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PRELIM REVIEWER
1) State Policy on Alternative Dispute Resolution
Article 1.2. Declaration of Policy. It is the policy of
the State:
a. To promote party autonomy in the
resolution of disputes or the freedom of the
parties to make their own arrangements to
resolve their disputes; (empower parties or
the disputants in the manner of resolving
their disputes)
b. To encourage and actively promote the use
of Alternative Dispute Resolution (“ADR”) as
an important means to achieve speedy
and impartial justice and to declog court
dockets;
c. To provide means for the use of ADR as an
efficient tool and an alternative procedure
for the resolution of appropriate cases; and
d. To enlist active private sector participation
in the settlement of disputes through ADR.
2) What are the statutes that govern Alternative
Dispute Resolution
 RA 9285 (ADR of 2004)
 RA 876 (The Arbitration Law)
 IRR of the ADR Act of 2004
 Uncitral Model Law on International
Commercial Arbitration
 Special Rules of Court on ADR
 EO 1008
 CIAC Revised Rules of Procedure
Governing Construction Arbitration
 Constitutional Law ( Art. 13, Sec 3
3) Definition of jurisdiction
 JURISDICTION: derived from 2 latin words: (1)
JURIS—law (2) DICO- to speak or to say.
Literally translated, it means “speak by the
law”. Speaking with authority or power.
 JURISDICTION simply means the power of the
court to hear, try and decide a case. In its
complete aspect, jurisdiction includes not
only the powers to hear and decide a case,
but also the power to enforce the
judgement.
4) Effect of lack jurisdiction
 Effect if there is no jurisdiction: Judgment and
trial is NULL and VOID.
5) Meaning of jurisdiction over the subject matter
 Jurisdiction over the subject matter is the
power to deal with the general subject
involved in the action, and means not simply
jurisdiction of a particular case, but
jurisdiction of the class of cases to which the
particular case belongs.
 Power of the court to hear and determine
cases of the general class to which the
proceedings in question belong. It is the
jurisdiction over the NATURE OF THE ACTION
(e.g. actions for nullity of marriage, accion
publiciana, accion reinvindicatoria,etc.).
 Effect of lack of it: case will be dismissed.
6) Meaning of venue
 VENUE is the place or the geographical area
where an action is to be filed and tried. In
civil cases, it relates only to the place of the
suit and not to the jurisdiction of the court.
 Relates to trial and not to jurisdiction. It is a
procedural, not a jurisdictional matter. It
relates to the place of trial or geographical
location in which an action or proceeding
should be brought and not to the jurisdiction
of the court. It is meant to provide
convenience to the parties, rather than
restrict their access to courts as it relates to
the place of trial.
7) How jurisdiction over the subject matter is
conferred?
 CONFERRED BY LAW and is NEVER acquired
by: Consent, Submission of the parties or by
their laches. This is a matter of legislative
enactment which only legislature can
change.
 Cannot be acquired by:
1. An agreement between the
parties;
2. Through waiver; and
3. Through failure to object
 ONLY EXCEPTION: ESTOPPEL BY LACHES
(case: Tijam vs. Sibonghanoy)
NOTE:
 GENERAL RULE: objection to jurisdiction can be
raised at any stage of the proceeding even for
the first time on appeal. Even if the parties would
not raise it, the court may motu proprio has the
authority to dismiss it.
 EXCEPTION: Tijam v. sibonghanoy.
 HOW DETERMINED: By the allegations of the
COMPLAINT. Not on the pleas or defenses of
the defendant in an answer or MTD.
8) What is the Doctrine of Primary Jurisdiction
 Courts will not determine a controversy
involving a question within the jurisdiction of
the administrative tribunal where the
question demands sound
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administrative discretion, providing QUESTION OF LAW

specialized expertise and knowledge of such  where issues are purely legal
administrative tribunal to determine equity  when the doubt or difference arises as to
and matters of fact. what the law is on a certain set of fact

9) How jurisdiction over the persons of the parties is QUESTION OF FACT

acquired.  answering the question “who is telling the
truth”
 Jurisdiction over the persons of the parties is  when the doubt or difference arises as to
the power to render a personal judgment the truth or falsehood of the alleged
though service of process or by voluntary facts
appearance of a party during the progress
of a cause which will bind the parties to the Question of Law Question of Fact
case. Issue
 Effect of lack of jurisdiction over A PARTY: The law on a certain set The truth or falsehood of
such party is NOT BOUND by the JUDGMENT of facts alleged facts
of the court. Review of evidence
 Jurisdiction over the PLAINTIFF The case can be The case has to be
 Acquired from the moment he files his decided without resolved by going over
complaint. Personal appearance in court is reviewing the evidence the evidence
not necessary.
 Jurisdiction over the DEFENDANT 12) Jurisdiction of Municipal Trial Courts
1. Upon service on him of coercive
process in the manner provided by (a) EXCLUSIVE ORIGINAL jurisdiction
law or
2. By his voluntary submission to the 1. Civil actions and probate
jurisdiction of the court. proceedings, testate and
intestate, including the grant of
10) What is the meaning of jurisdiction over the issue? provisional remedies in proper
cases, where the value of the
 Jurisdiction over the issue is the power of the personal property, estate, or
court to try and decide issues raised in the amount the demand does not
pleadings of the parties. exceed P300,000 outside MM or
 An issue is a disputed point or question to does not exceed P400,000 in
which parties to an action have narrowed MM, exclusive of interest,
down their several allegations and upon damages of whatever kind,
which they are desirous of obtaining a attorney’s fees, litigation
decision. Where there is no disputed point, expenses, and costs.
there is no issue.
 HOW CONFERRED: TOTALITY RULE: Where there are
1. Conferred and determined by the several claims or causes of
pleadings of the parties. actions between the same or
2. May be conferred by stipulation of different parties, embodied in
the parties, by entering into the same complaint, the
stipulations of facts and documents amount of the demand shall be
or enter into an agreement the totality of the claims in all the
simplifying the issues of the case. claims of action, irrespective of
3. May be conferred by waiver or whether the causes of action
failure to object to the presentation arose out of the same or
of evidence on a matter not raised different transactions (Sec. 33[1],
in the pleadings. BP 129).

**Issues may be tried even if not 2. Summary proceedings of

raised in the pleadings if made with forcible entry and unlawful
the express or implied consent of the detainer, violation of rental law
parties. Treated as if they were raised
in the pleadings. Thus, the pleadings This is regardless of the
may be amended upon motion or it amount of unpaid
is considered impliedly amended. rentals or whatsoever.
What determines
11) Distinguish between a question of law and jurisdiction is the nature
question of fact of the action,
and not the

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amount of recoverable (a) EXCLUSIVE ORIGINAL jurisdiction

rentals. (section 19)

3. Civil actions which involve title 1. matters incapable of

to, or possession of, real pecuniary estimation,
property, or any interest therein such as rescission of
where the assessed value of the contract, action for
property or interest therein does annulment, action for
not exceed P20,000 outside MM specific performance,
or does not exceed P50,000 in declaratory relief,
MM provided that in cases of permanent injunction,
land not declared for tax foreclosure of
purposes, the value of such mortgage, action
property shall be determined by questioning validity of
the assessed value of the mortgage, annulment of
ADJACENT LOTS. sale, conveyance,etc.
2. all civil actions which
4. Admiralty and maritime cases involve title to,
where the demand does not possession of, or interest
exceed P300,000, or in Metro in, real property with
Manila, does not exceed assessed value
P400,000. Where there are exceeding P20,000
several claims or causes of (outside Metro Manila),
action between the same or or exceeds P50,000 in
different parties, embodied in Metro Manila.
the same complaint, the 3. probate proceedings
amount of the demand shall be where the gross value of
the totality of the claims in all the the estate exceeds
causes of action irrespective of P300,000 outside MM or
whether the causes of action exceeds P400,000 in MM
arose out of same or different 4. admiralty or maritime
transactions. cases where the
demand or claim
5. Civil actions for ACCION exceeds P300,000
PUBLICIANA AND ACCION outside MM or exceeds
REINVINDICATORIA where the P400,000 in MM
ASSESSED VALUE of the land 5. Other cases in which the
should be 20,000 or less, in MM, it demand, exclusive of
is 50,000 or less. interest, damages of
whatever kind,
(b) SPECIAL JURISDICTION over petition attorney’s fees, litigation
for WRIT OF HABEAS CORPUs and expenses, and costs or
APPLICATION FOR BAIL if the RTC the value of the
Judge in area is not available property (personal) in
controversy exceeds
(c) DELEGATED JURISDICTION to hear and P300,000, or in Metro
decide cadastral and land Manila, exceeds
registration cases where there is no P400,000
controversy or contested lands
provided the value of the lad to be (b) ORIGINAL EXCLUSIVE jurisdiction over
ascertained by the claimant does cases not falling within the
not exceed P100,000, such value to jurisdiction of any court, tribunal,
be ascertained by the affidavit of person or body exercising judicial or
the claimant or by agreement of the quasi-judicial functions (i.e. action for
respective claimants if there are annulment of judgment of the MTC)
more than one, or from the
corresponding tax declarations of (c) ORIGINAL AND EXCLUSIVE
the real property. Their decisions in jurisdiction to hear and decide intra-
these cases shall be appelable to corporate controversies:
the CA.
1. Cases involving devises
13) Jurisdiction of Regional Trial Courts or schemes
employed by or

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any acts, of the board or Management

of directors, business Committee.
associates, its officers or
partnership, amounting (d) CONCURRENT AND ORIGINAL
to fraud and jurisdiction
misrepresentation which
may be detrimental to a. with the Supreme Court
the interest of the public in actions affecting
and/or of the ambassadors, other
stockholders, partners, public ministers and
members of associations consuls
or organizations b. with the SC and CA in
registered with the SEC. petitions for certiorari,
2. Controversies arising out prohibition and
of intra-corporate or mandamus against
partnership relations, lower courts and bodies
between and among in petitions for quo
stockholders, members warranto, habeas
or associates; between corpus, and writ of
any or all of them and continuing mandamus
the corporation, on environmental cases
partnership or c. with the SC, CA and
association of which Sandigabayan in
they are stockholders, petitions for writs of
members or associates, habeas data and
respectively; and amparo
between such
corporation, partnership (e) APPELLATE jurisdiction over cases
or association and the decided by lower courts in their
state insofar as it respective territorial jurisdictions
concerns their individual
franchise or right to exist (f) SPECIAL JURISDICTION over JDRC,
as such entity. agrarian and urban land reform
3. Controversies in the cases not within the exclusive
election or jurisdiction of quasi-judicial agencies
appointments of when so designated by the SC.
directors, trustees,
officers or managers of 14) Jurisdiction of Labor Arbiter
such corporations,
partnerships or  The Labor Arbiter is an official in the
associations Arbitration Branch of the National Labor
4. Petitions of corporations, Relations Commission (NLRC) who hears and
partnerships or decides cases falling under his original and
associations to be exclusive jurisdiction as provided by law.
declared in the state of  Various powers of the labor arbiters:
suspension of payments (a) Besides their adjudicatory power to
in cases where the hear and decide cases over which
corporation, partnership they have jurisdiction, the Labor
of association possesses Arbiters have
sufficient property to (1) Contempt power;
cover all its debts but and
foresees the impossibility (2) Power to conduct
of meeting them when ocular inspection.
they respectively fall
due or in cases where  Under Article 217 of the Labor Code:
the corporation, (a) Unfair labor practice cases;
partnership of (b) Termination disputes;
association has no (c) If accompanied with a claim for
sufficient assets to cover reinstatement, those cases that
its liabilities, but is under workers may file involving wages,
the management of a rates of pay, hours of work and other
Rehabilitation Receiver terms and conditions of
employment;

