uly 20, 1999; Delos Reyes vs. Courr of Appeats, 285 SCRA B l, 85, January 27 , l99B: Leberman Realty Corporation vs. Typingco, 293 SCRA 316, 327, )uly 29, l99Br2Baluyot vs. C^urt of Appeals, 3l I SCRA 29, 45, July 22, 1999;Vergara vs. Court of Appeals. 319 SCRA 323, 327, November 26, 1999, Leberman vs. Typinco, ibid , trt 328

[addition] of water and physically pushing the mix,

obviously because the same [was] no longer workable. This Tribunal holds that the unworkability of said concrete mix has been firmly established.
"There is no dispute, howeveq, to the fact that there are defects in some areas of the poured structures. In this regard, this Tribunal holds that the only logical reason is that the unworkable concrete was the one that was poured in the defective section s." \3

Third Issue: Monetary Awards

Petitioner assails the monetary awards given by the arbitral tribunal for alleged lack of basis in fact and in law. The solicitor general counters that the basis for petitioner's assigned errors with regard to the monetary awards is purely factual and beyond the review of this Court. Besides, Section1.9, EO 1008, expressly provides that monetary awards by the CIAC are final and
unappealable.
We disagree with the solicitor general. As pointed out earlieq, fnctual findings of quasi-judicial bodies that have acquired t xpertise are generally accorded great respect and even finality, if they are supported by substantial evidence.la The Court, Iroweveq, has consistently held that despite statutory provisions

'CIAC Decisions dated September 24, 1996; CA rollo for G.R. SP No. 42443. p. 12. laVillitflor vs. Court of Appeals. 280 SCRA 297,33O, October 9, 1997; Philippine Mt.rrlr,rrrt M.rrinc School, lnc. vs Court of Appeals, 224 SCav4.77O.785, June 2, 1995; ( ( X ( )l I l) vs Ir,rj,rno. /41 S('lil 261, )(rtl. Fr.t;ru.rry i'5, l99ti
|

46

47

r
AnrRNnrvr Drspurr Rrsolurtoru Acr or 2004

Chaprer--fi i:;'::,ffi ,T"",t;3,?,,,Arbirrarion making the decisions of certain administrative agencies " final," it still takes cognizance of petitions showing want of jurisdiction, grave abuse of discretion, violation of due process, denial of substantial justice or erroneous interpretation of the law.ls Voluntary arbitrators, by the nature of their functions, act in a quasi-judicial capacity, such that their decisions are within the scope of judicial review.16
The same issue was discussed during the hearing before the arbitration tribunal on Decemb er 19,lggi.It was also-mentioned in that tribunal's Decision dated septemb er 24, 1996. The payment of interest is based on Article 2209 of the Civil Code, which provides that if the obligation consists of the payment of a sum of money, and the debtor incurs delay, the inde*rrity ro, damages shall !e the payment of legal interest which is six percent par annum, rn the absence of a stipulation of the rate.
Awards for Retrofitting Costs. Wasted L I nworkable But D eliaered ()oncrete, and Arbitration Fees

Petitioner protests the award to respondent spouses of P23,276.25 as excess payment with six percent interest beginning
September 26, L995.It alleges that this item was neither raised as an issue by the parties during the arbitration case, nor was its justification discussed in the CIAC Decision. It further contends that it could not be held liable for interest, because it had earlier tendered a check in the same amount to respondent spouses, who refused to receive it.

Petitioner's contentions are completely untenable. Respondent Nelia G. Cid had already raised the issue of overpayment even prior to the formal arbitration. In paragraphg of the Terms of Reference, she stated: "9. Clairnants were assured that the problem and her demands had been the subject of several staff meetings and that Arteche was very much aware of it, a memorandum having been submitted citing all the demands of [c]laimants. This assurance was made on July 3L, 1,992 when Respondents Secillano, Martillano and Lomibao came to see Claimant Nelia Cid and offered to refundP23,276.25, [t]he difference between the billing by Philrock's Marketing Department in the amount of P725,586.25 and the amount charged by Philrock's Batching Plant Department in the amount of only P'1,02,586.25, which claimant refused to accept by saying' Saka na lang.'

Petitioner maintains that the defects in the concrete structure were due to respondent spouses'failure to secure the services of iln engineer or architect to supervise their project. Hence, it claims that the award for retrofitting cost was wiihout legal basis. It also denies liability for the wasted unworkable but delivered concrete, frrr which the arbitral court awarded p1g,404.54. Fin ally, it trrmplains against the award of litigation expenses, inasmuc"h as tlre case should not have been institutea at att haj ,espondents complied with the requirements of the National Building Code. we are unconvinced. Not only did respondents disprove the contention of petitioner; they also showed that they sustained tlirmages due to the defective concrete ithad delivered. These were llt'ms of actual damages th"y sustained due to its breach of contract. Mornl and Nominal Damageq Atlorney's Fees and Costs Petitioner assails the award of moral damages, claiming no trrnlicc or bad faith on its part. we disagree. Respondents were deprived of the comfort and fety of a house and were exposed tb the agony of witnessing llrt' wastage and the decay of the structure r* *br" than seven y('lrs. ln lrcr Mcmorandum, Respondent Nelia G. Cid describes Itlt' l'arrtily's strffcrings arising fiom the unrcasgnabp. clclay in
I

lrt'

sa

SCRA

rsVillaflor vs. CA, ibid., De Ysasi lll vs. National Labor Relations Commission. 231 173, lB5, March 11,1994.
r6Chung Fu lndustries {Phils.), lnc. vs. Court otAppeals. 206 SCRA 545, 556, February

25, 1992.

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the construction of their residence, as follows: "The family lives separately for lack of space to stay in. Mrs. Cid is staying in a small dingy bodega, while her son occupies another makeshift room. Their only daughter stayed with her aunt from 1992 until she got married rn1.996. x x x. The Court also notes that during the fendency of the case, Respondent Vicente Cid died without seeing the completion of their home.17 Under the circumstances, the award of moral damages is proper. Petitioner also contends that nominal damages should not have been granted, because it did not breach its obligation to

"Appointing Authority" as used in the Model Law shall mean the person or institution named in the
arbitration agreement as the appointing authority; or the regular arbitration institution under whose rules the arbitration is agreed to be conducted. where the parties have agreed to submit their dispute to institutional arbitration rules, and unless they have agreed to a different procedure, they shall be deemed to have agreed to the procedure under such arbitration rules for the selection and appointment of arbitrators. In ad hoc arbitration, the default appointment of an arbitrator shall be made by the National President of the Integrated Bar of the Philippines (IBp) or his duly authorize d representative.

SEC. 26. Meaning of "Appointing Authority.,,

respondent spouses.

Nominal damages are recoverable only

if no actual

or

substantial damages resulted from the breactU or no damage was or can be showt . Sit't." actual damages have been proven by private respondents for which they were amply compensated, they are no longer entitled to nominal damages. Petitioner protests the grant of attorney's fees, arguing that respondent spouses did not engage the services of legal counsel. Also, it contends that attorney's fees and litigation exPenses are awarded only if the opposin g patty acted in gross and evident demandable claim.

