ALTERNATIVE DISPUTE RESOLUTION (ADR) ACT OF

2004

 RA No. 9285 or the “Alternative Dispute Resolution Act of

2004”
- is the declared policy of the State
- to promote party autonomy in the resolution of disputes
- or freedom of the party
- to make their own arrangements
- to resolve their disputes.
- It is an important means
- to achieve speedy and impartial justice
- and declog court dockets.

[ G.R. No. 235894, February 05, 2024 ]

KAREN BALDOVINO CHUA, PETITIONER, VS. JOSE NOEL B. DE CASTRO,

RESPONDENT.

DECISION

Facts:

A Complaint was lodged before the RTC against respondent for rescission, breach of
5

contract, and damages, petitioner averred that she and her husband engaged his services
for the construction of a two-storey residential building. Owing to respondent's years of
experience and the fact of him being the first cousin of petitioner's mother, no written
contract was executed between the parties. Respondent prepared and proposed the
6

building plans, designs, and material specifications, which petitioner and her husband
acceded to. They likewise provided all the funding respondent requested from them, which
7

amounted to PHP 2,241,600.00 as of the institution of the complaint. 8

However, a month after petitioner and her family moved to the newly-constructed
house, they noticed several structural and architectural defects such as leaking ceilings,
flooding on the ground floor, cracks on the doors, and plumbing issues. The services of
another foreman had to be engaged when respondent failed to resolve such defects. The 9

repairs done by the foreman to address the defects as well as the subsequent inspections
conducted by a new engineer all revealed that respondent compromised on the work done
and the materials he used. It was also discovered that he deviated from the structural plan
10

agreed upon. 11

During the first hearing before the Lupong Tagapamayapa, respondent acknowledged
the existence of the construction agreement and the receipt of the amount detailed by
petitioner and her husband. Despite several hearings, the parties failed to resolve their
13

differences, impelling the Punong Barangay to issue a Certificate to File Action. Afterwards,
14

petitioner instituted her complaint.

On account of respondent's failure to submit any responsive pleading notwithstanding

the summons served on him, petitioner filed a Motion to Declare Defendant in Default. She
15 16

beseeched the RTC to proceed and render judgment based on the complaint.

In the first inveighed Order, the RTC held that pursuant to Circular No. 103-2015 of the
17
1aшphi1

Office of the Court Administrator (OCA), the complaint had to be dismissed and referred to
the Construction Industry Arbitration Committee (CIAC), the same being the tribunal with
exclusive jurisdiction over construction disputes. The trial court held that the allegations in
the complaint placed the controversy within the jurisdiction of the CIAC and as such, it was
exercising its discretion to dismiss the case motu proprio.18

Petitioner moved for a reconsideration of the order, which the RTC denied in the second
oppugned Order. 19

Through the present direct recourse before this Court on a pure question of law,
petitioner argues that the RTC erred in dismissing her complaint for want of jurisdiction. She
insists that under Executive Order (E.O.) No. 1008, parties must agree to submit the dispute
20

to the CIAC for voluntary arbitration before the tribunal can exercise its jurisdiction. In this
instance, there was neither a construction contract with an arbitration clause nor a
subsequent agreement from the parties to submit their case for arbitration. 21

In the Court's Resolution, respondent was directed to file his comment on the Petition.
After the lapse of the original period provided him, another Resolution was issued reiterating
23

the directive that he filed his comment. Still and all, he deigned to comply with the said
directive. On June 16, 2021 after the Court had confirmed that its latest Resolution was
indeed received by respondent's daughter on September 21, 2020, but that no compliance
25

was received from him, he was held in contempt and fined the sum of PHP 1000.00.
Likewise, another reiteration was made for him to file his comment on the Petition. 26

To date, respondent has neither paid the fine imposed upon him nor filed his comment.
27

Issue:

Whether the RTC erred in dismissing petitioner's complaint for lack of jurisdiction.

Ruling:

At the outset, the Court resolves to DISPENSE WITH respondent's comment due to his
repeated failure to file the same.

From a procedural standpoint, the Court affirms the remedy availed by petitioner via an
appeal by certiorari under a Rule 45 petition directly filed with the Court. Under Rule 41,
Section 2(c), the appeal from a judgment of the RTC must be lodged with the Supreme Court
by a Rule 45 petition "[i]n all cases where only questions of law are raised or involved[.]"
Unquestionably, the issue of determining jurisdiction over a subject matter is a question of
law, which snugly falls within this Court's appellate jurisdiction.
28

On the merits, the Court resolves to GRANT the Petition.