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(d) Claims for actual, moral, exemplary
and other forms of damages arising
from employer-employee relations;
(e) Cases arising from any violation of
Article 279 [264] of the Labor Code,
as amended, including questions
involving the legality of strikes and
lockouts;
(f) Except claims for employees
compensation, social security,
Philhealth (Medicare) and maternity
benefits, all other claims arising from
employer-employee relations,
including those of persons in domestic
or household service, involving an
amount exceeding Five Thousand
Pesos (P5,000.00), whether or not
accompanied with a claim for
reinstatement.
15) Jurisdiction of Voluntary Arbitrator
 The Voluntary Arbitrator or panel of Voluntary
Arbitrators shall have original and exclusive
jurisdiction to hear and decide all unresolved
grievances arising from the interpretation or
implementation of the Collective Bargaining
Agreement and those arising from the
interpretation or enforcement of company
personnel policies referred to in the
immediately preceding article.
 The Voluntary Arbitrator or panel of Voluntary
Arbitrators, upon agreement of the parties,
shall also hear and decide all other labor
disputes including unfair labor practices and
bargaining deadlocks
16) Jurisdiction of Domestic Arbitrators
 Covers both commercial and non-
commercial disputes provided they are
susceptible of arbitration and do not fall
within the exclusive original arbitral
jurisdiction of quasi-judicial agencies.
17) Jurisdiction of Commercial International
Arbitrators
 Covers matters arising from all relationships of
a commercial nature whether contractual or
not.
18) Jurisdiction of Construction Industry Arbitration
 Construction disputes which fall within the
original and exclusive jurisdiction of the
Construction Industry Arbitration Commission
(the "Commission") shall include those
between or among parties to, or who are
otherwise bound by, an arbitration
agreement, directly or by reference whether
such parties are project owner, contractor,
subcontractor, quantity surveyor, bondsman
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or issuer of an insurance policy in a
construction project.
 EO 1008, Sec. 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.
 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 time and 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 from employer-employee
relationships which shall continue to be
covered by the Labor Code of the
Philippines.
19) Jurisdiction of Lupong Tagapamayapa
 Covers all civil disputes in the barrangay.
(Barrangay Mediation)
20) Define Alternative Dispute Resolution
 Alternative Dispute Resolution means any
process or procedure used to resolve a
dispute or controversy, other than by
adjudication of a presiding judge of a court
or an officer of a government agency 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.
21) Principles of ADR
a. Promotion of party autonomy and self-
determination in resolution of disputes;
b. Recognition of ADR as an efficient tool and
alternative procedure for the resolution of
cases; and
c. Enlisting of private sector participation.
22) Objectives and Benefits of ADR
OBJECTIVES: speedy and impartial justice; and
declogging of court dockets.
BENEFITS:
 ADR has been both; increasingly used
alongside, and integrated formally,

into legal systems internationally in order to
capitalize on the typical advantages of ADR
over litigation:
 Suitability for multi-party disputes
 Flexibility of procedure - the process is
determined and controlled by the parties the
dispute
 Lower costs
 Less complexity ("less is more")
 Parties choice of neutral third party (and
therefore expertise in area of dispute) to
direct negotiations/adjudicate
 Likelihood and speed of settlements
 Practical solutions tailored to parties’ interests
and needs (not rights and wants,as they may
perceive them)
 Durability of agreements
 Confidentiality
 The preservation of relationships;[11] and the
preservation of reputations.
23) Features of ADR
1. ADR is a means used to resolve a dispute or
controversy;
2. ADR utilizes means and methods allow by
law;
3. ADR is contractual in nature;
4. ADR avoids court trial; and
5. ADR usually involves the participation of a
neutral third party.
24) What are the essential requisites of a contract
Article 1318. There is no contract unless the following
requisites concur:
1.) Consent of the contracting parties- meeting
of the minds of the two parties;
2.) Object certain which is the subject matter of
the contract- must be definite and certain
(ex. Land, or house etc);
3.) Cause of the obligation which is established-
compelling reason in the performance of the
contract or why a party assumes an
obligation.
 or institutional, other than court-annexed. The
25) Sources of ADR
 Domestic laws and rules;
 Act of the executive branch;
 Decisions of the Supreme Court ;
 International Law; and
 General Principles of Law and Equity.
26) Forms of ADR
1. ARBITRATION is an arrangement for taking
and abiding by the judgment of selected
persons in some disputed manner instead of
carrying it to established tribunal of justice.
2. MEDIATION - (q) "Mediation" means a
voluntary process in which a mediator,
selected by the disputing parties, facilitates
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communication and negotiation, and assist
the parties in reaching a voluntary
agreement regarding a dispute.
3. CONCILIATION is the adjustment and
settlement of a dispute in a friendly,
unantagonistic manner.
4. "NEUTRAL OR EARLY NEUTRAL EVALUATION”
means an ADR process wherein parties and
their lawyers are brought together early in a
pre-trial phase to present summaries of their
cases and receive a nonbinding assessment
by an experienced, neutral person, with
expertise in the subject in the substance of
the dispute;
5. "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 or without the
presence of a neutral third person after
which the parties seek a negotiated
settlement;
6. ANY COMBINATION OF THE FOREGOING
7. INNOMINATE ADR FORM
27) What the subject matters of ADR and what issues
not susceptible of ADR
Civil Statues of a person, validity of marriage
or any ground for legal separation,
jurisdiction of courts, future legitime, criminal
liability, in general those which by law
cannot be compromised.
28) Define Mediation under ADR Act of 2004
 "Mediation" means a voluntary process in
which a mediator, selected by the disputing
parties, facilitates communication and
negotiation, and assist the parties in reaching
a voluntary agreement regarding a dispute.
29) What cases or issues that would be and not be
subjected to Mediation
 Scope. - The provisions of this Chapter shall
cover voluntary mediation, whether ad hoc
term "mediation' shall include conciliation.
30) Classification of mediation
 Non-evidentiary and non-merit based
31) Confidential and Privileged Nature of Mediation
Communication
 Information obtained through mediation shall
be privileged and confidential. A party, a
mediator, or a nonparty participant may
refuse to disclose and may prevent any other
person from disclosing a mediation
communication.
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32) What is a Mediated Settlement Agreements shall settle their dispute.

How is a mediated settlement agreement prepared? But in case where the
parties agrees to appoint
 A settlement agreement following successful each
mediation shall be prepared by the parties arbitrator of their own
with the assistance of their respective choice, then the 2
counsel, if any, and by the mediator. appointed arbitrator will
appoint a 3rd arbitrator
33) Concept of Arbitration As to number of ADR practitioners
Only 1 1-3 arbitrators
 "Arbitration" means a voluntary dispute As to intervention of court
resolution process (it is one of the ADRs) in There is no need for There is a need for the
which one or more arbitrators, appointed in confirmation of court court to confirm the
accordance with the agreement of the arbitral award
parties, or rules promulgated pursuant to this
Act, resolve a dispute by rendering an
award; (RA 9285, Section 3 (d)) 35) Kinds of Arbitration
 Arbitration is from the Latin term “arbitrario”.
 Its essential concept is that a decision is DIFFERENT KINDS OF ARBITRATION UNDER RA 9285
rendered by a private judge who is a neutral 1. Domestic arbitration
3rd party who utilizes the same method of 2. International commercial arbitration
adjudication; it is also adversarial but it is only (governed by Chapter 4)
heard before an arbitrator. It is a shift from a 3. Individual Arbitration
public judging to a private judging 4. Institutional arbitration
5. Arbitration of Construction Disputes
34) Distinction between Arbitration and Mediation 6. Court-referred Arbitration (provided
under Section 24 of RA 9285)
MEDIATION ARBITRATION
As to function 36) Distinguish domestic arbitration from international
Does not render an The arbitrator acts as an arbitration
award but only out of- court judge and
arranges the facts to be settles the dispute extra- a. Domestic arbitration –Section 32, RA 9285;
negotiated so that the judicially. He makes a governed by sections 22 to 31 of Chapter 4
parties can come to a determination of the and Section 32 and 33 of Chapter 5
compromise facts to resolve a dispute b. International Commercial Arbitration—
agreement. He assists independently of the involves dispute arising from a ‘commercial’
the parties in reaching actual result desired by relationship that possesses any of the
a mutually agreeable the parties. characteristics that make it ‘international’
settlement of their under articles 1 (3) of the Model Law;
dispute through direct governed by UNCITRAL Model Law (ADR
negotiations. Law, Section 190, ADR Law Chapter 4
As to resolution Sections 19-31, ADR Law, Chapter 7 Sections
There is only mediation There is an arbitral award 42-45 and 47-48)
settlement. As a rule a
mediator cannot make COMPARISON of Domestic Arbitration
an award but the and International Commercial
mediation settlement Arbitration:
can be an award  Both take place and give rise to
provided that it is awards rendered in the
reduced into writing Philippines
signed by the parties  Both arbitrations give rise to
and their counsel and domestic or Philippine Arbitral
the mediator. Failure to awards
comply with such
mediation settlement CONTRAST between Domestic Arbitration
will give the right to the and International Commercial Arbitration
parties to go to court for  As to definition—an arbitration
the enforcement of that that is not international where
mediation settlement. the proceedings are held and
Appointment of ADR Practitioners where the award is rendered or
Appointed by the court Appointed by the parties the seat of arbitration is in the
if there is an agreement Philippines; the latter is an
that only one arbitrator arbitration where the