Appointing authority defined and explained. In arbitratiory the "Appointing Authority" is by agreement
Model Law, appointing authority shall mean the person named in the arbitration agreement as the rrppointing authofity; or the regular institution under whose rules, nnd unless they have agreed to a different procedure, they shall lre deemed to trave ug."Jd to the procedur".rrld"r such arbiiration rules for the selection and appointment of arbitrators. In ad hoc nrbitration, the default appointment of an arbitrator shall be made by the National President of the Integrated Bar of the Philippines (lltP) or his duly authorized representative.ls The appointing rtuthority, therefore of the National President of the Ir*egrated llirr of the Philippines may be delegated.le
SEC. 27. What Functions May be performed by Appointing Authority. functions referred to in - The Articles 1L(3), t't(4),13(3) and 14(1) of the Model Law shall be performed by the Appointing Authority,
'i's,'" i."
r''(r( ,( , l,

rrf the parties. Thus, in the

bad faith in refusing to satisfy plaintiff's valid, just and

We disagree. The award is not only for attorney's fees, but also for expenses of litigation. Hence, it does not matter if respondents represented themselves in court, because it is obvious that they incuired expenses in pursuing their action before the CIAC, as well as the regular and the appellate courts. We find no reason to disturb this award. WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED; howeve{, the award of nominal damages ts DELETED for lack of legal basis. Costs against petitioner.
SO ORDERED.
rTGovs. lntermediateAppellateCourt, 197 SCRA22,28-29, May 13, l99l;Ventenilla ( vs. Centeno. I SCRA 215, 220, January 28, l96l; Robes-Francisco Realty vs. otrrt of First l97B 30, October 65-66, lnstance. B(, SCRA 59,

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AlrrRnnrtvr Dtspure Rrsolurtoru Acr or 2004

REpusllc

Acr No. 9285

Chapter 4

lnternational Commercial Arbitration

unless the latter shall fail or refuse to act within thirty

(i) to prevent irreparable

injury;

loss or

the apilicant may renew the application with the

Court.

(30)daysfromreceiptoftherequestinwhichcase

(ii)

to provide security for the performance of any obligation;

dence; or

(iii) to produce or preserve any eviFunction defineda particular Functionmeans an activity that is appropriate to "Appointing business or profession.20 The functions of the No' 9285' Authori ty" aieenumerated in Section 27,Republic Act

(iv) to compel any other appropriate

act or omission.
(3)

sEc.

28.

Grant of lnterim Measure of Protection.

(4)

-(a)Itisnotincompatiblewithanarbitration agreementforapartytorequest,beforeconstitution

The order granting provisional relief may be conditioned upon the provision of security or any act or omission specified in the order.

of the tribunal, iro," a Court an interim measure of protectionandfortheCourttograntsuchmeasure. After constitution of the arbitral tribunal and during arbitral proceedings, a request for an interim measure of protection, or riodificition thereof' may be made with the arbitral tribunal or to the extent that the arbitral ftibunal has no Power to act or is unable to the act effectively, the request may be made with Court. The arbitral tritunal is deemed constituted when the sole arbitrator or the third arbitrator, who and has been nominated, has accepted the nomination written communication of said nomination and acceptancehasbeenreceivedbythepartymakingthe
request.

Interim or provisional relief is requested by written application transmitted by reasonable means to the Court or arbitral tribunal as the case may be and the party against whom the relief is sought, describing in appropriate detail the precise relief, the party against

whom the relief is requested, the

grounds for the relief, and the evidence supporting the request.
(s)
(6)

The order shall be binding upon the parties.

Either party may apply with the Court

(b)Thefollowingrulesoninterimor
provisional relief shall be observed: (1) Any Party may request that provisional reliei be granted against the adverse
partY.
(71

for assistance in implementing or

enforcing an interim measure ordered by an arbitral tribunal. A party who does not comply with the order shall be liable for all damages resulting from non-compliance, including all expenses/ and reasonable attorney's fees, paid in obtaining the order's iudicial enforcement.

Ql
/('See Section

Such relief may be granted:

27, RePublic Act No 9285

52

furERrunrve DrspurE Resolurroru

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Court may grant interim measure. It is not incompatible with an arbitration agreement for a party to request, before constitution of the tribunal, to request from a Court an interim measure. After constitution of the arbitral tribunal and during arbitral proceedings, a request for an interim measure of protection, or modification thereof, may be made with the arbitral tribunal or to the extent that the arbitral tribunal has no power to act for an interim measure of protectiory the request may be made with the Court.2l

enforcing an interim measure ordered by an arbitral tribunal.

with the court for assistance in implementing or

of the dispute in arbitration. Either pafty may apply

lnterim measures of protection by arbitraton it may consider necessary,in respect of the subject matter in dispute, unless otherwise agreed upon by the parties. It shall include but shall not be limited to: (1) pieliminary injunction
as

An arbitral tribunal may grant interim measures of protection

lnterim defined. lnterim means in the meantime.22 An interim order is a temporary orde4, made until another or final order takes its place
or final event occurs.23

directed against aparty; (2) appointment of receivers or detention; (3) preservatiory inspectior"t oi the property that is the subject of the dispute in arbitration. Either party m ay appry with the Court for assistance in the implementingbr enforcing aninterim measure ordered by the arbitral tribunal.2s

When arbitral tribunal deemed constituted. The arbitral tribunal is deemed constituted when the sole arbitrator or the third arbitratoq, who has been nominated, has accepted the nomination and written communication of said
nomination has been received by the party making the request.2a

Authority for Arbitrator to Grant lnterim Measure of Protection. - Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of apafty, order any party to take such interim measures of protection as the arbitral tribunal may consider necessary in respect of the subject-matter of
SEC. 2g.Further

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

agreed by the parties, meet at any prace it considers appropriate for consultation among its members, for

the circumstances of the case, includirlg the

The arbitral tribunar may, unless otherwise

sEC. 30. Place of Arbitration parties are - The free to agree on the place of arbitration. rining such agreement, the place of arbitration shail be in Metro Manila, unless the arbitral tribunal, having regard to

28, paragraph 2. Such interim measures may include but shall not be limited to preliminary injunction directed against aparty, appointment of receivers or detention, preservation, inspection of property that is the subiect
2lSee Section ZB(a), Republic Act No. 9285. 22Bouvier3 Law Dictionary, citing 2 Bell Comm. 265, zrBarron3 Law Dictionary, 20O3 Edition, p. 254.
7a3rd sentence, Section

the dispute following the rules in Section

hearing witnesses, experts or the parties, or for inspection of goods, other property oi documents.
Rules on place of arbitration.
a1e free to agree on the place of arbitration. Failing such agreement, the place of arbitration shall be in Metro Manila,

. The parties

p. 1649.

unless the arbitral tribunal, having regard to the circumstances tlf thc case, including the conveniur,"" of the parties shall decide
"'\t,r,\rtlt<nt /().lit'1 lrrltlrr
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54