It is well-settled that jurisdiction over the subject matters is conferred by law and not "by
the consent or acquiescence of any or all of the parties or by erroneous belief of the court
that it exists."
29

The jurisdiction of the CIAC is laid down in Section 4 of E.O. No. 1008:

SECTION 4. Jurisdiction. — The CIAC shall have original and exclusive

jurisdiction over disputes arising from, or connected with, contracts entered
into by parties involved in construction in the Philippines, whether the
dispute arises before or after the completion of the contract, or after the
abandonment or breach thereof. These disputes may involve government or
private contracts. For the Board to acquire jurisdiction, the parties to a
dispute must agree to submit the same to voluntary arbitration.... (Emphasis
supplied)

The foregoing section provides that when the dispute involves a construction agreement,
the law vests jurisdiction with the CIAC so long as the "the parties agree to submit to
voluntary arbitration[.]" In fact, the mere incorporation of an arbitration clause in a
30

construction contract is sufficient to vest the CIAC with jurisdiction. The clause operates as
31

the parties' consent as required by the law, and may not be subjected to any condition or
qualification.32

This Court has recognized the pivotal role that the CIAC plays in the swift settlement of
construction controversies and has adopted policies to ensure that the adjudicative body is
"empowered and enabled to fulfill its function as the professionally authoritative venue for
settlement of construction disputes[.]"33

All the same, the basic requirements under the law to vest jurisdiction upon an
adjudicative body must be complied with. The simple truth of the matter is that the parties did
not agree to submit their dispute to arbitration. Nothing on record indicates respondent's
acquiescence thereto, and petitioner herself has repeatedly rejected the notion. Strikingly,
34

there is also no arbitration clause from which the Court may infer the parties' consent to
arbitrate as there was no written construction contract executed between them. 35
 The Court takes this opportunity to caution trial courts in overzealously applying OCA
Circular No. 103-2015, and other Circulars of a similar nature, as it is not an excuse to ignore
the letter of the law or established jurisprudence with regard to the proper jurisdiction of the
RTC vis-à-vis the CIAC.

The RTC erred in dismissing petitioner's complaint and referring the case to the CIAC.
Appropriately, the case should be remanded for an adjudication on the merits.

1. Arbitration

-
(Gary Born)
-Consensual (Agreement of the parties)
-Non-government decision maker (decided by or selected by the parties)
-Final and binding decision (The decision is called an Arbitral Award)
-Use of adjudicatory procedure

*Elements:
1. Agreement
2. Dispute
3. Commencement
4. Proceedings proper
5. Award
6. Enforcement

*Types:
1. State to state arbitration
2. Investor-State arbitration
3. Ad-hoc (For this case alone) arbitration
4. Institutional arbitration
(Look page 99-100)

*Advantages:
1. Neutrality of arbitrators
2. Arbitrators have technical expertise
3. There is privacy and confidentiality
4. Speed of the disposition
5. Non-formal and more flexible arbitration
6. Flexibility in the choice of laws
7. Better enforcement of arbitral awards

*Arbitration Agreement:
1. Arbitration Clause
2. Submission Agreement/Arbitration Deeds (Compromis)
3. Incorporated by reference

1. G.R. No. 161957 January 22, 2007

JORGE GONZALES and PANEL OF ARBITRATORS, Petitioners,

vs.
CLIMAX MINING LTD., CLIMAX-ARIMCO MINING CORP., and AUSTRALASIAN
PHILIPPINES MINING INC., Respondents.

Doctrine:
The doctrine of separability, or severability as other writers call it, it enunciates that
an arbitration agreement is independent of the main contract. The arbitration agreement is to
be treated as a separate agreement and it does not automatically terminate when the
contract of which it is part comes to an end.

Facts:
Petitioner Jorge Gonzales, as claim-owner of mineral deposits located within the
Addendum Area of Influence in Didipio, entered into a co-production, joint venture and/or
production-sharing letter-agreement with Geophilippines, Inc, and Inmex Ltd.
Under the agreement, petitioner, as claim owner, granted to Geophilippines, Inc. and
Inmex Ltd. collectively, the exclusive right to explore and survey the mining claims for a
period of thirty-six (36) months within which the latter could decide to take an operating
agreement on the mining claims and/or develop, operate, mine and otherwise exploit the
mining claims and market any and all minerals that may be derived therefrom.
Gonzales filed before the Panel of Arbitrators, Region II, Mines and Geosciences
Bureau of the Department of Environment and Natural Resources, against respondents
Climax-Arimco Mining Corporation (Climax-Arimco), Climax, and APMI, seeking the
declaration of nullity or termination of the Addendum Contract.
He sought said reliefs on the grounds of "FRAUD, OPPRESSION and/or VIOLATION
of Section 2, Article XII of the CONSTITUTION. Panel of Arbitrators dismissed the Complaint
for lack of jurisdiction.
Petitioner moved for reconsideration and this was granted Panel granted the Motion
for Reconsideration with regard to the... issues of nullity, termination, withdrawal or
damages, but with regard to the constitutionality of the Addendum Agreement and FTAA, it
held that it had no jurisdiction.
Respondents filed their motion for reconsideration but this was denied. Respondents
assailed the orders of the Panel of Arbitrators via a petition for certiorari before the Court of
Appeals. the Court of Appeals granted the petition, declaring that the Panel of Arbitrators did
not have jurisdiction over the complaint filed by petitioner.
The jurisdiction of the Panel of Arbitrators, said the Court of Appeals, is limited only to the
resolution of mining disputes, defined as those which raise a question of fact or matter
requiring the technical knowledge and experience of mining authorities.
Issue:
Whether or not, the proceeding to compel arbitration under R.A. No. 876, to order the
parties to arbitrate even though the defendant therein has raised the twin issues of validity
and nullity of the Addendum Contract and, consequently, of the arbitration clause therein as
well.
Ruling:
(Yes). Since there obtains herein a written provision for arbitration as well as failure
on respondent's part to comply therewith, the court rightly ordered the parties to proceed to
arbitration in accordance with the terms of their agreement (Sec. 6, Republic Act 876).
Respondent's arguments touching upon the merits of the dispute are improperly raised
herein. They should be addressed to the arbitrators. This proceeding is merely a summary
remedy to enforce the agreement to arbitrate. The duty of the court in this case is not to
resolve the merits of the parties' claims but only to determine if they should proceed to
arbitration or not.
The separability of the arbitration agreement is especially significant to the
determination of whether the invalidity of the main contract also nullifies the arbitration
clause. Indeed, the doctrine denotes that the invalidity of the main contract, also referred to
as the "container" contract, does not affect the validity of the arbitration agreement.
Irrespective of the fact that the main contract is invalid, the arbitration clause/agreement still
remains valid and enforceable.
There is reason, therefore, to rule against Gonzales when he alleges that Judge
Pimentel acted with grave abuse of discretion in ordering the parties to proceed with
arbitration. Gonzales’s argument that the Addendum Contract is null and void and, therefore
the arbitration clause therein is void as well, is not tenable. First, the proceeding in a petition
for arbitration under R.A. No. 876 is limited only to the resolution of the question of whether
the arbitration agreement exists. Second, the separability of the arbitration clause from the
Addendum Contract means that validity or invalidity of the Addendum Contract will not affect
the enforceability of the agreement to arbitrate. Thus, Gonzales’s petition for certiorari should
be dismissed.
 2. G.R. No. 211044