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proceedings are held and the
award is rendered in the
Philippines but involves a dispute
arising from a commercial
relationship that possesses any of
the characteristics that make it
international.
 Distinct rules for the enforcement
of arbitral awards under RA 9285
37) What is commercial international arbitration
 An arbitration is "commercial" if it covers
matters arising from all relationships of a
commercial nature, whether contractual or
not. Relationships of a 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; engineering; licensing;
investment; financing; banking; insurance;
joint venture and other forms of industrial or
business cooperation; carriage of goods or
passengers by air, sea, rail or road.
38) Objectives of arbitration
 To provide speedy and inexpensive method
of settling disputes.
39) Who is an arbitrator
 Arbitrator means the person appointed to
render an award, alone or with others, in a
dispute that is the subject of an arbitration
agreement.
40) What is arbitration agreement
 It is an agreement by the parties to submit to
arbitration all or certain disputes which have
arisen or which may arise between them in
respect of a defined legal relationship,
whether contractual or not. An arbitration
agreement may be in the form of an
arbitration clause in a contract or in the form
of a separate agreement.
41) What are two modes of submitting a dispute to
arbitration
1. Agreement to submit to arbitration;and
2. Submission agreement.
42) What is the doctrine of separability
 GENERAL PREMISE: Arbitral agreement is
independent from the main contract.
 The Special ADR Rules recognize the
principle of competence-competence,
which means that the arbitral tribunal may
initially rule on its own jurisdiction, including
any objections with respect to the existence
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or validity of the arbitration agreement or
any condition precedent to the filing of a
request for arbitration.
 The Special ADR Rules recognize the
principle of separability of the arbitration
clause, which means that said clause shall
be treated as an agreement independent of
the other terms of the contract of which it
forms part. A decision that the contract is null
and void shall not entail ipso jure the
invalidity of the arbitration clause.
43) Special Rules of Court on Alternative Dispute
Resolution
 A.M. No. 07-11-08-SC September 1, 2009
(read)
44) Section 5, Article VIII, Constitution
SECTION 5. The Supreme Court shall have the
following powers:
(1) Exercise original jurisdiction over cases
affecting ambassadors, other public ministers
and consuls, and over petitions for certiorari,
prohibition, mandamus, quo warranto,
and habeas corpus.
(2) Review, revise, reverse, modify, or affirm on
appeal or certiorari, as the law or the Rules of
Court may provide, final judgments and
orders of lower courts in:
a. All cases in which the
constitutionality or validity of any
treaty, international or executive
agreement, law, presidential
decree, proclamation, order,
instruction, ordinance, or regulation
is in question.
b. All cases involving the legality of any
tax, impost, assessment, or toll, or
any penalty imposed in relation
thereto.
c. All cases in which the jurisdiction of
any lower court is in issue.
d. All criminal cases in which the
penalty imposed is reclusion
perpetua or higher.
e. All cases in which only an error or
question of law is involved.
(3) Assign temporarily judges of lower courts to
other stations as public interest may require.
Such temporary assignment shall not exceed
six months without the consent of the judge
concerned.
(4) Order a change of venue or place of trial to
avoid a miscarriage of justice.
(5) Promulgate rules concerning the protection
and enforcement of constitutional rights,
pleading, practice, and procedure in
all courts, the admission to the

practice of law, the integrated bar, and
legal assistance to the underprivileged. Such
rules shall provide a simplified and
inexpensive procedure for the speedy
disposition of cases, shall be uniform for all
courts of the same grade, and shall not
diminish, increase, or modify substantive
rights. Rules of procedure of special courts
and quasi-judicial bodies shall remain
effective unless disapproved by the Supreme
Court.
(6) Appoint all officials and employees of the
Judiciary in accordance with the Civil
Service Law.
CASE LAWS
CARGILL PHILIPPINES, INC. vs. SAN FERNANDO REGALA
TRADING, INC.
G.R. No. 175404 January 31, 2011
FACTS: On June 18, 1998, respondent San Fernando
Regala Trading, Inc. filed with the RTC a Complaint for
Rescission of Contract with Damages against petitioner
Cargill Philippines, Inc alleging that it was engaged in
buying and selling of molasses and petitioner was one of
its various sources from whom it purchased molasses.
Further, that it entered into a contract with petitioner,
wherein it was agreed upon that respondent would
purchase from petitioner 12,000 metric tons of Thailand
origin cane blackstrap molasses at the price of and that
payment was to be made by means of an Irrevocable
Letter of Credit payable at sight.
Petitioner however, as seller, failed to comply with its
obligations under the contract, despite demands from
respondent, thus, the latter prayed for rescission of the
contract and payment of damages.
On July 24, 1998, petitioner filed a Motion to
Dismiss/Suspend Proceedings and To Refer Controversy to
Voluntary Arbitration, wherein it argued that the alleged
contract between the parties was never consummated
because respondent never returned the proposed
agreement bearing its written acceptance or conformity
nor did respondent open the Irrevocable Letter of Credit
at sight.
Petitioner, on the other hand, contended that the
controversy between the parties was whether or not the
alleged contract between the parties was legally in
existence and the RTC was not the proper forum to
ventilate such issue. It claimed that the contract
contained an arbitration clause thus, the RTC must either
dismiss the case or suspend the proceedings and direct
the parties to proceed with arbitration, pursuant to
Sections 66 and 77 of Republic Act (R.A.) No. 876, or the
Arbitration Law.
ISSUE: WON this case can be brought under the
arbitration law
ABAS, BASILISCO, BONTUYAN, CAMACHO, DOMINGO,
JOSOL, MARAVILLA, MATURAN, OBINAY and RAYA | 9
RULING: NO. Arbitration, as an alternative mode of
settling disputes, has long been recognized and
accepted in our jurisdiction. R.A. No. 876 authorizes
arbitration of domestic disputes. Foreign arbitration, as a
system of settling commercial disputes of an international
character, is likewise recognized. The enactment of R.A.
No. 9285 on April 2, 2004 further institutionalized the use of
alternative dispute resolution systems, including
arbitration, in the settlement of disputes.
A contract is required for arbitration to take place and to
be binding. Submission to arbitration is a contract and a
clause in a contract providing that all matters in dispute
between the parties shall be referred to arbitration is a
contract. The provision to submit to arbitration any
dispute arising therefrom and the relationship of the
parties is part of the contract and is itself a contract.
Notwithstanding our ruling on the validity and
enforceability of the assailed arbitration clause providing
for foreign arbitration, it is our considered opinion that the
case at bench still cannot be brought under the
Arbitration Law for the purpose of suspending the
proceedings before the trial court.
We note that in its Motion to Dismiss/Suspend
Proceedings, etc, petitioner Cargill alleged, as one of the
grounds thereof, that the alleged contract between the
parties do not legally exist or is invalid. As posited by
petitioner, it is their contention that the said contract,
bearing the arbitration clause, was never consummated
by the parties. That being the case, it is but proper that
such issue be first resolved by the court through an
appropriate trial. The issue involves a question of fact that
the trial court should first resolve.
Arbitration is not proper when one of the parties
repudiates the existence or validity of the contract.
The question of validity of the contract containing the
agreement to submit to arbitration will affect the
applicability of the arbitration clause itself. A party
cannot rely on the contract and claim rights or
obligations under it and at the same time impugn its
existence or validity. Indeed, litigants are enjoined from
taking inconsistent positions.
Consequently, the petitioner herein cannot claim that the
contract was never consummated and, at the same
time, invokes the arbitration clause provided for under
the contract which it alleges to be non-existent or invalid.
Petitioner claims that private respondent's complaint
lacks a cause of action due to the absence of any valid
contract between the parties. Apparently, the arbitration
clause is being invoked merely as a fallback position. The
petitioner must first adduce evidence in support of its
claim that there is no valid contract between them and
should the court a quo find the claim to be meritorious,
the parties may then be spared the rigors and expenses
that arbitration in a foreign land would surely entail.
Alternative Dispute Resolution 2019 | ATTY. BATA
 ABAS, BASILISCO, BONTUYAN, CAMACHO, DOMINGO,
JOSOL, MARAVILLA, MATURAN, OBINAY and RAYA | 10

LICOMCEN INCORPORATED vs. FOUNDATION SPECIALIST
INC.
G.R. No. 167022 August 31, 2007
FACTS: Liberty Commercial Center, Inc. (LICOMCEN) is a
corporation engaged in the business of operating
shopping malls. In March 1997, the City Government of
Legaspi leased its lot in the Central District of Legaspi to
LICOMCEN. The Lease Contract was based on the Build-
Operate-Transfer Scheme under which LICOMCEN will
finance, develop and construct the LCC City Mall
(CITIMALL). LICOMCEN engaged E.S. De Castro and
Associates (ESCA) as its engineering consultant for the
project.
controversy to the Arbitral Tribunal and signed the Terms
of Reference (TOR). However, LICOMCEN reiterated the
claim that the arbitration clause in the contract does not
cover claims for payment of unrealized profits and
damages, and FSI did not comply with the condition
precedent for the filing of the suit, thus, the CIAC cannot
take cognizance of the suit.
The CIAC rendered a decision in favor of FSI. The CA
affirmed the decision but modified the amount.
ISSUE: WON the CIAC has jurisdiction over the suit.
RULING: YES, CIAC has jurisdiction over the suit.

LICOMCEN and Foundation Specialist, Inc. (FSI) signed a 1. ARGUMENT: LICOMCEN insists that the CIAC had no
Construction Agreement for the bored pile foundation of jurisdiction over the suit. Citing GC-05 and GC-61 of the
CITIMALL. Forming part of the agreement were the Bid GCC, it posits that jurisdiction over the dispute rests with
Documents and the General Conditions of Contract the regular courts of Legaspi City.
(GCC) prepared by ESCA. A salient provision of the GCC
is the authority granted the engineering consultant to The argument is misplaced.
suspend the work, wholly or partly. LICOMCEN was also
The power and authority of a court to hear, try, and
given the right to suspend the work or terminate the
decide a case is defined as jurisdiction. Elementary is the
contract. Among other caveats, GC-05 provided that
distinction between jurisdiction over the subject matter
questions arising out or in connection with the contract or
and jurisdiction over the person. The former is conferred
its breach should be litigated in the courts of Legaspi,
by the Constitution or by law, while the latter is acquired
except where otherwise stated, or when such question is
by virtue of the party's voluntary submission to the
submitted for settlement through arbitration. GC-61 also
authority of the court through the exercise of its coercive
provided that disputes arising out of the execution of the
process.
work should first be submitted to LICOMCEN for resolution,
whose decision shall be final and binding, if not
Section 4 of Executive Order (E.O.) No. 1008, or the
contested within thirty (30) days from receipt. Otherwise,
Construction Industry Arbitration Law, provides:
the dispute shall be submitted to the Construction
Industry Arbitration Commission (CIAC) for arbitration. SECTION 4. Jurisdiction. — The CIAC shall have original
and exclusive jurisdiction over disputes arising from, or
Upon receipt of the notice to proceed, FSI commenced
connected with, contracts entered into by parties
work and undertook to complete it within ninety (90)
involved in construction in the Philippines, whether the
days, all in accordance with the approved drawing,
dispute arises before or after the completion of the
plans, and specifications.
contract, or after the abandonment or breach thereof.
These disputes may involve government or private
On January 1998, LICOMCEN sent a letter to FSI ordering
contracts. For the Board to acquire jurisdiction, the parties
all the construction activities suspended on account of
to a dispute must agree to submit the same to voluntary
the filing of criminal complaints (violation of the Anti-Graft
arbitration.
and Corrupt Practices Act) against LICOMCEN and the
City Government of Legaspi. It requested FSI not to
The jurisdiction of the CIAC may include but is not limited
unload the steel bars. This request however was
to violation of specifications for materials and
unheeded.
workmanship; violation of the terms of agreement;
interpretation and/or application of contractual
FSI demanded payment for its work accomplishments,
provisions; amount of damages and penalties;
material costs, and standby off equipment, as well as
commencement time and delays; maintenance and
other expenses amounting to 22 M, but LICOMCEN took
defects; payment default of employer or contractor and
no heed. Even after the dismissal of the criminal case,
changes in contract cost.
LICOMCEN did not lift the suspension of the construction
that it previously ordered. It hired a new project
Excluded from the coverage of this law are disputes
consultant and invited contractors, including FSI to bid.
arising from employer-employee relationships which shall
continue to be covered by the Labor Code of the
FSI reiterated its demand for payment from LICOMCEN,
Philippines.
but the latter failed and refused to pay, prompting FSI to
file a petition for arbitration with the CIAC.
Corollarily, Section 1, Article III of the Rules of Procedure
Governing Construction Arbitration provides that
FSI reiterated its demand for payment from LICOMCEN,
recourse to the CIAC may be availed of whenever a
but the latter failed and refused to pay, prompting FSI to
file a petition for arbitration with the CIAC. During the
preliminary conference, the parties agreed to submit the