55

ALTERi'rcrrvE

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on a different place of arbitration. The arbitral tribunal may, unless

otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for the inspection of goods, other property or documents.26 The SEC. 31. Langunge of the Arbitration. parties are free to agree on the language or languages to be used in the arbitral proceedings. Failing such agreement, the language to be used shall be English in international arbitration, and English or Filipino for domestic arbitration, unless the arbitral tribunal shall determine a different or another language or languages to be used in the proceedings. This agreement or determination, unless otherwise specified therein, shall apply to any written statement by a parfir any hearing and any award, decision or other communication by the arbitral tribunal.

may order that any documentary evidence shall be accompanied by u translation.into.the_language or languages agreed upon by the parties or determined in u..oidunce wlth paragraph 1, section 31, Republic Act No. 92g5.22

The arbitral tribunal may order that any documentary evidence shall be accompanied by trans^ by lation into the language or languages agreed upon the parties or determined in accordance with Paragraph 1 of this Section. Language or languages of arbitration,
As a general rule, the parties are free to agree on the language or languages to be used in the arbitral proceedings. Failing such

agreement, the language to be used shall be English in international arbitration, and English and Eilipino tn domestic arbitr ati o n, unle ss the arbitr al tribunal shall determine a different or another language or languages to be used in the proceedings. This agreement or determination, unless otherwise specified therein, shall apply to any hearing and any award, decision or
other communication by the arbitral tribunal. The arbitral tribunal
26See

Section 32. Republic Act No. 9ZB5

56

57

CHAPTER

CHAPTER 6

DOMESTIC ARBITRATION
SEC.S2.LawGoaerningDomesticArbitration._ Domestic arbitration shafilontinue to be governed ,,The by Republic Act No. 875, otherwise known as Arbitration Law " as arnended by this chapter. The term,,domestic arbitration" as used herein shall mean an arbitration that is not international as defined in Article 1(3) of the Model Law'
Domestic Arbitration defined' No' The term "domestic arbitration" asused in Republic Act defined as g2gs,shall mean an arbitration that is not international in Article 1(3) of the Model Law. Domestic arbitration shall continue to bg governed by Republic Act No. 876, otherwise known as "The"Arbitration Law," as amended by Chapter 5, Republic Act No. 9285.1

ARBITRATION OF CONSTRUCTION
DISPUTES
SEC. 34. Arbitration of Construction Disputes: Goaerning Law. - The arbitration of construction disputes shall be governed by the Executive Order No. 1-008, otherwise known as the "Construction Industry Arbitration Law."

Governing law on construction arbitration disputes. The arbitration of construction disputes shall be governed by Executive Order No. 1008, otherwise known as the "Construction Industry Arbitration Law."l Executive Order No. 1008 vests upon the Construction Industry Arbitration Commission (CIAC) original and exclusive jurisdiction over disputes arising from, or connected with contracts entered into by the parties involved in construction in the Philippines.2
Effect of decisions of voluntary arbitrators. While under the law decisions of voluntary arbitrators are irccorded finality, the same may still be subject to judicial review such as where there was a violation of a party's right to due
process and to be heard.3

Articles 8, L0',LL,L2,lg,l4,Lgand 19 and'29 to 32 of the Model Law and sections 22 to 31 of the preceding chapter 4 shall apply to domestic arbitration.

sEc. 33. Applicability to Domestic Arbittation.

Applicability of Model Law and Republic Act No. 9285 to domestic arbitration'
There are certain provisions of the Model Law and Republic Act No. 9285 which, by virtue of section 33, Republic Act No' They are 9285 are expressly appiicable to domestic arbitration' enumerated in that provision of law'2
lsee Section 32, Republic Act No' 9285' 2See Section 32, Republic Act No 9285'

SEC. 35. Coaerage of the Law. Construction disputes which fall within the original and exclusive iurisdiction of the Construction Industry Arbitration Commission (the "Commission") shall include those
l\r,r'\<'r tion 14. licptrtrlir Act No. 9285 "\t'r'Mclro ( on\lru(lr()tt. lttr vs. ( h,rth.tnt Propcrticr, Inr., l(t'.i SCRA (rcl7 't Jtrtr t,rll ltrrlttslttr'., lnl('l lt,rlton,rl ( r)rlx)t.rll()t )v\ ( olrrl ol /\1 rl rr',tl\, l',', S( [{A l',',
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AnrRrunrvr DrspurE Rrsolurroru Acr or 2004

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between or among parties to/ or who are otherwise bound by, an arbitration agreement, directly or by reference whether such parties are proiect owner, contractoq, subcontractol, fabricatol, proj ect managel, design professional, consultant, quantity surveyor, bondsman or issuer of an insurance policy in a construction project.

Authority defined.
Authority is the permission or power delegated to another. Jhis Tuy be express or implied. If express, it is usually embraced in a document called apower of attoriey.6 sEC. 37. Appointment of Foreign Arbitrator. The Construction Industry Arbitration commission (cIAc) shall promulgate rules to allow for the appointment of a foreign arbitrator as co-arbitrator or chairman of a tribunal a person who has not been previously accredited by GIAC: proaided, That: (a) the dispute is a construction dispute in which one party is an international partli (b) the person to be appointed agreed to abide by the arbitration rules anilpolicies of CIAQ (c) he/she is either co-arbitrator upon the nomination of the international partlior he/she is the common choice of the two clAc-accredited arbitrators first appointed, one of whom was nominated by the international party; and (d) the foreign arbitrator shall be of different nationality from the international party.

The Commission shall continue to exercise original and exclusive iurisdiction over construction disputes although the arbitration is "commercial"
pursuant to Section 2L of this Act. Matters included in exclusive original jurisdiction of CIAC. Construction disputes which fall within the exclusive original jurisdiction of the CIAC shall include those between or among the parties, or who are otherwise bound by, anarbitration agreement, directly or by reference, whether such parties are project owner, contractor, subcontractor, fabricator, project manageq, design professional, consultant, quantity surveyor, bondsman or issuer of an insurance policy in a construction project.a The Commission shall continue to exercise original and exclusive jurisdiction over construction disputes although arbitration is "commercral" pursuant to Section 21 of Republic Act No. 9285.5
SEC. 36. Authority to Act as Mediator or Arbitrator. - By written agreement of the parties to a dispute, an arbitrator may act as mediator and a mediator may act as arbitrator. The parties may also agree in writing that, following a successful mediation, the mediator shall issue the settlement agreement in the form of an arbitral award.

lnternational party defined.

subsidiary of such internation-al party or co-venfurer in a joint venture with a party which hai its place of business in the f 'hilippines. The b-rTforeign arbitrator shall mean a person who is not a national of the Philippines.T
business is outside the Philippines. It shall not include a domestic

"International qarty-" shall mean an entity whose place of

4see Section

slbid.

35, Republic Act No. 9285

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Who shall appoint foreign mediator?