JACQUES A. DUPASQUIER Petitioners

vs.
ASCENDAS (PHILIPPINES) CORPORATION, Respondent

Doctrine:

If the wordings are ambiguous and may lead to different interpretations, the Court
should determine the actual intention of the contracting parties.

Facts:

In January 2007, the Net Corporations and Ascendas entered into a Memorandum of
Understanding (MOU) wherein the parties agreed in principle to Ascendas’ acquisition of the
entire issued and outstanding shares of stock of the former. The MOU included an arbitration
clause. In accordance with the MOU and the transaction timeline, Ascendas delivered to the
Net Group an irrevocable letter of Credit in the amount of One Million US Dollars or the Due
Diligence Letter of Credit specified in the MOU.
Thereafter, the Ascendas began its due diligence investigation on the Net Group. By
March 31, 2007, the parties were not able to execute a MOA and definitive agreements. The
Net Group informed Ascendas that they deemed the MOU lapsed as to April 1, 2007.
Ascendas, however, argued the contrary attributing the delay in the execution of the
Memorandum of Agreement (MOA) to the Net Group, citing lapses in providing the
information and documentation necessary to complete its due diligence audit.
It further informed the Net Group that the parties have until September 28, 2007 to
resolve the disputes between them; otherwise, Ascendas will refer the disputes to arbitration.
The Net Group filed a Petition for Declaratory Relief alleging that Ascendas’ demand to
arbitrate is baseless, contending that the arbitration clause would not survive the lapse of the
MOU on March 31, 2007 because the parties agreed that only the confidentiality clause will
survive the termination or lapse of the MOU.
Ascendas, on the other hand, claims that the parties did not intend that the
Arbitration Clause would end together with the MOU. Rather, the parties intended to submit
to arbitration any dispute arising out of or in connection with the MOU.

Issue:

Whether or Not the expiration of the MOU also terminated the effectivity of the
arbitration clause.

Ruling:

Yes. The expiration of the Memorandum of Understanding also terminated the

effectivity of the arbitration clause. Article 1370 of the New Civil Code, on the interpretation of
contracts mandates that the literal meaning of the stipulations shall prevail if the contract’s
terms are clear and leave no doubt as to the intention of the contracting parties. If, however,
the words of the contract are contrary to the evident intention of the parties, the intention of
the parties shall be controlling.

In the case at bar, while there is no doubt that the parties intended that disputes be
referred to arbitration, the parties, nonetheless, are in conflict as to whether the Arbitration
Clause is time-limited. The clauses of the MOU provide that upon its lapse, the MOU shall
cease to have any force and effect with the sole exception of its confidentiality clause. The
lapse of the parties’ principal contract would mean the corresponding lapse or expiry of the
arbitration agreement contained therein.

3. TOURISM INFRASTRUCTURE AND ENTERPRISE ZONE AUTHORITY, PETITIONER,

VS. GLOBAL-V BUILDERS CO., RESPONDENT.
[ G.R. No. 219708, October 03, 2018 ]

FACTS:

The Philippine Tourism Authority (PTA) entered into five Memoranda of Agreement with
respondent Global-V Builders Co. They filed a Request for Arbitration and a Complaint
before the Construction Industry Arbitration Commission (CIAC), seeking payment from the
Tourism Infrastructure and Enterprise Zone Authority (TIEZA), the office that took over the
functions of PTA, of unpaid bills in connection with the five projects, as well as payment of
interest, moral and exemplary damages, and attorney’s fees.

TIEZA filed a Refusal of Arbitration instead of filing an Answer. They argued that CIAC has
no jurisdiction over the case filed by Global-V because the Complaint does not allege an
agreement to arbitrate and the contracts do not contain an arbitration agreement in
accordance with (Sections 2.3 and 2.3.113 of) the CIAC Revised Rules of Procedure
Governing Construction Arbitration. Global-V countered that R.A. No. 9184 (Government
Procurement Reform Act) vests on CIAC jurisdiction over disputes involving government
infrastructure projects like the projects in this case.