Alternative Dispute Resolution 2019 | ATTY. BATA


contract contains a clause for the submission of a future
controversy to arbitration, thus:
SECTION 1. Submission to CIAC Jurisdiction. — An
arbitration clause in a construction contract or a
submission to arbitration of a construction dispute shall be
deemed an agreement to submit an existing or future
controversy to CIAC jurisdiction, notwithstanding the
reference to a different arbitration institution or arbitral
body in such contract or submission. When a contract
contains a clause for the submission of a future
controversy to arbitration, it is not necessary for the
parties to enter into a submission agreement before the
claimant may invoke the jurisdiction of CIAC.
Clearly then, the CIAC has original and exclusive
jurisdiction over disputes arising from or connected with
construction contracts entered into by parties that have
agreed to submit their dispute to voluntary arbitration.
The GCC signed by LICOMCEN and FSI had the following
arbitral clause:
GC-61 DISPUTES AND ARBITRATION
Should any dispute of any kind arise between the
LICOMCEN, INCORPORATED and the Contractor or the
Engineer and the Contractor in connection with, or
arising out of the execution of the Works, such dispute
shall first be referred to and settled by the LICOMCEN,
INCORPORATED who shall within a period of thirty (30)
days after being formally requested by either party to
resolve the dispute, issue a written decision to the
Engineer and Contractor. X X X
2. ARGUMENT: LICOMCEN theorizes that this arbitration
clause cannot vest jurisdiction in the CIAC, because it
covers only disputes arising out of or in connection with
the execution of works, whether permanent or
temporary. It argues that since the claim of FSI was not
connected to or did not arise out of the execution of the
works as contemplated in GC-61, but is based on alleged
breach of contract, under GC-05 of the GCC, the
dispute can only be taken cognizance of by the regular
courts. Furthermore, FSI failed to comply with the
condition precedent for arbitration. Thus, according to
LICOMCEN, the CIAC erred in assuming jurisdiction over
the case.
Contrary to what LICOMCEN wants to portray, the CIAC
validly acquired jurisdiction over the dispute.
a. Firstly, LICOMCEN submitted itself to the jurisdiction of
the CIAC when its president Antonio S. Tan signed the
TOR (Terms of Reference) during the preliminary
conference.
b. Secondly, we agree with the CA that the suit arose
from the execution of works defined in the contract.
c. Thirdly, FSI complied with the condition precedent
provided in GC-61. Record shows that FSI referred the
claim to ESCA, and then to LICOMCEN but it was
disallowed.
ABAS, BASILISCO, BONTUYAN, CAMACHO, DOMINGO,
JOSOL, MARAVILLA, MATURAN, OBINAY and RAYA | 11
Just as meaningful, the issue of jurisdiction was rendered
moot by LICOMCEN's active participation in the
proceedings before the CIAC. It is true that LICOMCEN
initially assailed the jurisdiction of the CIAC. But when the
CIAC asserted its jurisdiction in its order, LICOMCEN did
not seek relief from the CIAC ruling. Instead, LICOMCEN
took part in the discussion on the merits of the case, even
going to the extent of seeking affirmative relief. The
active involvement of a party in the proceedings is
tantamount to an invocation of, or at least an
acquiescence to, the court's jurisdiction. Such
participation indicates a willingness to abide by the
resolution of the case, and will bar said party from later
on impugning the court or body's jurisdiction. The Court
will not countenance the effort of any party to subvert or
defeat the objective of voluntary arbitration for its own
private motives. After submitting itself to arbitration
proceedings and actively participating therein,
LICOMCEN is estopped from assailing the jurisdiction of
the CIAC, merely because the latter rendered an
adverse decision.
On other issues, the SC ruled that (1) the CA did not err in
affirming the CIAC ruling that the contract had already
been terminated; (2) LICOMCEN cannot find refuge in
the principle of laches to steer clear of liability and thus
pay FSI; and (3) bear the cost of arbitration.
RV SANTOS vs. BELLLE CONSTRUCTION
G. R. No. 159561-62, October 3, 2012
FACTS:
Belle and RVSCI entered into a construction contract in
1997. RVSCI undertook to construct a detailed
underground electrical network for Belle’s Tagaytay
Woodlands Condominium Project with project cost of P22
Million Pesos. Belle advanced to RVSCI 50% of the
contract price for which RVSCI issued an official receipt.
The project was allegedly not completed within the
stipulated time frame. Belle purportedly informed RVSCI
on the target date and urged the latter to complete the
project before the deadline, however, the project was
still not completed on April 21, 1998.
Belle placed additional work orders with RVSCI, who in
turn made a cost estimates for additional work
amounting to P4,554,540.54
Belle approved RVSCI’s cost estimate for Additional Order
Nos. 1 and 2 but did not approve the cost estimate for
Additional Order No. 3 which estimated should only cost
P22,442.47.
RVSCI submitted its Progress billing to Belle claiming 53.3%
accomplishment of the project, including the work done
for Additional Order No. 1. The cost of the main project
was P7,159,216.63, and P1,768,000.00 on the additional
work order.
However, Belle reputedly made its own assessment of the
Alternative Dispute Resolution 2019 | ATTY. BATA

work accomplished by RVSCI and determined that it was
only worth P4,676,724.64.
While negotiations was on-going regarding the Progress
Billing, Belle claimed that RVSCI abandoned the project
and forced Belle to take over.
On January 22, 1999, Belle made an additional payment
for electrical works to RVSCI in the amount of P476,503.30
and was evidenced by an official receipt.
In February 1999, Belled engaged the services of an
assessor to determine the value of the work done by
RVSCI. The assessor reported that the work accomplished
by RVSCI on the main project only amounted to
P4,868,443.59. RVSCI allegedly refused to return the
excess payment despite repeated demands. Thus, relying
on the arbitration clause in the Construction Contract,
Belle brought the matter before CIAC.
In defense, RVSCI claimed that its Progress Billing was a
result of bilateral assessment and was in fact
approved/recommended by Belle’s representatives. It
further asserted that it was not notified nor made a privy
to the audit work made by the assessor and was not
bound by such audit.
CIAC gave weight to the result of the re-survey made by
the assessor and held that Belle indeed made an
overpayment to RVSCI.
Both parties filed petitions for review with the CA, to
which, the CA affirmed the CIAC’s Decision.
ISSUE:
Whether or not petition for review of questions of facts
may be granted.
RULING:
No.
In cases decided by CIAC, Executive Order No. 1008, as
amended, provides, in its Section 19 Executive Order No.
1008, as amended, provides, in its Section 19, as follows:
"Sec. 19. Finality of Awards. — The arbitral award shall be
binding upon the parties. It shall be final and
inappealable except on questions of law which shall be
appealable to the Supreme Court."
Section 19 makes it crystal clear that questions of fact
cannot be raised in proceedings before the Supreme
Court - which is not a trier of facts - in respect of an
arbitral award rendered under the aegis of the CIAC.
Consideration of the animating purpose of voluntary
arbitration in general, and arbitration under the aegis of
the CIAC in particular, requires us to apply rigorously the
above principle embodied in Section 19 that the Arbitral
Tribunal’s findings of fact shall be final and unappealable.
Aware of the objective of voluntary arbitration in the
labor field, in the construction industry, and in any other
ABAS, BASILISCO, BONTUYAN, CAMACHO, DOMINGO,
JOSOL, MARAVILLA, MATURAN, OBINAY and RAYA | 12
area for that matter, the Court will not assist one or the
other or even both parties in any effort to subvert or
defeat that objective for their private purposes. The Court
will not review the factual findings of an arbitral tribunal
upon the artful allegation that such body had
"misapprehended the facts" and will not pass upon issues
which are, at bottom, issues of fact, no matter how
cleverly disguised they might be as "legal questions." The
parties here had recourse to arbitration and chose the
arbitrators themselves; they must have had confidence in
such arbitrators. The Court will not, therefore, permit the
parties to relitigate before it the issues of facts previously
presented and argued before the Arbitral Tribunal, save
only where a very clear showing is made that, in reaching
its factual conclusions, the Arbitral Tribunal committed an
error so egregious and hurtful to one party as to
constitute a grave abuse of discretion resulting in lack or
loss of jurisdiction. Prototypical examples would be
factual conclusions of the Tribunal which resulted in
deprivation of one or the other party of a fair opportunity
to present its position before the Arbitral Tribunal, and an
award obtained through fraud or the corruption of
arbitrators. Any other, more relaxed, rule would result in
setting at naught the basic objective of a voluntary
arbitration and would reduce arbitration to a largely
inutile institution.
It is settled that findings of fact of quasi-judicial bodies,
which have acquired expertise because their jurisdiction
is confined to specific matters, are generally accorded
not only respect, but also finality, especially when
affirmed by the Court of Appeals. In particular, factual
findings of construction arbitrators are final and
conclusive and not reviewable by this Court on appeal.
This rule, however, admits of certain exceptions.
In David v. Construction Industry and Arbitration
Commission, we ruled that, as exceptions, factual findings
of construction arbitrators may be reviewed by this Court
when the petitioner proves affirmatively that:
(1) the award was procured by corruption, fraud
or other undue means;
(2) there was evident partiality or corruption of
the arbitrators or any of them;
(3) the arbitrators were guilty of misconduct in
refusing to hear evidence pertinent and material
to the controversy;
(4) one or more of the arbitrators were
disqualified to act as such under Section nine of
Republic Act No. 876 and willfully refrained from
disclosing such disqualifications or of any other
misbehavior by which the rights of any party
have been materially prejudiced; or
(5) the arbitrators exceeded their powers, or so
imperfectly executed them, that a mutual, final
and definite award upon the subject matter
submitted to them was not made.
Other recognized exceptions are as follows:
Alternative Dispute Resolution 2019 | ATTY. BATA