The Construction Industry Arbitration Commission (CIAC)

shall promulgate rules to allow for the appointment of a foreign arbitrltor as co-arbitrator or chairman of a tribunal a person who has been previously accredited by CIAC: Proaided, That: (1) the dispute is a construction dispute in which one Party is an international party; (2) the Person to be appointed agreed to abide by the arbitrition rules and policies of the CIAC; (3) he / she is either co-arbitrator upon the nomination of the international part!, or he, she is the common choice of the two CIAC accredited arbitrators first applied, one of whom was nominated by the international party| and (4) the foreign arbitrator shall be of different nationality than the international Party.8

SEC. 39. Court to Dismiss Case Inaolaing a A Regional Trial Court before - dispute which a construction is filed shall, upon becoming aware, not later than the pre-trial conference, that the parties had entered into an arbitration agreement, dismiss the case and refer the parties to arbitration to be conducted by the CIAC, unless both parties, assisted by their respective counsel, shall submit to the Regional Trial Court a written agreement exclusively for the Court, rather than the CIAC, to resolve the dispute.
Construction Dispute.

SEC. 35. Applicability to Construction Arbi' The provisions of Sections l7(d, of Chapter 2, and, Sections 28 and 29 of this Act shall apply to arbitration of construction disputes covered by this

tration.Chapter.

Applicability to construction arbitration. The provisions of section 17(d) and sections 28 and 29,
Republic Act No. 9285 shall apPly to arbitration of construction
disputes.e

General rule is dismissal of construction arbitration dispute. A regional trial court before which a construction dispute is filed shall, upon becoming aware, not later than the pre-trial conference, thatthe parties entered into an arbitration agreemenf dismiss the case and refer the parties to arbitration to be conducted by the CIAC unless both parties, assisted by their respective counsef shall submit to the regional trial court, a written agreement exclusively rather than the CIAC, to resolve the dispute. Because the CIAC has exclusive original jurisdiction over11 disputes arising from or connected with in construction in the Philippines, whether the dispute arises before or after completion if the contract, or ufter abandonment or breach thereof.l2

Construction lndustry Arbitration Commission (ClACl

jurisdiction.
Section 4 of Executive Order No. 1008 expressly vests in the Construction Industry Arbitration Commission (CIAC) original and exclusive jurisdiction over dispute arising from or connected with construction contracts entered into by parties that have agreed to submit their dispute to voluntary arbitration.lO
I

BSee

Section 37, lbid.

eSee Section

38, Republic Act No. 9785. roPhilrock, lnc. vs. Construction lndustryArbitration Commission. 3t,(/

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llSr:t' 5t.r tion 39, Repubhc Act No 9285 r/Mt.lro ( orrslrtrr lron. lrrr vs ( h,tth,rrrr l'l<lpt.rltt's.

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by the Supreme Court. But a CIAC award shall not be confirmed as final and executory as provided in EO No. L008.1

CHAPTER 7

Final and executory judgment explained.

"Fir:ral" in the phrase "judgments and final orders" found in Section 49 ofthe Rules of Court has two accepted interpretations. ln the first sense, it is an order that one can no longer appeal because the period to do so has expired, or because the order has been affirmed by the highest possible tribunal involved. In the second sense, it connotes that it is an order that leaves nothing else to be done, as distinguished from that which is interlocu tory.2 Final judgments on the merits rendered by a court of competent jurisdiction is conclusive on the rights of the parties and their privies and constitutes an absolute bar to subsequent actions involving the same claim, demand or cause of action.3 A final decision rendered by a competent court can no longer be relitigated.a Once a decision becomes final and executory, it is removed from the power or jurisdiction of the Court which rendered it to further amend, much less revoke it to further amend, much less rcvoke it.5 A judgment becomes final and executory by operation of law.6 Finality of judgment becomes a fact upon the lapse of the pcriod for appeal if no appeal is perfected.T

JUDICIAL REVIEW OF ARBITRAL AWARDS

A.

DOMESTIC AWARDS

mation of a domestic arbitral award shall be governed by Section 23 of the R.A- No. 876' A domestic arbitral award when confirmed shall be enforced in the same manner as final and executory decisions of the Regional Trial Court' The recognition and enforcement of an award in an international commercial arbitration shall be governed by Article 35 of the Model Law' The confirmation of a domestic award shall be made by the Regional Trial Court in accordance with the Ruies of Piocedure to be promulgated by the Supreme Court. A CIAC Arbitral award need not be confirmed by the Regional Trial Court to be executory as provided under E.O. No. 1008.

sEc.40.ConfirmationofAward,-Theconfir.

Confirmation defined.

Confirmation is the act of giving formal approval.s

('orrfirmation by the Regional Trial Court, therefore, of a domestic rtward means court approval thereof.

Section 22, Republic Act No. 87 6 governs domestic awards' The confirmation of a domestic award shall be governed by section 23, Republic Act No. 876. A domestic award when confirmed shali be enforced in the same manner as final and executory decisions of the Regional Trial Court' The recognition of an international commerciil arbitration shall be governed by Article 35 0f the Model Law. The confirmation of domestic award shall be in accordance with the Rules of Procedure as promulgated

rSee Section 40, Republic Act No. 9285. /Macahilig vs. Heirs of Grace M. Magalit. 344 SCRA B3B. 'l)cvelopment Bank of the Philippines vs. Court of Appeals. 357 rlbiri

SCRA

626

"Al,rtr.rns,rs

''( rly ol M,rrril,r

/llnl

vs lntermediate Appellate Court, 204 SCRA 304. vs ('orrrt of Aprlrr'.rls. ?04 SCRA 367
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Function of ordering execution of judgment. The function of ordering execution of judgment being judicial, devolves upon the judge whereas the act of issuing a writ of execution may be performed by another person, like the clerk of court.e The court loses jurisdiction upon finality of the
decision, except to order its execution. A final judgment or order becomes "final and executory" upon expiration <lf the periodlO for appeal therefrom where t o upp*al his been duly perfected oI, an appeal therefrom having been takery the judgment of the appellate court becomes final-it is called "final and executory judgment because execution at such point issues as a matter of right.11 Execution pending appeal is the only exception to the general rule that only a final judgment may be executed, thus the existence of "good reasons" for it is what confers discretionary power to issue a writ of execution pending appea1.12

I{A

The crux of the controversy boils down to whether the dispute between the parties warrants an order compelling them to submit to arbitration. Petitioners contend that the subject matter of private respondent's causes of action arises out of or relates to the Agreement between petitioners and private respondents. Thus, considering that the arbitration clause of the Agreement provides that all disputes arising out of or relating to thJAgr""-J1t or the parties' relationship, including the termination tf,ereol shall be resolved by arbitration, they insist on the suspension of the lroceedings in civil Case No. 2632-MN as mandut"a by sec.7 of
976.13

The case of Del Monte Corporation-USA vs. Court of Appeals (3sr scRA 3731.

