CHAPTER 6: DOMESTIC ARBITRATION ALTERNATIVE DISPUTE RESOLUTION

Dayawon, Karl Mark F. Atty. David L. Ballesteros

Gesmundo, Anne Frances G.
Roxas, Marie Antoinette

DOMESTIC ARBITRATION person is granted an opportunity to seek

In general, arbitration is domestic if conducted reconsideration of an action or ruling. It does
in the Philippines. not require trial type proceedings similar to
those in courts of justice.” (Equitable PCIB vs.
Specifically, arbitration is domestic if the RCBC, 574 SCRA 858, [2008])
components of parties’ places of business, place
of arbitration, place of performance of PLACE OF ARBITRATION
substantial part of the obligation and place To be determined by the parties.
where the subject matter of the dispute is most
closely connected, are all located in the RP. If no such agreement, it shall be conducted in
Metro Manila, unless the arbitral tribunal shall
The ADR act of 2004 devoted only 2 sections to decide on a different place, taking into account
domestic arbitration namely: the circumstances of the case and the
1. Section 32, which distinguished domestic convenience of the parties.
arbitration from international arbitration and
declared that the “arbitration law” (RA876) LANGUAGE
remains to be applicable to domestic arbitration The rule in the determination of the language
that will be used in the arbitration proceedings
2. Section 33, which adopted certain provisions is the same for domestic and ICA, including the
of the Model Law and the ADR act on ICA to prerogative of the arbitral tribunal to require a
domestic arbitration. translation of documentary evidence if not in
the official language, except that Filipino is
DISPUTES COVERED added to English as a default language in
Both commercial and noncommercial disputes domestic arbitration.
provided they are susceptible of arbitration and
do not fall within the exclusive original CONFIDENTIALITY
arbitration jurisdiction of quasi-judicial The arbitration proceedings, records, evidence
agencies. and other confidential information are
privileged and shall not be published
DUE PROCESS IN DOMESTIC ARBITRATION Except:
The parties to a domestic arbitration, like in the 1. With the consent of the parties; or
case of international commercial arbitration, 2. For the limited purpose of disclosing
are entitled to be treated equally and with due to the court relevant documents where
process. On due process in a case involving a resort to the court is allowed.
domestic arbitral proceeding, the SC held that
“the well settled rule is that administrative RULES ON RECEIPT OF WRITTEN
agencies exercising quasi-judicial powers shall COMMUNICATIONS
not be fettered by the rigid technicalities of General rule: that provided for by the parties in
procedure, albeit they are, at all times required, their arbitration agreement.
to adhere to the basic concepts of fair play.
If no such agreement, it shall be delivered
“Submission of position papers may be personally, by registered mail or courier service
sufficient as long as the parties are given the and shall be deemed to be received on the date
opportunity to be heard. In administrative it is delivered at the addressee’s address of
proceedings, the essence of due process is record, place of business, residence or last
simply an opportunity to seek a reconsideration known address.
of the action or ruling complained of. This
constitutional mandate is deemed satisfied if a
 CHAPTER 6: DOMESTIC ARBITRATION ALTERNATIVE DISPUTE RESOLUTION
Dayawon, Karl Mark F. Atty. David L. Ballesteros
Gesmundo, Anne Frances G.
Roxas, Marie Antoinette