(1) when there is a very clear showing of grave
abuse of discretion resulting in lack or loss of
jurisdiction as when a party was deprived of a fair
opportunity to present its position before the
Arbitral Tribunal or when an award is obtained
through fraud or the corruption of arbitrators,
(2) when the findings of the Court of Appeals are
contrary to those of the CIAC, and
(3) when a party is deprived of administrative
due process.31 (Citations omitted.
In the case at bar, petitioner indeed raises factual
matters in the present controversy which this Court may
not look into under a petition for review on certiorari. We
likewise find that this case is not among the exceptions to
this settled rule. Nevertheless, even if we were to excuse
this procedural infirmity of the petition, we are still not
inclined to reverse the lower tribunals’ findings on the
merits of the case.
SHINRYO (PHILIPPINES) COMPANY, INC., vs, RRN
INCORPORATED
G.R. No. 172525 : October 20, 2010
FACTS: Petitioner Shinryo (Philippines) Company, Inc.
(hereinafter petitioner) is a domestic corporation
organized under Philippine laws. Private respondent RRN
Incorporated (hereinafter respondent) is likewise a
domestic corporation organized under Philippine laws.
Respondent filed a claim for arbitration against petitioner
before CIAC for recovery of unpaid account which
consists of unpaid portions of the sub-contract, variations
and unused materials in the total sum of P5,275,184.17
and legal interest in the amount of P442,014.73. Petitioner
filed a counterclaim for overpayment in the amount of
P2,512,997.96.
The parties admitted several facts before the CIAC. It was
shown that petitioner and respondent executed an
Agreement and Conditions of Sub-contract (hereafter
Agreement signed on June 11, 1996 and June 14, 1996,
respectively. Respondent signified its willingness to
accept and perform for petitioner in any of its projects, a
part or the whole of the works more particularly
described in Conditions of Sub-Contract and other Sub-
contract documents.
The CIAC rendered the assailed decision after the
presentation of the parties' evidence. [The dispositive
portion of said decision reads as follows:
WHEREFORE, judgment is hereby rendered in favor of the
claimant and respondent is ordered to pay claimant its
unpaid account in the sum of P3,728,960.54 plus legal
interest of 6% reckoned from June 25, 2003 up to the filing
of the case on October 11, 2004 and 12% of P3,728,960.54
from the finality of the judgment until fully paid and
arbitration cost of P104,333.82 representing claimant's
share of the arbitration cost which respondent should
reimburse.
ABAS, BASILISCO, BONTUYAN, CAMACHO, DOMINGO,
JOSOL, MARAVILLA, MATURAN, OBINAY and RAYA | 13
Petitioner accepts the ruling of the CIAC only in Issue No.
1 and Sub-Issue No. 1.1 and in Issue No. 2 in so far as the
amount of P440,000.00 awarded as back charges for the
use of scaffoldings.
On February 22, 2006, the CA promulgated the
assailed Decision affirming the decision of the CIAC.
The CA upheld the CIAC ruling that petitioner failed to
adduce sufficie nt proof that the parties had an
agreement regarding charges for respondent's use of
the manlift. As to the other charges for materials, the
CA held that the evidence on record amply supports
the CIAC findings. Petitioner moved for reconsideration
of said ruling, but the same was denied per
Resolution dated April 26, 2006.
Despite petitioner's attempts to make it appear that
it is advancing questions of law, it is quite clear that
what petitioner seeks is for this Court to recalibrate
the evidence it has presented before the CIAC. It
insists that its evidence sufficiently proves that it is
entitled to payment for respondent's use of its manlift
equipment, and even absent proof of the supposed
agreement on the charges petitioner may impose on
respondent for the use of said equipment,
respondent should be made to pay based on the
principle of unjust enrichment. Petitioner also questions
the amount s awarded by the CIAC for inventoried
materials, and costs incurred by petitioner for
completing the work left unfinished by respondent.
ISSUE: WON there is a question of law in the ruling of the
CA.
RULING: The Court will not review the factual findings of
an arbitral tribunal upon the artful allegation that such
body had "misapprehended facts" and will not pass upon
issues which are, at bottom, issues of fact, no matter how
cleverly disguised they might be as "legal questions."
The parties here had recourse to arbitration and chose
the arbitrators themselves; they must have had
confidence in such arbitrators. The Court will not,
therefore, permit the parties to relitigate before it the
issues of facts previously presented and argued before
the Arbitral Tribunal, save only where a clear showing is
made that, in reaching its factual conclusions, the Arbitral
Tribunal committed an error so egregious and hurtful to
one party as to constitute a grave abuse of discretion
resulting in lack or loss of jurisdiction.
There is nothing in the records that point to any grave
abuse of discretion committed by the CIAC.
THE MANILA INSURANCE COMPANY, INC. vs SPOUSES
ROBERTO & AIDA AMURAO
G.R. No. 179628 January 16, 2013
FACTS: This case involves the question as to whether the
jurisdiction of the Construction Industry Arbitration
Commission (CIAC) is broad enough to cover any dispute
arising from, or connected with construction contracts,
whether these involve mere contractual money
claims or execution of works.
Alternative Dispute Resolution 2019 | ATTY. BATA

On 07 March 2000, Spouses Amurao entered into a
construction agreement with Aegean Construction and
Development Corporation for the construction of a 6-
storey building in Quezon City. To guarantee faithful
compliance, Aegean posted performance bonds
secured by the Manila Insurance Company, Inc. and
Intra Strata Assurance Corporation.
Due to Aegean’s failure to complete the project the
spouses filed before the RTC a Complaint against Manila
Insurance and Intra Strata to collect on the performance
bonds.
Manila Insurance filed a Motion to Dismiss on the ground
that the Complaint states no cause of action as the
spouses failed to implead the contractor, Aegean
Construction. The RTC denied the Motion to Dismiss.
Manila Insurance then filed an Answer.
During the pre-trial, Manila Insurance and Intra Strata
discovered that the Construction Agreement contained
an arbitration clause. Manila Insurance then filed a
Motion to Dismiss on the ground of lack of cause of
action and lack of jurisdiction but this was again
dismissed by the RTC.
Aggrieved, Manila Insurance elevated the case to the
CA by way of special civil action for certiorari.
The CA dismissed the petition, hence, this petition.
The CA ruled that the presence of an arbitration clause in
the CCA does not merit a dismissal of the case because
under the CCA, it is only when there are differences in the
interpretation of Article I of the construction agreement
that the parties can resort to arbitration
ISSUE: WON the CIAC has jurisdiction and not the the
regular courts.
RULING: YES. The complaint must be dismissed for lack of
jurisdiction.
The CIAC has jurisdiction over the case. Section 4 of E.O.
No. 1008 provides that:
SEC. 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.
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 time and
delays, maintenance and defects, payment, default of
employer or contractor, and changes in contract cost.
ABAS, BASILISCO, BONTUYAN, CAMACHO, DOMINGO,
JOSOL, MARAVILLA, MATURAN, OBINAY and RAYA | 14
Excluded from the coverage of the law are disputes
arising from employer-employee relationships which shall
continue to be covered by the Labor Code of the
Philippines.
Based on the foregoing, in order for the CIAC to acquire
jurisdiction two requisites must concur:
1. The dispute must be connected to a construction
contract;
2. The parties must have agreed to submit the
dispute to arbitration proceedings
Both requisites are present. The parties agreed to submit
to arbitration proceedings as provided under Article XVII
of the Construction Agreement.
Also, in Golangco Construction vs. Ray Burton
Development Corporation, the Supreme Court ruled that
monetary claims under a construction contract are
disputes arising from “differences in interpretation of the
contract” because “the matter of ascertaining the duties
and obligations of the parties under their contract all
involve interpretation of the provisions of the contract”.
Following our reasoning in that case, we find that the
issue of whether respondent-spouses are entitled to
collect on the performance bond issued by petitioner is a
"dispute arising in the course of the execution and
performance of the Construction Agreement by reason
of difference in the interpretation of the contract
documents."
The fact that Manila Insurance is not a party to the
Construction Agreement cannot remove the dispute
from the jurisdiction of the CIAC because the issue of
whether respondent-spouses are entitled to collect on
the performance bond, as the Court said, is a dispute
arising from or connected to the Construction
Agreement.
Finally, the argument that the jurisdiction of CIAC is
limited to the construction industry, and thus, cannot
extend to surety contracts. In Prudential vs. Anscor Land,
the Supreme Court held that "although not the
construction contract itself, the performance bond is
deemed as an associate of the main construction
contract that it cannot be separated or severed from its
principal. The Performance Bond is significantly and
substantially connected to the construction contract that
there can be no doubt it is the CIAC, under Section 4 of
E.O. No. 1008, which has jurisdiction over any dispute
arising from or connected with it."
Therefore, the CIAC has jurisdiction.
FRUEHAUF ELECTRONICS PHILS. CORP vs. TECHNOLOGY
ELECTRONICS ASSEMBLY ETC.
G.R. No. 204197 November 23, 2016
FACTS: In 1978, Fruehauf Electronics Philippines
Corp. (Fruehauf) leased several parcels of land in Pasig
City to Signetics Filipinas Corporation (Signetics) for a
Alternative Dispute Resolution 2019 | ATTY. BATA

period of 25 years (until May 28, 2003). Signetics
constructed a semiconductor assembly factory on the
land on its own account.
In 1983, Signetics ceased its operations and in 1986, Team
Holdings Limited (THL) bought Signetics. THL later
changed its name to Technology Electronics Assembly
and Management Pacific Corp. (TEAM)
In March 1987, Fruehauf filed an unlawful detainer case
against TEAM. In an effort to amicably settle the dispute,
both parties executed a Memorandum of
Agreement (MOA) where TEAM undertook to pay
Fruehauf 14.7 million pesos as unpaid rent (for the period
of December 1986 to June 1988).
They also entered a 15-year lease contract4 (expiring on
June 9, 2003) that was renewable for another 25 years
upon mutual agreement. The contract included an
arbitration agreement.
TEAM subleased the property to Capitol Publishing
House (Capitol) on December 2, 1996 after notifying
Fruehauf.
On May 2003, TEAM informed Fruehauf that it would not
be renewing the lease. On May 31, 2003, the sublease
between TEAM and Capitol expired. However, Capitol
only vacated the premises on March 5, 2005. In the
meantime, the master lease between TEAM and Fruehauf
expired on June 9, 2003.
Fruehauf instituted SPProc. No. 11449 before the Regional
Trial Court (RTC) for "Submission of an Existing Controversy
for Arbitration”. The RTC granted the petition and
directed the parties to comply with the arbitration clause
of the contract.
On December 3, 2008, the arbitral tribunal awarded
Fruehauf: (1) 8.2 million pesos as (the balance of) unpaid
rent from June 9, 2003 until March 5, 2005; and (2) 46.8
million pesos as damages.
TEAM moved for reconsideration which the tribunal
denied. Thus, TEAM petitioned the RTC to partially vacate
or modify the arbitral award. It argued that the tribunal
failed to properly appreciate the facts and the terms of
the lease contract.
On April 29, 2009, the RTC found insufficient legal
grounds under Sections 24 and 25 of the Arbitration Law
to modify or vacate the award. It denied the petition and
CONFIRMED, the arbitral award. TEAM filed a Notice of
Appeal.
The CA reversed and set aside the arbitral award
and dismissed the arbitral complaint for lack of merit.
ISSUE: WON an arbitral award is appealable or be subject
for a petition for certiorari.
RULING: NO. The right to an appeal is neither a natural
right nor an indispensable component of due process. It is
ABAS, BASILISCO, BONTUYAN, CAMACHO, DOMINGO,
JOSOL, MARAVILLA, MATURAN, OBINAY and RAYA | 15
a mere statutory privilege that cannot be invoked in the
absence of an enabling statute.
Neither the Arbitration Law nor the ADR Law allows a
losing party to appeal from the arbitral award. The
statutory absence of an appeal mechanism reflects the
State's policy of upholding the autonomy of arbitration
proceedings and their corresponding arbitral awards.
(Rule 19.7. No appeal or certiorari on the merits of an
arbitral award - An agreement to refer a dispute to
arbitration shall mean that the arbitral award shall be
final and binding. Consequently, a party to an arbitration
is precluded from filing an appeal or a petition
for certiorari questioning the merits of an arbitral award. )
More than a decade earlier in Asset Privatization Trust v.
Court of Appeals, the Court likewise defended the
autonomy of arbitral awards through our policy of non-
intervention on their substantive merits:
As a rule, the award of an arbitrator cannot be set aside
for mere errors of judgment either as to the law or as to
the facts. Courts are without power to amend or overrule
merely because of disagreement with matters of law or
facts determined by the arbitrators. They will not review
the findings of law and fact contained in an award,
and will not undertake to substitute their judgment for
that of the arbitrators, since any other rule would make
an award the commencement, not the end, of litigation.
Errors of law and fact, or an erroneous decision of matters
submitted to the judgment of the arbitrators,
are insufficient to invalidate an award fairly and honestly
made. Judicial review of an arbitration is, thus, more
limited than judicial review of a trial.
Nonetheless, an arbitral award is not absolute. Rule 19.10
of the Special ADR Rules - by referring to Section 24 of the
Arbitration Law and Article 34 of the 1985 United Nations
Commission on International Trade
Law (UNCITRAL) Model Law - recognizes the very limited
exceptions to the autonomy of arbitral awards.
(Rule 19.10. Rule on judicial review on arbitration in the
Philippines. - As a general rule, the court can only vacate
or set aside the decision of an arbitral tribunal upon a
clear showing' that the award suffers from any of the
infirmities or grounds for vacating an arbitral
award under Section 24 of Republic Act No. 876 or
under Rule 34 of the Model Law in a domestic
arbitration, or for setting aside an award in an
international arbitration under Article 34 of the Model
Law, or for such other grounds provided under these
Special Rules.)
If the Regional Trial Court is asked to set aside an arbitral
award in a domestic or international arbitration on any
ground other than those provided in the Special ADR
Rules, the court shall entertain such ground for the setting
aside or non-recognition of the arbitral award only if the
same amounts to a violation of public policy.
The court shall not set aside or vacate the award of the
arbitral tribunal merely on the ground that the arbitral
Alternative Dispute Resolution 2019 | ATTY. BATA