In this case, the Supreme Court held that: "Even before the enactment of Republic Act No. 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

sec. 7. stay of Ciail Action. - If any suit or proceeding be hrought.rpgr an issue arising out_of an ugr""*unt providing for nrbitration thereof, the courtin which rrrlh suit or proceediig is pending, uPon being satisfied that the issue involved in such Juit or proceeding is referable to arbitration, shall stay the action or proceeding until an arbitration has been had in accordance with thc terms of the agreeme nt. prouided, That the uppli.u^t ior the ntay is not in default in proceeding with such arbiiration. Private respondents claim, on the other hand, that their cause i'Arts.20,2L and2J of the civil code, the tlt'tcrmination of which demands a full blown trial, as correctly f.'ld bythe Court of Appeals. MoreoveS they claim that the issues ht'frre the trial court were'ot joined so thaithe Honorull" |udge wns not given the opportunity to satisfy himself that the issue lnv.lved in the case was referable to arbitration. They submit thnt, apparently, petitioners filed a motion to suspend proceedings lnstcad of sending a written demand to private respondents to arlritrate because petitioners were not sureihether thl case could lrt' n subject of arbitration. They maintain that had petitioners done
rrf action are rooted

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." Moreove{, "Only parties to the Agreement, their assigns or heirs have the right to arbitrate or could be compelled to arbitrate ." FinalLy, "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 proceeding." Portions of the decision follow.
eCasaje vs. Cabalite, 331 SCRA 508. toLizardo, Sr. vs. Montano, 332 SCRA 163.

private_responclents failed to answer the demand, Pt'litione''rs could have filed with the trial court their demand for nrlritration that would warrant a determination by the juclge
'

xo

lnd

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iffatAwards

whether to refer the case to arbitration. Accordingly,private respondents assert that arbitration is out of the question. Private respondents further contend that the arbitration clause centers more on venue rather than on arbitration. They finally allege that petitioners filed their motion for extension of time to file this petition on the same datela petitioner DMC-USA filed a petition to compel private respondent MMI to arbitrate before the United States District Court in Northern California, docketed as Case No. C-98 -4446. They insist that the filing of the petition to compel arbitration in the United States made the petition filed before this Court an alternative remedy and, in a way, an abandonment of the cause they are fighting for here in the Philippines, thus warranting the dismissal of the present petition before this Court. There is no doubt that arbitration is valid and constitutional in our jurisdiction.ls 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 eourts will look with favor upon such amicable arrangement and will only interfere with great reluctance to anticipate or nullify the action of the arbitrator.l6 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 " Cont)ention on the Recognition and the Enforcement of Foreign Arbitrnl Awards of 1958" under the 10 May 1965 Resolution No. 77 of the Philippine Senate, giving reciprocal recognition and allowing enforcement of international arbitration agreements between parties of different nationalities within a contracting state.17
lB November 1998. r5Chapter 2, Title XIV Book lV New Civil Code of the Philippines. l6Puromines, lnc. vs. Court of Appeals, G.R. No. 91228,22 March 1993, 220 SCIIA
7Bt.
rTNational Union Fire lnsurance Company of Pittsburg vs. Stolt-Nielst'n. PhiIpprnt's lnc., G.R. No. 87958, 26 Aprrl 1990, I 84 SCRA 682.
ra

A careful examination of the instant case shows that the arbitration clause in the Distributorship Agreement between petitioner DMC-usA and private respond"r,i MMI is valid and the dispute between the puiti"r is arbiirable. HoweveL this Court must deny the petition.
respondent MMI is a contract. The provision to submit to arbitration any dispute arising therefrom and the relationship of -part the parties is of that contract and is itself a contract. As a rule, contracts are respected as the law between the contracting partie_s and produce effect as between them, their assigns and heirs.l8 Clearly, only parties to the Agreem ent, i.e., petltioners DMC-usA and its Managing Director for Export sales paul E. Derby, Jr., ury| private respondents MMI uttd itr Managing l)irector LILY SY are bound 6y the Agreement and its arbitration c'lause as they are the only signatoriei thereto. Petitioners Daniel Collins and Luis Hidalgo, attd private respondent sFI, not parties to- rlr" Agreement and cannot u,run be considered assigns o. h"i6 rf the parties, are not bound by the Agreement and the arbitration c'lause therein. Consequently, referril 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 thf return trf the arbitral award could be called forle but oilyas to"petitioners DMC-usA and Paul E. Derby, Jr., and private tbrporrdents MMI nnd LILY sY and not as to the other parties in this case, in rtccordance with the recent case of Heirs oy augusto L. Salas,lr. as. l.!!1:!il Realty corporation,2o which r.rp"rr"-dea ihat of Toyota' Motor Ithilippines Corp. us. Court of Appeals.il rn Toyota, the Court ruled that ',[t]he contention that the nrlritration clause has become dysfunctional because of the Jtrcscnce of third parties is untenable ratiocinating that [c]ontracts
r"Art I J I I, Nc'w
r''\r't' Nott'
''"(r
''rt r
l(-l.

The Agreement between petitioner DMC-USA and private

Crvll Code of the phrlippines.

l{ Nr) I .l') l(,). I I l)t'rr,rrrlrt,r l()()(), l)O SCRA6l0 li Nr t l(l)tltll, / l)t'tOilrlX,r l,),)). ) 11, \( liA,/ J1r
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are respected as the law between the contracting parties22 and that "[a]s such, the parties are thereby expected to abide with good faith in their contractual commitments.23 Howeveq, in Salas, lr., only parties to the Agreement, their assigns or heirs have the right to arbitrate or could be compelled to arbitrate. The Court went futher by declaring that in recognizing the right of the contracting parties to arbitrate or to compel arbitration, the splitting of the proceedings to arbitration as to some of the parties on one hand and trial for the others on the other hand, or the suspension of trial pending arbitration between some of the parties, should not be allowed as it would, in effect, result in multiplicity of suits, duplicitous procedure and unnecessary
delay.2a

sEC. 41. vacation

rules of procedure to be promulgated by the supreme Court or.ty on those grounds enumerated in section 25 of Republic Act No. g76. A.y other ground raised against a domestic arbitral award shall be disregarded by the Regional Trial Court.

arbitration may question the arbitral award with the appropriate Regional Trial court in accordance with

Autard.- A party to a domestic

The object of arbitration is to allow the expeditious determination of a dispute.2s 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 cemplete proceedi.g.t' WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals affirming the Order of the Regional Trial Court of Malabory Metro Manila, in Civil Case No. 2637-MN, which
denied petitioners' Motion to Suspend Proceedinss, is AFFIRMED. The Regional Tiial Court concerned is directed to proceed with the hearing of Civit Case No. 2537-MN with dispatch. No costs.
SO ORDERED.