The use of electronic mail, facsimile (Transfield Philippines Inc. vs. Luzon Hydro
transmission or other electronic means is Corporation 490 SCRA 14 [2006])
permitted as long as there is a record of the If the arbitral tribunal in the exercise of its
sending and receipt of the communication authority to resolve or defer the resolution of
at the recipient’s mail box, and such electronic the preliminary issue its jurisdiction over the
communication shall be deemed to have been arbitration agreement, decides to defer the
received on the same date of its transmittal. resolution until the rendition of the arbitral
award, none of the parties can seek judicial
WAIVER OF OBJECTION relief from the deferment. MR, appeals and
Same rule applies with domestic arbitration as petition for certiorari are not available to
with the ICA. A party may be estopped from challenge the decision of the arbitral tribunal to
questioning non-compliance or is deemed to defer the resolution of the preliminary
have waived his objection if he fails to raise the jurisdictional issues.
objection without delay or within the time
prescribed (30days), provided that he knows of To justify the vacation of an arbitral award on
such non-compliance. The act, omission, or account of ‘manifest disregard of law’ the
silence giving rise to waiver or estoppel must be arbiter’s findings must clearly and
unequivocal and intentional. unequivocably violate an established legal
precedent. Anything less would suffice
EXTENT OF COURT INTERVENTION (Equitable PCI Bank vs. RCBC 574 SCRA 858
No court shall intervene except in the instances [2008])
allowed by the Arbitration Law, ADR Act and
Special ADR Rules. REPRESENTATION
The same rule on representation in ICA obtains
Pursuant to IRR, among these instances are in domestic arbitration. A party may represent
when, 30days having elapsed from receipt of himself or be represented or assisted by any
the request for arbitration, the appointing person of his choice, provided that such
authority fails to perform functions imposed representative, unless admitted to the practice
under Article 5.10(c) and (d); article 5.11(a) and of law in the RP, shall not be authorized to
article 5.13, in which cases the applicant may appear as counsel in any RP court or quasi-
apply with courts for the same relief. judicial body.

Interim measures may also be requested or ARBITRAL AGREEMENT

enforced through the courts. “As a fundamental An agreement to arbitrate is a contract and as
point, the pendency of arbitral proceedings such the arbitration agreement must satisfy the
does not foreclose resort to the courts for essential requisites of a valid contract.
provisional reliefs. The rule of ICC, which
governs the parties’ arbitral dispute, allows the Similar with mediation and ICA, the consent to
application of a party to a judicial authority for arbitrate can either be:
interim or conservatory measures. Section 14 of 1. pre-causal consent (agreement to submit to
RA876, the Arbitration Law, recognizes the arbitration), when the parties agree in a
rights of any party to petition the court to take contract to settle by arbitration a controversy
measures to safeguard and/or conserve any that will arise between them; or
matter, which is the subject of the dispute in 2. present causal consent (submission
arbitration. In addition, RA9285 known as the agreement) when the controversy already exists
ADR Act of 2004, allows the filing of provisional between the parties at the time of the
or interim measures with the courts whenever submission to arbitration. The submission and
the arbitral tribunal has no power to act” contract shall be valid, enforceable and
 CHAPTER 6: DOMESTIC ARBITRATION ALTERNATIVE DISPUTE RESOLUTION
Dayawon, Karl Mark F. Atty. David L. Ballesteros
Gesmundo, Anne Frances G.
Roxas, Marie Antoinette

irrevocable except upon grounds provided by between ICA and domestic arbitration on the
law for the revocation of contracts. commencement of arbitral proceedings.
An arbitration agreement must be in writing
and subscribed by the party sought to be Specific rules for the commencement of
charged or by his lawful agent/s. domestic arbitration:
1. In an institutional arbitration where there is
A court before which an action is brought on a no prior arbitration agreement, it is commenced
matter which is the subject of an arbitration in accordance with the arbitration rules of the
agreement shall, if at least one party requests institutional arbitrator.
not later than the pre-trial conference, or upon
the request of both parties, refer to arbitration 2. In an ad hoc arbitration, where there is a
unless it finds that the arbitration agreement is prior arbitration agreement, it is commenced
null and void, inoperative or incapable of being upon the delivery by the claimant to the
performed. If the parties request in the same respondent of a demand for arbitration. The
manner the court may stay the proceedings demand for arbitration shall be in any form
during the pendency of the arbitration (Ormoc and shall state the name, addresses and
Sugarcane Planters Assoc. vs. CA). In such case, description of the nature and circumstances of
the court does not lose its jurisdiction over the the dispute giving rise to the claim; the relief
case and the proceedings are merely stayed to sought including the amount of the claim; the
await the rendition of the arbitral award, which relevant agreements including the arbitration
shall be enforced by the court (Benguet Corp. agreement, a copy of which shall be attached.
vs. DENR-Mines and Adjudication Board,
545 SCRA 196 [2008]) Where there is no prior agreement, it is
initiated by one party through a demand upon
When the court action is multi-party and one or the other to submit their dispute to arbitration,
more but not all of them are parties to an and arbitration is deemed commenced upon
arbitration agreement, the court shall refer the agreement by the other party to submit the
those who are parties to the arbitration dispute to arbitration, and arbitration is
agreement to arbitration and proceed with the deemed commenced upon the agreement by
court action as to those who are not bound by the other party to submit the dispute to
such arbitration agreement. arbitration. The demand shall also require the
respondent to name his arbitrator within
DETERMINATION OF APPLICABLE RULES OF a period, which shall not be less than 15days
PROCEDURE from the receipt of demand.
Except for the reference to UNCITRAL
Arbitration Rules, the determination The default rule in the case of ICA is that it is
of the applicable rules of procedure is the same commenced on the date on which a request for
for domestic arbitration and ICA. The the dispute to be referred to arbitration is
parties are free to agree on the applicable rules received by the respondent, while for domestic
of procedure, in the absence of which, arbitration where there is no prior agreement is
the arbitral tribunal may conduct the arbitration reckoned from the date when the other party
in the manner it considers appropriate. agreed to submit the dispute to arbitration.