tribunal committed errors of fact, or of law, or of fact and
law, as the court cannot substitute its judgment for that of
the arbitral tribunal.
TUNA PROCESSING, INC. vs. PHILIPPINE KINGFORD, INC.
G.R. No. 185582 February 29, 2012
FACTS On January 14, 2003, Kanemitsu Yamaoka,
together with five (5) Philippine tuna processors, and
respondent Kingford, entered into a Memorandum of
Agreement (MOA) for the establishment of Tuna
Processors, Inc (TPI), a corporation established in the
State in California, in order to implement the objectives of
the MOA.
Due to a series of events, the five tuna processors and
Kingford withdrew from the agreement and
correspondingly reneged on their obligations. Petitioner
TPI submitted the dispute for arbitration before the
International Centre for Dispute Resolution in the State of
California, United States and won the case against the
respondent.
Respondent Kingford was ordered to pay the petitioner
the sum of $1,750,846.10 for breach of the MOA and
violation of the Lanham Act and infringement of the
Yamaoka Patent.
In order to enforce the award, petitioner TPI filed a
petition for Confirmation, Recognition, and Enforcement
of Foreign Arbitral Award before the Regional Trial Court.
Respondent Kingford filed a motion to dismiss which was
denied by the court for lack of merit. After Judge
Alameda inhibited himself, the case was re-raffled and in
turn, Judge Ruiz granted the motion filed by the
respondent and dismissed the petition on the ground that
the petitioner lacked legal capacity to sue in the
Philippines.
Petitioner TPI now seeks to nullify the order of the trial
court dismissing its Petition for Confirmation, Recognition,
and Enforcement of Foreign Arbitral Award.
ISSUE: WON a foreign corporation not licensed to do
business in the Philippines may seek recognition and
enforcement of the foreign arbitral award.
RULING: YES. The petitioner may seek recognition and
enforcement of the foreign arbitral award, despite being
not licensed to do business in the Philippines, in
accordance with the provisions of the Alternative Dispute
Resolution Act of 2004.
Section 45 of the Alternative Dispute Resolution Act of
2004 provides that the opposing party in an application
for recognition and enforcement of the arbitral award
may raise only those grounds that were enumerated
under Article V of the New York Convention, to wit:
Article V
1. Recognition and enforcement of the award may
be refused, at the request of the party against
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JOSOL, MARAVILLA, MATURAN, OBINAY and RAYA | 16
whom it is invoked, only if that party furnishes to
the competent authority where the recognition
and enforcement is sought, proof that:
(a) The parties to the agreement referred to in
article II were, under the law applicable to
them, under some incapacity, or the said
agreement is not valid under the law to
which the parties have subjected it or, failing
any indication thereon, under the law of the
country where the award was made; or
(b) The party against whom the award is
invoked was not given proper notice of the
appointment of the arbitrator or of the
arbitration proceedings or was otherwise
unable to present his case; or
(c) The award deals with a difference not
contemplated by or not falling within the
terms of the submission to arbitration, or it
contains decisions on matters beyond the
scope of the submission to arbitration,
provided that, if the decisions on matters
submitted to arbitration can be separated
from those not so submitted, that part of the
award which contains decisions on matters
submitted to arbitration may be recognized
and enforced; or
(d) The composition of the arbitral authority or
the arbitral procedure was not in
accordance with the agreement of the
parties, or, failing such agreement, was not in
accordance with the law of the country
where the arbitration took place; or
(e) The award has not yet become binding on
the parties, or has been set aside or
suspended by a competent authority of the
country in which, or under the law of which,
that award was made.
2. Recognition and enforcement of an arbitral
award may also be refused if the competent
authority in the country where recognition and
enforcement is sought finds that:
(a) The subject matter of the difference is not
capable of settlement by arbitration under
the law of that country; or
(b) The recognition or enforcement of the award
would be contrary to the public policy of
that country.
Clearly, not one of these exclusive grounds touched on
the capacity to sue of the party seeking the recognition
and enforcement of the award.
When a party enters into a contract containing a foreign
arbitration clause and, as in this case, in fact submits itself
to arbitration, it becomes bound by the contract,
by the arbitration and by the result of arbitration,
Alternative Dispute Resolution 2019 | ATTY. BATA

conceding thereby the capacity of the other party to
enter into the contract, participate in the arbitration and
cause the implementation of the result.
DEPARTMENT OF FOREIGN AFFAIRS (DFA) vs. BCA
INTERNATIONAL CORPORATION & AD HOC ARBITRAL
TRIBUNAL
G.R. No. 225051. July 19, 2017.
FACTS:
4/5/2002 – DFA awarded the Machine Readable Passport
and Visa Project (MRP/V Project) to BCA International
Corporation in an Amended Build-Operate-Transfer (BOT)
Agreement. While implementing the project, conflict
arose and DFA sought to terminate the Agreement.
4/20/2006 – BCA International opposed the termination
and filed a request for arbitration
6/29/2009 – Arbitral Tribunal was constituted.
8/24/2009 – BCA International sought to nullify and set
aside DFA’s notice of termination, plus damages and to
order DFA to perform its obligation under the Amended
BOT Agreement within five days from receipt of the
Arbitral Award.
DFA opposed BCA’s manifestation, arguing that such
amendment at the very late stage of the proceedings
will cause undue prejudice to its interests. However, the
Arbitral Tribunal gave respondent time to file its Amended
Statement of Claims and gave petitioner time to formally
interpose its objections.
In BCA’s Amended Statement of Claims, said in the
alternative that in the event specific performance by
petitioner was no longer possible, petitioner prayed that
the Arbitral Tribunal shall render judgment ordering
petitioner to pay respondent P1,648,611,531.00,
representing the net income respondent is expected to
earn under the Agreement, and P100,000,000.00 as
exemplary, temperate or nominal damages.
8/6/2014 - After DFA’s opposition to the Amended
Statement of Claims, BCA have withdrawn their
Amended Statement of Claims due to both DFA’s
opposition and to avoid further delay in the arbitration of
their claims.
5/4/2015 – BCA filed anew a Motion to Admit Attached
Amended Statement of Claims dated April 30, 2015,
increasing the actual damages sought to
P390,000,000.00, plus an additional P10,000,000.00 for
exemplary, temperate or nominal damages.
2/15/2016 - Arbitral Tribunal, in Procedural Order No. 11,
granted respondent’s Motion to Admit Attached
Amended Statement of Claims on the premise that
respondent would no longer present any additional
evidence-in-chief.
2/19/2016 - DFA and BCA filed a Motion for
Reconsideration of Procedural Order No. 11. Both also
filed a Motion to Suspend Proceedings.
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6/8/2016 - The Arbitral Tribunal issued Procedural Order
No. 12 which resolved BCA's Motion for Partial
Reconsideration of Procedural Order No. 11 and denied
such.
DFA filed a petition for certiorari under Rule 65 of the Rules
of Court with application for issuance of a temporary
restraining order and/or writ of preliminary injunction,
seeking to annul and set aside Procedural Order No. 11
and Procedural Order No. 12.
Procedural Order No. 12: allow the submission of
additional documentary evidence by any Party in
support of its position in relation to the Amended
Statement of Claims and to which the other may submit
its comments or objections but will still not allow the
taking of testimonial evidence from any witness by any
Party.
ISSUES:
1. Which laws apply to arbitration proceedings;
2. Whether or not a petition for review by certiorari
(Rule 65) is availing in a pending arbitration
process.
RULING: (ISSUE 1)
Under Article 33 of the UNCITRAL Arbitration Rules
governing the parties, “the arbitral tribunal shall apply the
law designated by the parties as applicable to the
substance of the dispute. Failing such designation by the
parties, the arbitral tribunal shall apply the law
determined by the conflict of laws rules which it considers
applicable. Follow the rule of lex loci contractus.
As the parties did not designate the applicable law and
the Agreement was perfected in the Philippines, our
Arbitration laws, particularly, RA No. 876, RA No. 9285 and
its IRR, and the Special ADR Rules apply. The IRR of RA No.
9285 provides that “[t]he arbitral tribunal shall decide the
dispute in accordance with such law as is chosen by the
parties. In the absence of such agreement, Philippine law
shall apply.”
The 1976 UNCITRAL Arbitration Rules and the Rules of
Court do not apply to the present arbitration
proceedings. Arbitration is a special proceeding and
governed by the special provisions of RA 9285, its IRR, and
the Special ADR Rules. RA 9285 is the general law
applicable to all matters and controversies to be resolved
through alternative dispute resolution methods. While
enacted only in 2004, we held that RA 9285 applies to
pending arbitration proceedings since it is a procedural
law, which has retroactive effect. Consistent with Article
2046 of the Civil Code, the Special ADR Rules were
formulated and were also applied to all pending
arbitration proceedings covered by RA 9285, provided no
vested rights are impaired.
Thus, contrary to DFA’s contention, RA 9285, its IRR,
and the Special ADR Rules are applicable to the
Alternative Dispute Resolution 2019 | ATTY. BATA