Section 59 of R.A. No. 9184 provides that “[a]ny and all disputes arising from the
implementation of a contract covered by this Act shall be submitted to arbitration in the
Philippines according to the provisions of Republic Act No. 876, otherwise known as the
“Arbitration Law”: Provided, however, that, disputes that are within the competence of the
Construction Industry Arbitration Commission to resolve shall be referred thereto.”

Global-V asserted that the pertinent provisions of R.A. No. 9184 governing the subject
infrastructure projects are deemed part of the contracts entered into by the parties. They
contended that considering that the arbitration process is an integral part of the contracts
between the parties by operation of law, the requirement under Section 2.3 of the CIAC
Rules has been met. The Arbitral Tribunal dismissed TIEZA’s motion to dismiss for lack of
merit. The parties and their respective counsels attended the preliminary conference. TIEZA
manifested that its participation in the preparation of the Terms of Reference was being done
to safeguard its rights in the proceedings, without waiving its challenge on the jurisdiction of
CIAC. The Arbitral Tribunal resolved the issues raised by the parties affirming with finality of
its ruling in the Order that CIAC has jurisdiction over this case.

A second preliminary conference was conducted for the purpose of amending the Terms of
Reference (TOR). The amended TOR was signed by’ Global-V and its counsel, and by the
members of the Arbitral Tribunal. TIEZA, through its representative, also signed the
amended TOR with reservation, in view of the non- inclusion of the jurisdictional issue in the
amended TOR. The Arbitral Tribunal rendered the decision in favor of Global-V in the
amount of P10,178,440.17. The Court of Appeals reversed and set aside its Decision dated
June 19, 2014 and upheld the Final Award of the Arbitral Tribunal.

Issue:

Whether or not the CA committed a reversible error in ruling that the CIAC had jurisdiction
over the dispute.

Ruling:

No. E.O. No. 1008 created the CIAC as an arbitral machinery to settle disputes in the
construction industry expeditiously in order to maintain and promote a healthy partnership
between the government and the private sector in the furtherance of national development
goals. It was therein declared to be the policy of the State to encourage the early and
expeditious settlement of disputes in the Philippine construction industry.

The CIAC, pursuant to its rule-making power granted by E.O. No. 1008, promulgated the first
Rules of Procedure Governing Construction in August 1988, and it has amended the rules
through the years to address the problems encountered in the administration of construction
arbitration.

In this case, the pertinent provisions of the CIAC Rules are as follows:

SECTION 2.1 Jurisdiction. – The CIAC shall have original and exclusive jurisdiction over
construction disputes, which arose from, or is connected with contracts entered into by
parties involved in construction in the Philippines whether the dispute arose before or after
the completion of the contract, or after the abandonment or breach thereof. These disputes
may involve government or private contracts.

2.1.1 The jurisdiction of the CIAC may include but is not limited to violation of specifications
for materials and workmanship; violation of the terms of agreement; interpretation and/or
application of contractual provisions; amount of damages and penalties; commencement
time and delays; maintenance and defects; payment default of employer or contractor and
changes in contract cost.
xxx
SECTION 2.3 Condition for exercise of jurisdiction. – For the CIAC to acquire jurisdiction, the
parties to a dispute must be bound by an arbitration agreement in their contract or
subsequently agree to submit the same to voluntary arbitration.

2.3.1 Such arbitration agreement or subsequent submission must be alleged in the

Complaint. Such submission may be an exchange of communication between the parties or
some other form showing that the parties have agreed to submit their dispute to arbitration.
Copies of such communication or other form shall be attached to the Complaint.
Xxx

SECTION 4.1 Submission to CIAC Jurisdiction. – An arbitration clause in a construction

contract or a submission to arbitration of a construction dispute shall be deemed an
agreement to submit an existing or future controversy to CIAC jurisdiction, notwithstanding
the reference to a different arbitration institution or arbitral body in such contract or
submission.

From the foregoing, it is evident that for CIAC to acquire jurisdiction over a construction
controversy, the parties to a dispute must be bound by an arbitration agreement in their
contract or subsequently agree to submit the same to voluntary arbitration, and that an
arbitration clause in a construction contract or a submission to arbitration of a construction
dispute shall be deemed an agreement to submit an existing or future controversy to CIAC’s
jurisdiction.

Clause 20.2 of the General Conditions of Contract is an arbitration clause that clearly
provides that all disputes arising from the implementation of the contract covered by R.A. No.
9184 shall be submitted to arbitration in the Philippines. In accordance with Section 4.1 of
the CIAC Rules, the existence of the arbitration clause in the General Conditions of Contract
that formed part of the said MOAs shall be deemed an agreement of the parties to submit
existing or future controversies to CIAC’s jurisdiction. Since CIAC’s jurisdiction is conferred
by law, it cannot be subjected to any condition; nor can it be waived or diminished by the
stipulation, act or omission of the parties, as long as the parties agreed to submit their
construction contract dispute to arbitration, or if there is an arbitration clause in the
construction contract. Hence, the fact that the process of arbitration was not incorporated in
the contract by the parties is of no moment. Moreover, the contracts in this case are
expressly covered by R.A. No. 9184, which provides under Section 5945 thereof that all
disputes arising from the implementation of a contract covered by it shall be submitted to
arbitration in the Philippines, and disputes that are within the competence of CIAC to resolve
shall be referred thereto.