COMMENCEMENT OF ARBITRAL PROCEEDINGS ARBITRATORS AND ARBITRAL TRIBUNAL

In general, the commencement of arbitral
proceedings is determined by the Number of Arbitrators
prior arbitration agreement between the Unless the parties have agreed otherwise, there
parties. Up to the extent, there is similarity shall be 3 arbitrators for domestic arbitration.
 CHAPTER 6: DOMESTIC ARBITRATION ALTERNATIVE DISPUTE RESOLUTION
Dayawon, Karl Mark F. Atty. David L. Ballesteros
Gesmundo, Anne Frances G.
Roxas, Marie Antoinette

Qualifications and Disqualifications from receipt of request, failing of which, the

An arbitrator must be: appointment shall be made by the appointing
1. Of legal age; authority.
2. Be in full employment of his civil rights; and
3. Know how to read and write. 2. Default appointment by appointing authority
– the appointing authority in ad hoc domestic
The foregoing qualifications are prescribed in arbitration, in the absence of an agreement of
the Arbitration Law and in the IRR. However, the parties, is the National President of IBP or
they are not similarly required for ICA except his authorized representative. In an institutional
that an arbitrator in ICA may be challenged if he arbitration, there is no need for an appointing
does not possess the qualifications agreed to by authority for purposes of appointing because
the parties. the parties have already designated the
institutional ADR provider under whose rules
No person shall serve as an arbitrator in any the arbitrator or arbitrators to be selected.
proceedings if:
1. He is related by blood or marriage within the The appointing authority may make the
6th degree to either party to the controversy; appointment or give the appointing party who
objects to a default appointment time to make
2. He has or has had financial, fiduciary or other the appointment but not more than 30days.
interest in the controversy or cause to be
decided, or in the result of the proceeding; AWARD

3. He has personal bias which might prejudice 1. Time to Render the Award Generally, the
the right of any party to a fair and impartial arbitral tribunal would render the award within
award; or the period agreed upon by the parties. In the
absence of an agreement, Section 19 of
4. He has been selected to act as champion or Republic Act No. 876 specifically provides that
to advocate a party’s cause. the arbitral tribunal must render a written
award within thirty days after closing of the
Procedure for the Appointment of Arbitrators hearing. Such period may be extended by
The parties in a domestic arbitration are free to mutual consent of the parties.
agree on the procedure for the appointment of
arbitrators except that, in order to prevent 2. Form and Content of the Award The award in
undue advantage, an agreement or clause a domestic arbitration must be in writing and
giving a party the power to choose more signed by the arbitrator or arbitrators. “In
arbitrators than the other is void. The parties arbitral proceedings with more than one
may agree to empower the arbitrators already arbitrator, the signature of the majority of all
appointed to select and appoint additional members of the arbitral tribunal shall suffice,
arbitrators who shall sit with the original provided that the reason for any omitted
arbitrators. signature is stated. ”Unless the parties agree
otherwise, the award should state the reasons
If there is no agreement for the appointment, upon which it is based. The
the following are the default rules: award should also state the date and place of
arbitration.
1. Appointment by the parties – in an
arbitration with 3arbitrators, each party shall 3. Grounds and Procedure to Quash/Vacate the
appoint one and the 2 arbitrators appointed Award
shall appoint the 3rd arbitrator within 30days
 CHAPTER 6: DOMESTIC ARBITRATION ALTERNATIVE DISPUTE RESOLUTION
Dayawon, Karl Mark F. Atty. David L. Ballesteros
Gesmundo, Anne Frances G.
Roxas, Marie Antoinette