(a) where there was an evident miscalculation of figures, or an evident mistake in the description of any person, thi"ng or property referred to in the award; or (b) where the arbitrators have awarded upon a matter not submitted to them, not affecting the merits of the decision upon the matter submitted; or (c) where the award is imperfect in a matter of form not affecting the merits of the coniroversy, and if it had been a commissioner's report, the defect could have been amended or disregarded by the court. The order may modify and correct the award so as to effect the intent thereof and promote justice between the parties.,
Methods of vacating an award. A party to a domestic arbitration may question an arbitral ruward with the appropriate Regional Triai Cburt in accordance with rules of procedure to be promulgated by the s,rpr"*" Court orrlv on those grounds enumerated in siction is oy n pLwi, Act No.
/\r.r ltrlrr

section 25, Republic Act No. gr6 on grounds for vacating domestic awards. _ In any one of the following cases, the court must make an order modifying or correctingthe award, upon application of any party to the controversy which was arbitrited:

zzCiting Mercantile lns. Co. vs. Felipe Ysmael, Jr. & Co., lnc., G.R. No. 43862. l3

January 1989, | 69 SCRA 66.

23ciring Ouillian vs. Court of Appeals. G.R. No.

55457,20 January 1989, 169

SCR

279.
24lbid.

zsCoquia, Jorge R., Annotation, Arbitration as a Means of Reducing Court Congestion, 29 Juty t977, 78 SCRA l2l.
26See

Note 20.

/',,

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t ll/(, 7t

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876. Any other ground raised against a domestic arbitral award shall be disregarded by the Regional Trial Court.28

Awards approved in 1958 and ratified by the Philippine Senate under Resolution No. 72.2e

B.

FOREIGN ARBITRAL A\YARDS

Application of the New York Convention.

The New York Convention shall govern the recognition and enforcement of awards by said Convention. The recognition and e'nforcement of such arbitral awards shall be filed with the Regional Trial Court in accordance with rules of procedure to be promulgated by the Supreme Court. Said procedural rules shall provide that the party relying on the award or applying for its t'nforcement shall file with the court the original or authenticated copy of the award and the arbitration agreement. If the award or irgreement is not made in any of the official languages, the party shall apply a duly certified translation thereof in any of such languages. The applicant shall establish that the country in which the foreign arbitration award was made a party to the New York Convention. If the application for rejection or suspension of the rrward has been made, the Regional Trial Court rr.ay, if it considers it propeq, vacate its decision and may also, on the application of the. party claiming recognition or enforcement of the award, order the party to provide appropriate security.30

Application of theNew York Conaention. The New York Convention shall govern the recognition and enforcement of arbitral awards covered by said Convention. The recognition and enforcement of such arbitral awards shall be filed with the Regional Trial Court in accordance with the rules of procedure to be promulgated by the Supreme Court. Said procedural rules shall provide that the party relying on the award or applying for its enforcement shall file with the court the original or authenticated copy of the award and the arbitration agreement. If the award or agreement is not made in any of the official languages, the party shall supply a duly certified translation thereof into any of such.languages. The applicant shall establish that the country in which foreign arbitration award was made is a party to the New York Convention. If the application for reiection or suspension of enforcement of an award has been made, the Regional Trial Court fitalr if considers it proper, vacate its decision and may also, on the application of the party claiming recognition or enforcement of the award, order the party to provide appropriate security.
SEC.
42.

Vacate defined and explained.

Vacqte means to render void; to set aside.31 It is a fundamental precept that a final decision cannot be amended or corrected t'xcept for clerical errors, mistakes or misprisions. Because the t'ourt loses jurisdiction upon the finality of its decisiory except to orcler its decision within its lifetime.32 An award, being merely a partial or final decision of an arbitrator in resolving the issue in t'orrtroversy is not a final decision of a court.

New York Convention defined. New York Convention means the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral
285ee

i
i

l i

SEC. 43. Recognition and Enforcement of Foreign

Arbitral Awards Nof Coaered by the New York Con''l\t'r lton t(w). lk'pLrbltr Act No. 9285 "'\r'r lrr tt 4). lltttl. rrll, ltoli, l,rw l)tr ltottny, /OO I I rlitton. tt4(; 1t ' l t,r,nt lrr ',1 v', MoI tl, u to I l.) 'r( lin I/, I

Section 41, Republic Act No. 9285.

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The recognition and enforcement of z)ention foreign arbitral awards not covered by the New York Convention shall be done in accordance with procedural rules to be promulgated by the Supreme Court. The Court malr on grounds of comity and reciprocity, recognize and enforce a non-convention award as a convention award.
Recognition defined. Recognition is a confirmation that an act done for another person was authorized. It is the formal admission that a person, entity or thing has a particular status.33
Enforcement defined. Enforcement is the act or process of compelling compliance with a law, mandate or command.3a Enforcement can be done extrajudicially or by means of legitimate law enforcement
agencies.

be interfered

on the theory that a court which first asserts jurisdiction will not with in continuance of its assertion of another court... it is unless desirable that one give way to the other.36

Reciprocity defined and explained. Reciprocity, is generally a relationship between persons, states or countries whereby favors or privileges granted by one are returned by the other. Thus, if state " A" certifies engineers already certified by state "8" to work in state " A," reciprocity exists when state "B" similarly certifies engineers certified by state " A." Reciprocity does not involve a vested right but would exist without it.37 SEC. 44. Foreign Arbitral Award Nof Foreign fudgment.-A foreign arbitral award when confirmed by court of a foreign country, shall be recognized and"enforced as a foreign arbitral award and not as a judgment of a foreign court. A foreign arbitral award, when confirmed by the Regional Trial Court, shall be enforced in the same manner as final and executory decisions of courts of law of the Philippines. Effect of a foreign arbitral award. A foreign arbitral award when confirmed by a court of a foreign country shall be enforced as a foreign arbitral award and not as a judgment of a foreign court. As such foreign arbitral award, it can be vacated by a regional trial court in the Philippines. Howevet when aforeign arbitral award has been confirmed by the regional trial court, the same shall be enforced as a final and executory decisions of courts of law in the Philippines.3s The effect of confirmation by uregional trial court of a foreign arbitral award
'nBarronls Law Dictionary, 2003 Edition, t/lbttl , rrtrrrr; 100 S.E 2rl705. ?,O8. frf\t.r. St'< lt<'tt't 44, llt.1lrrtllir Ar t No 9?85

Recognition and enforcement of non-New York Convention awards. The recognition and enforcement of foreign arbitral awards not covered by the New York Convention shall be done in accordance with procedural rules to be promulgated by the Supreme Court. The Court may, on grounds of comity and reciprocity, reco gnize and enforce a non-convention award as a convention award.3s Comity and "judicial comity" defined and explained. Comity is a rule of courtesy by which one court defers to the concomitant jurisdiction of another. "fudicial comity is not a rule of law, but one of practical convenience and expediency" based
33Black3 Law Dictionary, 34lbid.
35See

Tth Edition, p. 1277

p BB, citing 177 U.S. 485. 4BB

Section 43. Republic Act No. 9285.