The jurisdiction of courts and quasi-judicial bodies is determined by the Constitution and the
law. Section 4 of E.O. No. 1008 provides that the CIAC shall have original and exclusive
jurisdiction over disputes arising from, or connected with, construction contracts, which may
involve government or private contracts, provided that the parties to a dispute agree to
submit the dispute to voluntary arbitration.

4. [ G.R. No. 193782, August 01, 2018 ]

DALE STRICKLAND, PETITIONER, VS. ERNST & YOUNG LLP, RESPONDENT
Ruling:
 5. G.R. No. 211504

FEDERAL BUILDERS, INC., Petitioner

vs
POWER FACTORS, INC., Respondent

Facts:

Federal Builders, Inc. (Federal) was the general contractor for the Bullion Mall under a
construction agreement with Bullion Investment and Development Corporation (BIDC). In
2004, Federal subcontracted Power Factors, Inc. (Power) for the electric works at the Bullion
Mall and the Precinct Building for a contract price of P18,000,000.00.

On February 19, 2008, Power sent a demand letter to Federal claiming an unpaid amount of
P11,444,658.97 for work completed. Federal responded that its outstanding balance under
the original contract was only P1,641,513.94 and that any claims for work done after June
21, 2005 should be directed to BIDC.

Despite several demands, Federal did not settle the claimed amount. On October 29, 2009,
Power filed a request for arbitration with the Construction Industry Arbitration Commission
(CIAC), invoking the arbitration clause in their Contract of Service. Federal initially agreed to
arbitration through its counsel but later moved to dismiss the case, arguing that the Contract
of Service was a mere draft and not finalized or signed by the parties. The CIAC proceeded
with the arbitration and rendered a Final Award on May 12, 2010, ordering Federal to pay
Power a total of P9,369,238.87. Federal appealed to the Court of Appeals (CA), which
affirmed the CIAC's decision with modifications, reducing the amount to P7,140,728.07.
Federal then appealed to the Supreme Court.

Issue:

Whether the CA erred in upholding CIAC's jurisdiction over the case.

Ruling:

The Supreme Court affirmed the CA's decision, holding that the CIAC had jurisdiction over
the dispute.

The Supreme Court ruled that the CIAC had jurisdiction over the dispute based on the
arbitration clause in the Contract of Service, which need not be signed by the parties as long
as the intent to submit to arbitration is clear and in writing. The CIAC Revised Rules of
Procedure allow for such an agreement to be reflected in any written communication,
including drafts, letters, or emails. The Court emphasized that the jurisdiction of the CIAC is
over the dispute, not necessarily the contract itself. The essential elements of a valid contract
—consent, object certain, and cause or consideration—were present, making the contract
between Federal and Power binding despite being unsigned. The Court also noted that
Federal's reliance on the original contract to support its claim while rejecting the arbitration
clause was inconsistent. Regarding the amounts awarded, the Court found no reversible
error in the CA's modification, which excluded labor cost escalation due to the lack of a
separate agreement for such adjustments. The decision promotes the policy of encouraging
alternative dispute resolution methods, such as arbitration, to expedite the resolution of
construction disputes and alleviate judicial dockets.

6. [G.R. NO. 208603]

STEAMSHIP MUTUAL UNDERWRITING ASSOCIATION (BERMUDA) LIMITED, VS.

PETITIONER,SULPICIO LINES, INC. REPONDENT.

Facts:

Steamship was a Bermuda-based Protection and Indemnity Club, managed outside London,
England. It ensures its members-shipowners against “third party risks and liabilities” for
claims arising from (a) death or injury to passengers; (b)loss or damage to cargoes; and ©
loss or damage from collisions.

Sulpicio insured its fleet of inter-island vessels with Steamship. One of these vessels was
M/V Princess of the World, evidenced by a Certificate of Entry and Acceptance issued by
Steamship (The certificate incorporated by reference an arbitration agreement set forth in its
Club Rules)

On July 07, 2005, M/V Princess of the World was gutted by fire while on voyage from Iloilo to
Zamboanga City, resulting in total loss of its cargoes. Sulpicio claimed indemnity from
Steamship. The latter denied ythe claim and subsequently rescinded the insurance coverage
on the ground that Sulpicio was grossly negligent in conducting its business regarding
safety, maintaining the seaworthiness of its vessels as well as proper training of its crew.
Sulpicio filed a complaint with the RTC of Makati.

Steamship filed its Motion to Dismiss the case and to refer case to Arbitration pursuant to RA
9285 or the ADR Act of 2004, ro Rule 4716 of 2005 Club Rules, which supposedly provided
for arbitrationin London of disputes between the Steamship and its members.

Issue:

Whether or not the arbitration agreement set forth in its Club Rules not signed by the parties,
which in turn is incorporated by reference in the Certificate of Entry and Acceptance of M/V
Princess of the World is valid and binding upon Sulpicio.