Section 41 of Republic Act No. 9285 provides

that: e. Any other misbehavior of the
A party to a domestic arbitration may question arbitrators by which the right of any
the arbitral award with the of the parties have been materially
appropriate Regional Trial Court in accordance prejudice; or
with rules of procedure to be
promulgated by the Supreme Court only on f. The arbitrators exceeded their powers
those grounds enumerated in Section 25 or imperfectly executed
of [the Philippine Arbitration Law]. Any other them such that a mutual, final and
ground raised against a domestic definite award was not made.
arbitral award shall be disregarded by the
Regional Trial Court. Should the Joint Philippine Congressional
Committee approve the proposed
Section 25 of Republic Act No. 876 refers, Implementing Rules and Regulations of Republic
however to the grounds for Act No. 9285, parties would have
modification or correction of an award, and not clearer and more established parameters to
to grounds to vacate an award. support a position to vacate an award.
Notably, it is Section 24 of the Republic Act No.
876 that enumerates the grounds to With respect to the procedure for vacating a
vacate and award. It appears, therefore, that domestic arbitral award, the
there was a typographical error in Philippine Supreme Court has yet to promulgate
printing the final version of the ADR Act with the rules of procedure for this matter. In the
regard to that matter. meantime, the procedure for vacating an
award, which is currently being employed, is
The proposed Implementing Rules and that relative to a case for specific performance.
Regulation of Republic Act No. 9285
tries to cure the apparent typographical error 4. Confirmation and Enforcement of the Award
by re-establishing the grounds to vacate
an award as provided by Section 24 of the With respect to domestic arbitration, Republic
Republic Act No. 876, which grounds Act No. 9285 expressly states
include: that the confirmation of the domestic arbitral
a. Corruption, fraud or other means in award shall be governed by “Section 23
procuring the award; of [the Philippine Arbitration Law” and that the
domestic arbitral award shall be
b. Evident partiality or corruption in enforced in the same manner as final and
the arbitrators or any of them; executory decisions of the Regional Trial
Court.
c. Misconduct of the arbitrators in
refusing to postpone the hearing Under Republic Act No. 876, any party to the
upon sufficient cause shown or controversy may, within one
misconduct in refusing to hear month after the award is made, file with the
pertinent and material Regional Trial Court having jurisdiction
evidence; a motion to have the award confirmed with
notice to the adverse party or his
d. Disqualification of one or more attorney. Unless the award is vacated, modified
arbitrators and said arbitrator(s) or corrected, the court must grant the motion
refrained from disclosing such for confirmation of award. Upon granting of an
disqualification;
 CHAPTER 6: DOMESTIC ARBITRATION ALTERNATIVE DISPUTE RESOLUTION
Dayawon, Karl Mark F. Atty. David L. Ballesteros
Gesmundo, Anne Frances G.
Roxas, Marie Antoinette

order confirming an award, judgment may be

entered in conformity therewith by the Court.
The judgment so entered which will be
docketed as if rendered in a special civil action,
shall have the same force and effect and be
subject to all the provisions relating to a
judgment in an action and may be enforced as if
it had been rendered in the court in which it has
been entered. Confirmation of the award is
essential before the same can be judicially
enforced. Hence, a successful party cannot
secure a writ of execution to enforce an arbitral
award in his favor without said award first
confirmed by the courts of law. An exception is
an award rendered under the Construction
Industry Arbitration Law,
which authorizes the issuance of a writ of
execution to enforce the arbitral award upon
the finality thereof.

Note that “an arbitration has also the effect of

res judicata, because under Article 2043 of the
Civil Code, the provision on Compromise is also
applicable to arbitration. Article 2037 expressly
provides that a compromise has the effect or
authority or res judicata and consequently can
no longer (be appealed)”. This is of course not
to mention Sections 27 and 28 of R.A. No. 876
which make the confirmed award subject to
immediate execution.