present arbitration proceedings. The arbitration between
the DFA and BCA is still pending, since no arbitral award
has yet been rendered. Moreover, DFA did not allege any
vested rights impaired by the application of those
procedural rules.
RA No. 9285 declares the policy of the State to actively
promote 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 as an important means
to achieve speedy and impartial justice and declog
court dockets.
Court intervention is allowed under RA No. 9285 in the
following instances: (1) when a party in the arbitration
proceedings requests for an interim measure of
protection; (2) judicial review of arbitral awards by the
Regional Trial Court (RTC); and (3) appeal from the RTC
decisions on arbitral awards to the Court of Appeals.
(ISSUE 2)
Rule 19.37 of Special ADR Rules provides that a party
desiring to appeal by certiorari from a judgment or final
order or resolution of the Court of Appeals issued pursuant
to these Special ADR Rules may file with the Supreme
Court a verified petition for review on certiorari. The
petition shall raise only questions of law, which must be
distinctly set forth.
In this case, the appeal by certiorari is not from a final
Order of the Court of Appeals or the Regional Trial Court,
but from an interlocutory order of the Arbitral Tribunal;
hence, the petition must be dismissed for failure to
observe the rules on court intervention allowed by RA No.
9285 and the Special ADR Rules, specifically Rule 19.36
and Rule 19.37 of the latter, in the pending arbitration
proceedings of the parties to this case.
KOPPEL, INC. VS. MAKATI ROTARY CLUB FOUNDATION,
INC.
G.R. No. 198075, Sept. 4. 2013
FACTS:
Fedders Koppel Inc (FKI) owned a parcel of land in
Paranaque. Within the subject property are buildings and
other improvements dedicated to the business of FKI.
In 1975, FKI bequeathed the subject property (exclusive
of the improvements) in favor of Makati Rotary Club by
way of a conditional donation. The donation provides
that the donee, Makati Rotary Club, was required to
lease the subject property to FKI under the terms
specified in the Deed of Donation. The stipulations in the
donation provides:
a. that the period of lease shall be for 25 years
(until May 25, 2000) and the annual rent for the
first 25 years is P40,126;
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b. The lease is subject to renewable for another
25 years upon mutual agreement of the donor
and done; and
c. In case of disagreement, the matter shall be
referred to a Board of arbitrators (3-member)
appointed and with powers in accordance with
the Arbitration Law of the Philippines (RA 878).
Before the lease contract was set to expire, FKI and
Makati Rotary Club executed another contract
extending the lease for 5 years, with annual rents ranging
from P4,000,000 for the 1st year up to P4,900,00 for the 5th
year. The 2000 Lease contract an arbitration clause
worded as:
Any disagreement as to the interpretation,
application or execution of the [2000 Lease]
contract shall be submitted to a board of 3
arbitrators constituted in accordance with the
Arbitration Law of the Philippines. The decision of
the majority of the board shall be binding upon
FKI and respondent.
After the 2000 Lease Contract expired, FKI and
respondent agreed to renew their lease for another 5
years at a fixed rate pf P4,200,000 per annum (2005 Lease
Contract). In addition, the contract also obligated FKI to
make a yearly “donation” of money to respondent
ranging from P3 million for the 1st year up to P3.9 million
for the 5th year. The lease contract contained an
arbitration clause similar to the 2000 lease contract. From
2005 to 2008, FKI paid the rentals and “donations” due
based on the 2005 Lease Contract.
In Aug 2008, FKI assigned all its interest and obligations in
favor of petitioner Koppel Inc. The next year, Koppel
discontinued the payment of the rentals and “donations”
under the 2005 Lease Contract. Koppel’s refusal to pay
was based on the premise that the subsequent lease
contracts violated one of the material conditions of the
donation of the property, i.e. Item 2(g) of the Deed of
Donation states “that the rent of the subject property
over the second 25 years was limited to only 3% of the fair
market value of the subject property excluding the
improvements.”
On June 1, 2009, Makati Rotary Club sent a demand
letter notifying Koppel of its default. Petitioner (Sept 22,
2009) sent a reply expressing its disagreement over the
rental stipulations of the 2005 Lease Contract and offered
to pay P80,502.79 instead of P8,394,000 as demanded by
respondent.
Respondent send a subsequent demand letter (Sept 25,
2009) ordering Koppel Inc to vacate the premises should
it fail to pay its obligation within 7 days from receipt of
letter. Petitioner Koppel refused to comply with the
demands of the respondent and instead, filed with RTC
Alternative Dispute Resolution 2019 | ATTY. BATA

Paranaque a complaint for the rescission or cancellation
of the Deed of Donation.
Thereafter, Makati Rotary Club filed an unlawful detainer
case against Koppel before MTC Paranaque. In the
ejectment suit, Koppel reiterated its objections over the
rental stipulations of the 2005 Lease Contract and
questioned the jurisdiction of the MTC in view of the
arbitration clause contained in the Lease Contract. In the
ejectment case, RTC ruled in favor of Koppel Inc. While it
did not dismiss the action on the ground of arbitration,
MTC sided with petitioner with respect to the issues
regarding the insufficiency of the respondent’s demand
and the nullity of the 2005 Lease contract.
On appeal, RTC reversed the MTC decision and ordered
Koppel to vacate the subject property. As to the existing
improvements, RTC held that the same were built in good
faith subject to the provisions under Art 1678 NCC. CA
affirmed
Arguments against arbitration:
 The dispute between petitioner and respondent
involves the validity of the 2005 Lease Contract.
Citing Gonzales v. Climax Mining: The validity of
contract cannot be subject the arbitration
proceedings as such questions are legal in nature
and require the application of interpretation of
laws and jurisprudence which is necessarily a
judicial function.
 Petitioner cannot validly invoke the arbitration
clause while at the same time, impugn such
contract’s validity.
 Petitioner did not file a formal application before
the MTC so as to render the arbitration clause
operational.
 The parties underwent Judicial Dispute Resolution
(JDR); further referral of the dispute to arbitration
would only be circuitous.
ISSUE:
Whether or not the present dispute is subject to
arbitration.
RULING:
Yes.
Respondent took the ruling in the Gonzales case out of
context. Panel of Arbitrators of the Mines and
Geosciences Bureau (PA-MGB) was devoid of any
jurisdiction to take cognizance of the complaint for
arbitration because RA 7942 (Mining Act of 1995) grants
PA-MGB with exclusive original jurisdiction only over
mining disputes. Since the complaint for arbitration in the
Gonzales case did not raise mining disputes as
contemplated under RA 7942, the SC held such
complaint could not arbitrated before the PA-MGB.
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The Court in Gonzales did not simply reject the complaint
on the ground that the issue of validity of contracts per se
is non-arbitrable. The real consideration that binds the
ruling was the limitation that was placed by RA 7942 upon
the jurisdiction of PA-MGB as an arbitral body. Petitioner
may still invoke the arbitration clause of the 2005 Lease
Contract notwithstanding the fact that it assails the
validity of such contract. This is due to the doctrine of
separability.
Under said doctrine, an arbitration agreement is
considered as independent of the main contract. Being
a separate contract in itself, the arbitration agreement
may thus be invoked regardless of the possible nullity or
invalidity of the main contract. The operation of the
arbitration clause in this case is not defeated by Koppel’s
failure to file a formal “request” or application with the
MTC. In using the word “may” to qualify the act of filing a
“request” under Sec 24 of RA 9285 (Special ADR Rues)
clearly did not intend to limit invocation of an arbitration
agreement in a pending suit solely via such request. After
all, non-compliance with an arbitration agreement is a
valid defense to any offending suit and, as such, may
even be raised in an answer as provided in our ordinary
rules of procedure.
As early as in its answer with counterclaim, Koppel had
already apprised MTC of the existence of the arbitration
clause in the 2005 Lease Contract; such act is enough
valid invocation of his right to arbitrate. The fact that
petitioner and respondent already underwent through
JDR proceedings before the RTC, will not make the
subsequent arbitration between the parties unnecessary
or circuitous. The JDR system is substantially different from
arbitration proceedings. The JDR framework is based on
the processes of mediation, conciliation or early neutral
evaluation which entails the submission of a dispute
before a “JDR judge” who shall merely “facilitate
settlement” between the parties in conflict or make a
“non-binding evaluation or assessment of the chances of
each party’s case.” Thus in JDR, the JDR judge lacks the
authority to render a resolution of the dispute that is
binding upon the parties in conflict. In arbitration, on the
other hand, the dispute is submitted to an arbitrator/s—a
neutral third person or a group of thereof—who shall
have the authority to render a resolution binding upon
the parties.
ADDITIONAL NOTES FROM THE CASE:
 What is the nature of an arbitration proceeding?
A pivotal feature of arbitration as an alternative mode of
dispute resolution is that it is, first and foremost, a product
of party autonomy or the freedom of the parties to
“make their own arrangements to resolve their own
disputes.” Arbitration agreements manifest not only the
desire of the parties in conflict for an expeditious
resolution of their dispute. They also represent, if not more
so, the parties’ mutual aspiration to achieve such
resolution outside of judicial auspices, in a more
Alternative Dispute Resolution 2019 | ATTY. BATA
 ABAS, BASILISCO, BONTUYAN, CAMACHO, DOMINGO,
JOSOL, MARAVILLA, MATURAN, OBINAY and RAYA | 20

informal and less antagonistic environment under the the machineries, equipment, and facilities installed in the
terms of their choosing. Needless to state, this critical Carmona plant. KOGIES filed a Complaint for Specific
feature can never be satisfied in an ejectment case no Performance against PGSMC before the Muntinlupa City
matter how summary it may be. Regional Trial Court (RTC).