Ruling:

Yes. A Contract need not be contained in a single writing. It may be collected from several
different writings which do not conflict with each other and, when connected, show the
parties, subject matter, terms and consideration, as in part of contracts entered into by
correspondence. A contract may be encompassed in several instruments even though every
instrument is not signed by the parties, since it is sufficient if the unsigned instrument are
clearly identified or referred to or made part of the signed instrument or instruments.
Similarly, a written agreement of which there are two copies, one signed by each of the
parties, is binding on both of the same extent as though there had been only one copy of the
agreement and both had signed it.

Thus, an arbitration agreement that was not embodied in the main agreement but set forth in
another document is binding upon the parties, where the document was incorporated by
referrence to the main agreement. The Arbitration agreement contained in the Club Rules,
which in turn was referred to in Certificate of Entry and Acceptance, is binding upon Sulpicio
even though there was no specific stipulation on dispute resolution in this Certificate.

Consistent with state policy, arbitration agreements are liberally construed in favor of
proceeding to arbitration. Every reasonable interpretation is indulged to give effect to
arbitration agreements. Thus, the Court must give effect to arbitration clauses as
much as the terms of the agreement would allow. Any doubt should be resolved in
favor of the arbitration.

When the contract is embodied in two (2) or more writings, the writings of the parties
should be read and interpreted together in such way as to render their intention
effective.
 7. Bases Conversion Development Authority vs. DMCI Project Developers, Inc. (G.R.
No. 173137)

Facts:

The dispute involves the Bases Conversion Development Authority (BCDA), North Luzon
Railways Corporation (Northrail), and DMCI Project Developers, Inc. (DMCI-PDI). The
conflict is over arbitration proceedings related to a Joint Venture Agreement (JVA) for
constructing a railroad system from Manila to Clark, with possible extensions. The JVA was
initially executed on June 10, 1995, and included several foreign corporations, the BCDA,
and the Philippine National Railways (PNR). BCDA was to establish Northrail to manage the
project, and the JVA contained an arbitration clause for resolving disputes.

On February 8, 1996, the JVA was amended to include D.M. Consunji, Inc. (DMCI) and/or its
nominee, with DMCI agreeing to invest in Northrail. DMCI-PDI deposited PHP 300 million
into Northrail's account for future subscription of shares. Northrail withdrew its application to
increase its authorized capital stock, leading DMCI-PDI to demand the return of its deposit,
which BCDA and Northrail refused. DMCI-PDI sought arbitration, which BCDA and Northrail
contested, arguing that DMCI-PDI was not a party to the JVA. The Regional Trial Court of
Makati granted DMCI-PDI's petition to compel arbitration. BCDA and Northrail then filed a
Rule 45 Petition before the Supreme Court.

Issues:

Whether or not the DMCI-PDI can compel BCDA and Northrail to submit to arbitration
despite not being a signatory to the original Joint Venture Agreement.

Whether or not Northrail, a non-signatory to the contracts, is bound by the arbitration

agreement.

Ruling:

1. Yes, DMCI-PDI can compel BCDA and Northrail to submit to arbitration.

The Supreme Court ruled in favor of DMCI-PDI, emphasizing the state’s policy favoring
arbitration for dispute resolution. Arbitration agreements should be liberally construed to
cover disputes if the terms allow such interpretation. The JVA, the amended JVA, and the
Memorandum of Agreement (MOA) should be read together as one contract, extending the
arbitration clause to all subsequent documents and parties involved. DMCI-PDI, as DMCI’s
nominee, was considered a party to the agreements and could invoke the arbitration clause.

2. Yes, Northrail is bound by the arbitration agreement.

Northrail, although not a signatory, was bound by the arbitration agreement as it was
established pursuant to the JVA and benefited from it. The Court emphasized the need to
avoid multiplicity of suits and ensure judicial efficiency, affirming the trial court’s decision to
compel arbitration.

8.G.R. No. 175404 January 31, 2011

CARGILL PHILIPPINES, INC., Petitioner,

vs.
SAN FERNANDO REGALA TRADING, INC., Respondent.

Facts:

On June 18, 1998, San Fernando Regala Trading, Inc. (respondent) filed a Complaint for
Rescission of Contract with Damages against Cargill Philippines, Inc. (petitioner) in the
Regional Trial Court (RTC) of Makati City. The respondent, engaged in the buying and
selling of molasses, alleged that it entered into a contract with the petitioner on July 11,
1996, to purchase 12,000 metric tons of Thailand origin cane blackstrap molasses at
US$192 per metric ton. The delivery was initially set for January/February 1997, with
payment via an Irrevocable Letter of Credit payable at sight, to be opened by September 15,
1996. The parties later agreed to shift the delivery to April/May 1997, with the payment to be
made upon the petitioner's advice.

The petitioner failed to comply with its obligations, leading the respondent to seek rescission
and damages. On July 24, 1998, the petitioner filed a Motion to Dismiss/Suspend
Proceedings and to Refer Controversy to Voluntary Arbitration, arguing that the contract was
never consummated as the respondent did not return the proposed agreement with written
acceptance nor opened the Irrevocable Letter of Credit. The petitioner cited an arbitration
clause in the contract, which stipulated that disputes should be settled by arbitration in New
York before the American Arbitration Association. The RTC denied the motion, stating that
the arbitration clause contravened the Arbitration Law, which requires arbitration to be
conducted in the Philippines. The petitioner’s motion for reconsideration was also denied.
The petitioner then filed a petition for certiorari with the Court of Appeals (CA), which also
denied the petition, affirming the RTC's orders. The CA held that while the arbitration clause
was valid, the issue of the contract's existence or validity should first be resolved by the
court. The petitioner’s motion for reconsideration was denied, leading to the present petition
for review on certiorari.