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is to clothe them

with the force and effect of a final and executory court decision in the Philippines.
SEC. 45. Reiection of a Foreign Arbitral Autard.

oppose an application for recognition and enforce-

A party to a foreign arbitration Proceeding may

Appeal defined. Appeal is a resort to a higher court for the purpose of obtaining a review of a lower court decision and a reversal of the lower court's judgment or the granting of new trial.ao Appeal from decisions on arbitral awards. A decision of the Regional Trial Cour! confirming, vacating, setting aside or modifyirg or correcting an arbitral award may be appealed to the Court of Appeals in accordance with the rules
of procedure to be promulgated by the Supreme Court. Flowever,

ment of the arbitral award in accordance with the procedural rules to be promulgated by the Supreme Court only on those grounds enumerated under Article V of the New York Convention. Any other ground raised shall be disregarded by the Regional Trial Court.

How foreign arbitral award rejected. A party to a foreign arbitration proceeding may oppose an
application for recognition and enforcement of the arbitral award in accordance with the procedural rules to be promulgated by the Supreme Court only on those grounds enumerated under Article V of the New York Convention. A.y other ground raised shall be disregarded by the regional trial court.3e
SEC.
46.

the losing parry who appeals from the judgment of the court confirming an arbitral award shall be required by the appellate court to post a counterbond executed in favor of the prevailin g party equal to the amount of the award in accordance with the rules to be promulgated by the Supreme Court.al

for recognition and enforcement of -an arbitration

SEC. 47. Venue and

lurisdiction.

Proceedings

Awards.

decision of the - A vacating, setting aside, modifying or confirming,

Appeal from Court Decisions on Arbitral

agreement or for vacation, setting aside, correction or modification of an arbitral award, and any application with a court for arbitration assistance and supervision shall be deemed as special proceedings and shall be

Regional Trial Court

filed with the Regional Trial Court (i) where arbitration proceedings are conducted; (ii) where the asset to be attached or levied upon, or the act to be enioined is located; (iii) where any of the parties to the dispute resides or has his place of business; or (iv) in the National fudicial Capital Region, at the option of the applicant.

correcting an arbitral award may be appealed to the Court of Appeals in accordance with the rules of procedure to be promulgated by the Supreme Court. The losing party who appeals from the judgment of the court confirming an arbitral award shall be required by the appellate court to post a counterbond executed in favor of the prevailing party equal to the amount of the award in accordance with the rules to be promulgated by the Supreme Court.

Venue and jurisdiction for recognition etc. of an arbitral

award. Proceedings for recognition and enforcement of an arbitration agreement or for vacatiorL setting aside, correction or
aoB.rror)\ l..rw Dir-tiorvtry, 7OO3 Edition, p. 2B arSct ltott 4/r, llcJrttlllir Ar I No 9)8';

3eSection

45, Republic Act No 9285.

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modification of an arbitral award, and any application with a court for arbitration assistance and supervision ihall be filed with the Regional Trial Court: (1) where arbitration proceedings are or coriduct ed,; (2) where the asset to be attached or levied uPon/ to parties (3) any where the act to be enioined is located; 9!the Region the dispute resihes; or (a) in the National ]udicial Capital at the option of the aPPlicant.a2

must be heard before he is condemned.$ The requirement of due process is satisfied as long as a party is given a reasonable opportunity to explain his side, even if he chooses not to participate in the proceedings when his request for posponement is denied.ae

Venue andjurisdiction distinguished' a case, furisdiction implies the Power of a court to decide not procedural, is Venue action.a3 while venue is the piu.u of the

jurisdictional, hence may be waived.4 Thus, the court m1y dismiss subject an action motu proprioin case of lack of jurisdiction over the improper for not but prescription litis p endentia,' r es' iudicata, and policy venue.as ]urisdiction is conferred by law and not by mere of any court or tribunal.a6

Notice of proceedings to parties. In special proceedings for recognition and enforcement of an arbitral award, the Court shall send notice to the parties at their address of record in the arbitration or if any party cannot be served notice at such address, at such party's last known address. The notice shall be sent at least fifteen (15) days before the date set for initial hearing of the application.s0

SEc.4s.NoticeofProceedingtoParties.-Ina special proceeding for recognition and enforcement aibitral awird, the Court shall send notice to oi

partiei at their address of record in the arbitration, the"t or if any party cannot be senred notice at such address, at such i^rty'E last known address. The notice shall be sent at leas[ fifteen (15) days before the date set for the initial hearing of the application' Notice defined and exPlained. Notice comes from the Latin "notitin," beirtg known or knOWled ge, "nOtLtS," known and "nocefe." It meanS infOrmatiOn actually ieceived by the Person to whom it is intended to be impartld.aT Procedural drre process simply means that a Person
a2Section 47, Republic Act No' 9285. a3Sulo ng Bayan vs. Gregorio Araneta, lnc', 72 SCRA 352' 44Heirs oJ Pedro Lopez vs. De Castro, 324 SCRA 591 ' asRudolf Lists Holdings, lnc. vs. Registry of Deeds. Parafraque ciry, 344 SCRA 380
a6Arranza vs. BF Homes. lnc.' 333 SCRA aTEnriquez vs. Bautista,79 Phil- 234'

4'rtJniversity of the lmmaculate Concepcion vs. U.l.C Teaching and Non-Teaching It,rsortneland Employees Union. 362 SClFu4.242.
4'llbid. "oSt.c St.r'tron

799'

4f). Rt'prtrl>ilc Act No. 9285

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Chapter B

Rrpusuc Acr No. 9295 Miscellaneous provisions

CHAPTER 8
M ISCELI.AN

EOUS PROVISIONS

the ADR in the private and public sectors; and (2) To assist the government to monito[, study and evaluate the use by the public and private sectors of the AD& and recommend tb Congress needful statutory changes to develop, strengthen ar,a improve ADR practices in accordance with world standards.2

There is hereby established the Office for Alternative Dispute Resolution, as an attached agency
to the Department of justice (DOD, which shall have a Secretariat, headed by an Executive Director. The Executive Director shall be appointed by the President of the Philippines. The objectives of the Office are: develop and expand the use of ADR in the private and public sectors; and (b) To assist the 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 in accordance with world standards.

SEC. a9. Office for Alternatiae Dispute Resolution.

sEC. s0. powers and Functions of the office for Alternatiue Dispute Resolution.- The bffice r* aliurnative Dispute Resolution shall have the foflowing powers and functions:

(a) To promote,

G) To certify that such ADR practitioners and ADR service providers rrave under:gone the professional training provided by the Offi"ce;
(c)
ADR programs;

(a) To formulate standards for the training of the ADR practitioners and service providers; v

tation, monitoring and evaluation of go.r".rr*"it

To coordinate the development, implemen-

carry into effect the provisions of this Act.