Issues:

1. Whether the arbitration clause in the contract is valid and enforceable.

2. Whether the dispute should be referred to arbitration despite the petitioner's claim that the
contract was never consummated.

Ruling:

1. The Supreme Court ruled that the arbitration clause is valid and enforceable.

The Supreme Court emphasized the doctrine of separability, which treats an arbitration
agreement as independent of the main contract. This means that the arbitration clause
remains valid and enforceable even if the main contract is disputed. The Court found that the
RTC exceeded its jurisdiction by denying the motion to refer the dispute to arbitration and
directing the petitioner to file an answer. The Court of Appeals erred in holding that the issue
of the contract's existence or validity should first be resolved by the court.

2. The Supreme Court ordered the parties to submit to arbitration pursuant to their July 11,
1996 agreement.

The Supreme Court clarified that it is for the arbitrator, not the courts, to decide on the
existence or validity of the contract. The Court also noted that arbitration as an alternative
dispute resolution mechanism is recognized and institutionalized in Philippine law, including
Republic Act No. 9285. The Court concluded that the parties should proceed to arbitration as
stipulated in their agreement.

PART II
SPECIFIC COURT RELIEF

RULE 3: JUDICIAL RELIEF INVOLVING THE ISSUE OF EXISTENCE, VALIDITY AND

ENFORCEABILITY OF THE ARBITRATION AGREEMENT

Rule 3.1. When judicial relief is available. - The judicial relief provided in Rule 3, whether
resorted to before or after commencement of arbitration, shall apply only when the place of
arbitration is in the Philippines.

A. Judicial Relief before Commencement of Arbitration

Rule 3.2. Who may file petition. - Any party to an arbitration agreement may petition the
appropriate court to determine any question concerning the existence, validity and
enforceability of such arbitration agreement serving a copy thereof on the respondent in
accordance with Rule 1.4 (A).

Rule 3.3. When the petition may be filed. - The petition for judicial determination of the
existence, validity and/or enforceability of an arbitration agreement may be filed at any time
prior to the commencement of arbitration.

Despite the pendency of the petition provided herein, arbitral proceedings may nevertheless
be commenced and continue to the rendition of an award, while the issue is pending before
the court.
Rule 3.4. Venue. - A petition questioning the existence, validity and enforceability of an
arbitration agreement may be filed before the Regional Trial Court of the place where any of
the petitioners or respondents has his principal place of business or residence.

Rule 3.5. Grounds. - A petition may be granted only if it is shown that the arbitration
agreement is, under the applicable law, invalid, void, unenforceable or inexistent.

Rule 3.6. Contents of petition. - The verified petition shall state the following:

a. The facts showing that the persons named as petitioner or respondent have legal
capacity to sue or be sued;

b. The nature and substance of the dispute between the parties;

c. The grounds and the circumstances relied upon by the petitioner to establish his
position; and

d. The relief/s sought.

Apart from other submissions, the petitioner must attach to the petition an authentic copy of
the arbitration agreement.

Rule 3.7. Comment/Opposition.-The comment/opposition of the respondent must be filed

within fifteen (15) days from service of the petition.

Rule 3.8. Court action. - In resolving the petition, the court must exercise judicial restraint in
accordance with the policy set forth in Rule 2.4, deferring to the competence or jurisdiction of
the arbitral tribunal to rule on its competence or jurisdiction.

Rule 3.9. No forum shopping. - A petition for judicial relief under this Rule may not be
commenced when the existence, validity or enforceability of an arbitration agreement has
been raised as one of the issues in a prior action before the same or another court.

Rule 3.10. Application for interim relief. - If the petitioner also applies for an interim measure
of protection, he must also comply with the requirements of the Special ADR Rules for the
application for an interim measure of protection.

Rule 3.11. Relief against court action. - Where there is a prima facie determination upholding
the arbitration agreement.-A prima facie determination by the court upholding the existence,
validity or enforceability of an arbitration agreement shall not be subject to a motion for
reconsideration, appeal or certiorari.

Such prima facie determination will not, however, prejudice the right of any party to raise the
issue of the existence, validity and enforceability of the arbitration agreement before the
arbitral tribunal or the court in an action to vacate or set aside the arbitral award. In the latter
case, the court’s review of the arbitral tribunal’s ruling upholding the existence, validity or
enforceability of the arbitration agreement shall no longer be limited to a mere prima facie
determination of such issue or issues as prescribed in this Rule, but shall be a full review of
such issue or issues with due regard, however, to the standard for review for arbitral awards
prescribed in these Special ADR Rules.

B. Judicial Relief after Arbitration Commences

Rule 3.12. Who may file petition. - Any party to arbitration may petition the appropriate court
for judicial relief from the ruling of the arbitral tribunal on a preliminary question upholding or
declining its jurisdiction. Should the ruling of the arbitral tribunal declining its jurisdiction be
reversed by the court, the parties shall be free to replace the arbitrators or any one of them
in accordance with the rules that were applicable for the appointment of arbitrator sought to
be replaced.

Rule 3.13. When petition may be filed. - The petition may be filed within thirty (30) days after
having received notice of that ruling by the arbitral tribunal.

Rule 3.14. Venue. - The petition may be filed before the Regional Trial Court of the place
where arbitration is taking place, or where any of the petitioners or respondents has his
principal place of business or residence.
Rule 3.15. Grounds. - The petition may be granted when the court finds that the arbitration
agreement is invalid, inexistent or unenforceable as a result of which the arbitral tribunal has
no jurisdiction to resolve the dispute.

Rule 3.16. Contents of petition. - The petition shall state the following:

a. The facts showing that the person named as petitioner or respondent has legal capacity to
sue or be sued;

b. The nature and substance of the dispute between the parties;

c. The grounds and the circumstances relied upon by the petitioner; and

d. The relief/s sought.

In addition to the submissions, the petitioner shall attach to the petition a copy of the request
for arbitration and the ruling of the arbitral tribunal.

The arbitrators shall be impleaded as nominal parties to the case and shall be notified of the
progress of the case.

Rule 3.17. Comment/Opposition. - The comment/opposition must be filed within fifteen (15)
days from service of the petition.

Rule 3.18. Court action. - (A) Period for resolving the petition.- The court shall render
judgment on the basis of the pleadings filed and the evidence, if any, submitted by the
parties, within thirty (30) days from the time the petition is submitted for resolution.

(B) No injunction of arbitration proceedings. - The court shall not enjoin the arbitration
proceedings during the pendency of the petition.

Judicial recourse to the court shall not prevent the arbitral tribunal from continuing the
proceedings and rendering its award.

(C) When dismissal of petition is appropriate. - The court shall dismiss the petition if it fails to
comply with Rule 3.16 above; or if upon consideration of the grounds alleged and the legal
briefs submitted by the parties, the petition does not appear to be prima facie meritorious.

Rule 3.19. Relief against court action. - The aggrieved party may file a motion for
reconsideration of the order of the court. The decision of the court shall, however, not be
subject to appeal. The ruling of the court affirming the arbitral tribunal’s jurisdiction shall not
be subject to a petition for certiorari. The ruling of the court that the arbitral tribunal has no
jurisdiction may be the subject of a petition for certiorari.

Rule 3.20. Where no petition is allowed. - Where the arbitral tribunal defers its ruling on
preliminary question regarding its jurisdiction until its final award, the aggrieved party cannot
seek judicial relief to question the deferral and must await the final arbitral award before
seeking appropriate judicial recourse.

A ruling by the arbitral tribunal deferring resolution on the issue of its jurisdiction until final
award, shall not be subject to a motion for reconsideration, appeal or a petition for certiorari.

Rule 3.21. Rendition of arbitral award before court decision on petition from arbitral tribunal’s
preliminary ruling on jurisdiction. - If the arbitral tribunal renders a final arbitral award and the
Court has not rendered a decision on the petition from the arbitral tribunal’s preliminary ruling
affirming its jurisdiction, that petition shall become ipso facto moot and academic and shall
be dismissed by the Regional Trial Court. The dismissal shall be without prejudice to the
right of the aggrieved party to raise the same issue in a timely petition to vacate or set aside
the award.

Rule 3.22. Arbitral tribunal a nominal party. - The arbitral tribunal is only a nominal party. The
court shall not require the arbitral tribunal to submit any pleadings or written submissions but
may consider the same should the latter participate in the proceedings, but only as nominal
parties thereto.
10/21/2024

1. Arbitration agreement

-SADRR, P2, R3, enforceability of arbitration agreement,

2. Commencement of arbitration(Regular forum in any other case or without arbitration)

*Ad Hoc -depends on the agreements of the parties.If not agreed, IRR of the ADR Act.
(Default Rule)

*Institutional- specific rules under the institution under the parties. Ex. PDRCI,
PACV,PICCR.

Art. 4.21 , Art. 4.11, 4.12,

3. Appointment/Constitution of Arbitral Tribunal

Mabuhay Holdings V.

Powers of Arbitral Tribuinal:

*Principle of Competence-Competence means that the arbitral tribunal may initially rule on
its own jurisdiction, including any objections with respect to the existence of validity of
arbitration agreement.

*To issue binding decision in the form of Arbitral Award

Interim Measures:

Under the ADR Act of 2004, the following rules on interim or provisional relief shall
be observed:

1. Any party may request that the interim or provisional relief be granted against the adverse
party;
2. Such relief may be granted:

a) To prevent irreparable loss or injury;

b) To provide security for the performance of an obligation;

c) To produce or preserve evidence; and

d) To compel any appropriate acts or omissions.

Duties of Arbitral Tribunal:

1. Maintain the impartiality while handling the dispute;

2. Maintain the confidentiality of the proceedings; and
3. Observance of due process.

1. Preliminary Conference or the Case Management Conference

1. Trial Order
2. Procedural order

2. Hearing Process

Rule 5, IRR of RA9285

Art 4.23, Art. 4.25

1. Statement of Claims
2. Statement of Defense

3. Rendering of Arbitral Award

*Forms and Contents of Award:

Art. 4.31, Art 4.33

Termination: Final Award or Terminal Award

4. Post award actions