(d) To charge fees for their services; and (e) To perform such acts as may be necessary to

Office of Alternative Dispute Resolution established. An office of Alternative Dispute Resolution (ADR) is established under Republic Act No. 9285, as an agency of the
Department of fustice (DOI). It shall have a secretariat headed by an executive director who shall be appointed by the President of the Philippines.l

Power defined.
Power is thl authority granted to by one person to another Io do in his behalf the same thitrg which he would do himself in the' premises. The powers and, aithe same time, functions

of the office for Alternative Dispute Resolution is granted by law.3

Objectives of the Office for Alternative Dispute Resolution. The objectives of the Office for Alternative Disputt' Resolution are as follows: (1) To promote, develop and expancl
rSee

rf

Functions of the office of Atternative Dispute Resolution explained. when an office is engaged in the performance of the
lris office, he is said to .;. Z*f tmqraph,
tbrrl.

iitihis functions. Thus, when the office

duties

lst paragraph, Section 49 Republic Act No. 9285

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for Alternative Dispute Resolution engages in the performance 50, any of its powers and functions, as enumerated in Section Republic Act No. 9285, that office is engaged in the performance of its powers and functions.a

Appropriation for Republic Act No. 9285. Appropriations "to catry out the provisions"

of Republic Act No. 9285 "shall be included the General Appropriations Act of the year following its enactment into law and thereafter."s

Formulation of standards for ADR training' Formulation of standards for training of the ADR of practitioners and service providers means the establishment iraining guidelines for enn practitioners and service providers' Certification defined. A certification is a written statement legally authenticated by which on the accomplishment of something. It is also a writing

SEC. 52. Implementing Rules and Regulations (IRR). Within one (1) month after the approval of this Act, the Secretary of justice shall convene a Committee that shall formulate the appropriate rules and regulations necessary f.ot the implementation of this Act.

The Committee, composed of representatives from:

testimony is given that fact has or has not taken place' CertiJication or may atso be"a writing that a thing has or has not been done' the fact exist or does not exist.s

(a) the Department of ]ustice; (b) the Department of Trade and Industry; (c) the Department of the Interior and Local
Governmenf

sEc.Sl.AppropriationS._Theamountneces. sary to carry o.,t thu provisions of this Act shall be inciuded in the Geniral Appropriations Act of the year following its enactment into law and thereafter' Appropriation defined. at Appropriatian is an authority fP* the legislature given a the proper time and legal form io the ProPer officer to apply ,,r- of honey out of that which may be used in the treasury in a

(d) the President of the Integrated

Philippines;
profession;

Bar of the

(e) a representative from the arbitration

(f) a representative from the mediation

profession; and

(g) a representative from the ADR organizations;

shall, within three (3) months after convening submit

It is given year inspecified objects or demand against the State'6 ih" u.iof the tegistature setting apart or assigning_to a particular It is the setting use the paymen"t of debt or duJs fiom its creditors. revenue for a public apart Uy fu* of a certain sum from the specified purPose.T
4See Section

50, Republic Act No. 9286' sBoard of Election lnspectors vs. Piccio. 8l Phil' 580' 6Dajao vs. Padilla, 124 ?nn. 6. TBengson vs. Secretary of Justice, 67 Pnil' 916'

Committee for review and approval. The Oversight Committee shall be composed of the Chairman of the Senate Committee on |ustice and Human Rights, Chairman of the House Committee on fustice, and one (1.) member each from the Maiority and Minority of both Houses.
'\ilr, Sr\lr,rn l,
lleJltrtrlic Acl No.

the IRR to the Joint Congressional Oversight

9)85. 83

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The joint Oversight Committee shall become functus officio upon approval of the IRR.
Rules and regulations defined and explained.

"o,.

",

,lrtr'irlro'otherwise

known as the "Local Government Code of

Rule is a prescribed for action or conduct, regulation or principle.e Regulations are rules or other directives issued by administrative agencies that must have specific authorization to issue directives and upon such authorization must usually follow prescribed conditions, such as prior notification of the proposed action in a public record and an invitation for public comment.lo Functus oficio defined.
Functus oficio means "having performed his office," it is without further authority or legal c-ompetence because the duties and functions of the original commission have been fully accomplished.ll

SEC. 54. Repealing Clause._ AII laws, executive orders, rulei and regulations, decrees, which are inconsistent *itl the provisionsif this Act, are hereby repealed, amended oi modified accordingly.

Repealing clause defined. A repealing clause is a sratutory provision earlier statute' It is also called uyrlit;;;.t"h that repeals an #;iative act abrogating an earlier law. ,";";i may be express if .thir effected by specific declaration in the .L* statute. It is implied lf it is effected by irreconcilable conftict ii'* u.a the new law.13

ffi

u"r*l"i;;fi

SEC. 53. Applicability of the Katarungang This Act shall not be interpreted to repeal, amend or modify the jurisdiction of the Katarungang Pambarangny under Republic Act No.
Pambarahgoy. Tl:h0,otherwise known as the "LocalGovernment Code

sEC' 55. Separab,ity crause.If for any reason or reasons' any portion or provision of this Act shali be held unconstiturional oi invalil; other parts provisions not affected sharl thereby "ii continue or to remain in fuII force and effect. - - ,

teparab ility clause defined.

separability clause rs a provision that keeps the remaining provisions of a contract or Jtut.rt" in force if any t;;ti"";f that c'ntract or statute is declared void or rrr*.stitutional. It is also cn I led severability clause. la

of 1991.;'
Katarun gang pambarangay provisions not repealed.

The katarungang pambarangay provisions in the Local Government Code of 1991 also has provisions on arbitration, mediation and conciliation on cases within the jurisdiction of the lupong tagapamayapa. Section 53, Republic Act No. 9285 provides that "This Act shall not be interpreted to repeal, amend, or modify the jurisdiction of the Katarungang Pambarangay in Republic Act
eBarrons Law Dictionary, 2003 Edition, pp. 454-455.

Scparabirity crause in Repubric Act No. 92g5. Republic Act No. 92g5 contains a separability crause in st'ction 55 thereof. It provides th;ililt;"", reason or reasons Itly provision of this Act shail be herd .tt or "orrrtitutional invalid,
F ----

rolbid., p. 431. rrBlack3 Law Dictionary, 7th Edition. p. 682.

St,rtion bJ, llepulllir Art No. g2BS. lr\t'r'\r,r lr\ttt4, Rr,1 rrrl rlir Arl No ?,r{}! l'llll, rr k\ l, rw I )lr llor r, rry. /llr I rltf uttr. 1.t I I /<)

r/\rt

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all other parts or provisions not affected shall continue in full force and effect.ls
SEC. 56. Effectioity. This Act shall take effect fifteen (15) days after its-publication in at least two (2) national newspapers of general circulation.

Approved,
(Sgd.) loSE DE VENECIA, JR. Speaker of the House
of Representatiaes

(Sgd.) FRANKLIN M. DRILON

President of the Senate

This Act which is a consolidation of Senate Bill No. 2671 and House Bill No. 5654 was finally passed by the Senate and the House of Representatives on February 4,2004.
(Sgd.) ROBERTO P. NAZARENO
Secretary General House ofRepresentatiues

(Sgd.) OSCAR G. YABES

Secretary of the Senate

Approved. Apr. 2,2004

(Sgd.) GLORIA MACAPAGAL-ARROYO President of the Philippines

r5See

Section 55, Republic Act No. 9285.

86