 What are the legal effects of the arbitration On May 30, 2000, the CA rendered the assailed
clause? Decision affirming the RTC Orders and dismissing the
Since there really are no legal impediments to the petition for certiorari filed by KOGIES. The CA found
application of the arbitration clause of the 2005 Contract that the RTC did not gravely abuse its discretion in
of Lease in this case, the unlawful detainer action was issuing the assailed July 23, 1998 and September 21,
1998 Orders. Moreover, the CA reasoned that
instituted in violation of such clause. Under Sec 7, RA
KOGIES’ contention that the total contract price for
9285, the instant unlawful detainer action should have
USD 1,530,000 was for the whole plant and had not been
been stayed; the petitioner and the respondent should
fully paid was contrary to the finding of the RTC that
have been referred to arbitration pursuant to the PGSMC fully paid the price of USD 1,224,000, which was
arbitration clause of the 2005 Lease Contract. The MeTC, for all the machineries and equipment. According to
however, did not do so in violation of the law—which the CA, this determination by the RTC was a factual
violation was, in turn, affirmed by the RTC and Court of finding beyond the ambit of a petition for certiorari.
Appeals on appeal. The violation by the MTC of the clear
directives under R.A. Nos. 876 and 9285 renders invalid all On the issue of the validity of the arbitration clause, the
proceedings it undertook in the ejectment case after the CA agreed with the lower court that an arbitration
filing by petitioner of its Answer with Counterclaim—the clause which provided for a final determination of the
point when the petitioner and the respondent should legal rights of the parties to the contract by arbitration
have been referred to arbitration. This case must, was against public policy.
therefore, be remanded to the MeTC and be suspended
ISSUE: WON the Arbitration clause is contrary to public
at said point. Inevitably, the decisions of the MeTC, RTC
policy.
and the Court of Appeals must all be vacated and set
aside. RULING: The arbitration clause which stipulates that
the arbitration must be done in Seoul, Korea in
accordance with the Commercial Arbitration Rules of the
KCAB and that the arbitral award is final and binding,
KOREA TECHNOLOGIES CO. LTD. VS. LERMA, ET AL.
is not contrary to public policy. This Court has
G. R. no. 143581, January 7, 2008
sanctioned the validity of arbitration clauses in a
catena of cases. In the 1957 case of Eastboard
FACTS: PGSMC and KOGIES executed a Contract
Navigation Ltd. v. Juan Ysmael and Co., Inc.,iii this
whereby KOGIES would set up an LPG Cylinder
Court had occasion to rule that an arbitration clause to
Manufacturing Plant in Carmona, Cavite. The contract
resolve differences and breaches of mutually agreed
was executed in the Philippines. On April 7, 1997, the
contractual terms is valid. In BF Corporation v. Court of
parties executed, in Korea, an Amendment for Contract
Appeals, we held that ―[i]n this jurisdiction,
No. KLP-970301 dated March 5, 1997 amending the terms
arbitration has been held valid and constitutional.
of payment. The contract and its amendment stipulated
Even before the approval on June 19, 1953 of
that KOGIES will ship the machinery and facilities
Republic Act No. 876, this Court has countenanced
necessary for manufacturing LPG cylinders for which
the settlement of disputes through arbitration.
PGSMC would pay USD 1,224,000. KOGIES would install
Republic Act No. 876 was adopted to
and initiate the operation of the plant for which
supplement the New Civil Code’s provisions on
PGSMC bound itself to pay USD 306,000 upon the
arbitration. And in LM Power Engineering
plant’s production of the 11-kg. Later PGSMC
Corporation v. Capitol Industrial Construction Groups,
entered into a Contract of Lease with Worth
Inc., we declared that:
Properties, Inc. (Worth) for use of Worth’s
5,079-square meter property with a 4,032-square meter
Being an inexpensive, speedy and amicable
warehouse building to house the LPG manufacturing
method of settling disputes, arbitration––along
plant. after the installation of the plant, the initial
with mediation, conciliation and negotiation––
operation could not be conducted as PGSMC
is encouraged by the Supreme Court. Aside
encountered financial difficulties affecting the supply of
from unclogging judicial dockets, arbitration
materials, thus forcing the parties to agree that KOGIES
also hastens the resolution of disputes,
would be deemed to have completely complied with
especially of the commercial kind. It is
the terms and conditions of the March 5, 1997 contract.
thus regarded as the ―wave of the
PGSMC informed KOGIES that PGSMC was canceling
future in international civil and commercial
their Contract dated March 5, 1997 on the ground that
disputes. Brushing aside a contractual
KOGIES had altered the quantity and lowered the
agreement calling for arbitration between the
quality of the machineries and equipment it delivered to
parties would be a step backward.
PGSMC, and that PGSMC would dismantle and transfer

Alternative Dispute Resolution 2019 | ATTY. BATA


DAR vs. UNITED PLANNERS CONSULTANTS
G.R. No. 212081 February 23, 2015
FACTS: On July 26, 1993, petitioner, through the Land
Management Bureau (LMB), entered into an Agreement
for Consultancy Services (Consultancy Agreement) with
respondent United Planners Consultants, Inc.
(respondent) in connection with the LMB' s Land
Resource Management Master Plan Project (LRMMP).
Under the Consultancy Agreement, petitioner committed
to pay a total contract price of ₱4,337,141.00, based on
a predetermined percentage corresponding to the
particular stage of work accomplished.
Respondent completed the work required, which
petitioner formally accepted .However, petitioner was
able to pay only 47% of the total contract price.
On October 1994, the Commission on Audit (COA)
released the Technical Services Office Report (TSO)
finding the contract price of the Agreement to be 84.14%
excessive. This notwithstanding, petitioner, in a letter,
acknowledged its liability to respondent and assured
payment at the soonest possible time.
For failure to pay its obligation under the Consultancy
Agreement despite repeated demands, respondent
instituted a Complaint against petitioner before the RTC
Quezon City.
Upon motion of respondent, the case was subsequently
referred to arbitration pursuant to the arbitration clause
of the Consultancy Agreement, which petitioner did not
oppose. As a result, Atty. Tadiar, Architect Alli, and (CIAC)
Accredited Arbitrator Engr. San Juan were appointed as
members of the Arbitral Tribunal (Court-referred
Arbitration).
During the preliminary conference, the parties agreed to
adopt the CIAC Revised Rules Governing Construction
Arbitration (CIAC Rules) to govern the arbitration
proceedings. They further agreed to submit their
respective draft decisions in lieu of memoranda of
arguments on or before April 21, 2010, among others.
On the due date for submission of the draft decisions,
however, only respondent complied with the given
deadline, while petitioner moved for the deferment of
the deadline which it followed with another motion for
extension of time.
In order, the Arbitral Tribunal denied petitioner’s motions
and deemed its non-submission as a waiver, but
declared that it would still consider petitioner’s draft
decision if submitted before May 7, 2010, or the expected
date of the final award’s promulgation. Petitioner filed its
draft decision only on May 7, 2010.
The Arbitral Tribunal rendered its Award in favor of
respondent, directing petitioner to pay the latter the
amount of (a) ₱2,285,089.89 representing the unpaid
progress billings, with interest at the rate of 12% per
annum from the date of finality of the Arbitral Award
upon confirmation by the RTC until fully paid; (b)
ABAS, BASILISCO, BONTUYAN, CAMACHO, DOMINGO,
JOSOL, MARAVILLA, MATURAN, OBINAY and RAYA | 21
₱2,033,034.59 as accrued interest thereon; (c)
₱500,000.00 as exemplary damages; and (d) ₱150,000.00
as attorney’s fees. It also ordered petitioner to reimburse
respondent its proportionate share in the arbitration costs
as agreed upon in the amount of ₱182,119.44.
Consequently, petitioner filed before the RTC a Motion for
Reconsideration (May 19, 2010 Motion for
Reconsideration)and a Manifestation and Motion (June
1, 2010 Manifestation and Motion), asserting that it was
denied the opportunity to be heard when the Arbitral
Tribunal failed to consider its draft decision and merely
noted its motion for reconsideration. It also denied
receiving a copy of the Arbitral Award by either
electronic or registered mail.
In an order, the RTC merely noted petitioner’s aforesaid
motions, finding that copies of the Arbitral Award appear
to have been sent to the parties by the Arbitral Tribunal,
including the OSG, contrary to petitioner’s claim. Onthe
other hand, the RTC confirmed the Arbitral Award
pursuant to Rule 11.2 (A) of the Special ADR Rules and
ordered petitioner to pay respondent the costs of
confirming the award, as prayed for, in the total amount
of ₱50,000.00. From this order, petitioner did not file a
motion for reconsideration.
Thus, respondent moved for the issuance of a writ of
execution, to which no comment/opposition was filed by
petitioner despite the RTC’s directive therefor. In an order,
the RTC granted respondent’s motion.
Petitioner moved to quash the writ of execution, positing
that respondent was not entitled to its monetary claims. It
also claimed that the issuance of said writ was premature
since the RTC should have first resolved its May 19, 2010
Motion for Reconsideration and June 1, 2010
Manifestation and Motion, and not merely noted them,
thereby violating its right to due process.
The RTC denied petitioner’s motion to quash finding no
merit on petitioner’s contention.
The CA dismissed the certiorari petition on two (2)
grounds, namely: (a) the petition essentially assailed the
merits of the Arbitral Award which is prohibited under Rule
19. of the Special ADR Rules; and (b) the petition was
filed out of time, having been filed way beyond 15 days
from notice of the RTC’s order.
ISSUE: Whether or not the CA erred in applying the
provisions of the Special ADR Rules, resulting in the
dismissal of petitioner’s special civil action for certiorari.
RULING: NO, the CA did not err in in applying the
provisions of the Special ADR Rules.
1. Republic Act No. (RA) 9285, otherwise known as the
Alternative Dispute Resolution Act of 2004,"
institutionalized the use of an Alternative Dispute
Resolution System (ADR System) in the Philippines. The
Act, however, was without prejudice to the adoption by
the Supreme Court of any ADR system as a means
of achieving speedy and efficient means of
Alternative Dispute Resolution 2019 | ATTY. BATA

resolving cases pending before all courts in the
Philippines.
Accordingly, A.M. No. 07-11-08-SC was created setting
forth the Special Rules of Court on Alternative Dispute
Resolution (referred herein as Special ADR Rules) that shall
govern the procedure to be followed by the courts
whenever judicial intervention is sought in ADR
proceedings in the specific cases where it is allowed.
Rule 1.1 of the Special ADR Rules lists down the instances
when the said rules shall apply, namely: "(a) Relief on the
issue of Existence, Validity, or Enforceability of the
Arbitration Agreement; (b) Referral to Alternative Dispute
Resolution ("ADR"); (c) Interim Measures of Protection; (d)
Appointment of Arbitrator; (e) Challenge to Appointment
of Arbitrator; (f) Termination of Mandate of Arbitrator; (g)
Assistance in Taking Evidence; (h) Confirmation,
Correction or Vacation of Award in Domestic Arbitration;
(i) Recognition and Enforcement or Setting Aside of an
Award in International Commercial Arbitration; (j)
Recognition and Enforcement of a Foreign Arbitral
Award; (k) Confidentiality/Protective Orders; and (l)
Deposit and Enforcement of Mediated Settlement
Agreements."
Notably, the Special ADR Rules do not automatically
govern the arbitration proceedings itself. A pivotal
feature of arbitration as an alternative mode of dispute
resolution is that it is a product of party autonomy or the
freedom of the parties to make their own arrangements
to resolve their own disputes. Thus, Rule 2.3 of the Special
ADR Rules explicitly provides that "parties are free to
agree on the procedure to be followed in the conduct of
arbitral proceedings. Failing such agreement, the arbitral
tribunal may conduct arbitration in the manner it
considers appropriate."
In the case at bar, the Consultancy Agreement
contained an arbitration clause. Hence, respondent,
after it filed its complaint, moved for its referral to
arbitration which was not objected to by petitioner. By its
referral to arbitration, the case fell within the coverage of
the Special ADR Rules. However, with respect to the
arbitration proceedings itself, the parties had agreed to
adopt the CIAC Rules before the Arbitral Tribunal in
accordance with Rule 2.3 of the Special ADR Rules.
The Arbitral Tribunal rendered the Arbitral Award in favor
of respondent. Under Section 17.2, Rule 17 of the CIAC
Rules, no motion for reconsideration or new trial may be
sought, but any of the parties may file a motion for
correction of the final award, which shall interrupt the
running of the period for appeal, based on any of the
following grounds, to wit:
a. an evident miscalculation of figures, a typographical
or arithmetical error;
b. an evident mistake in the description of any party,
person, date, amount, thing or property referred to in
the award;
c. where the arbitrators have awarded upon a matter
not submitted to them, not affecting the merits of the
decision upon the matter submitted;
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d. where the arbitrators have failed or omitted to
resolve certain issue/s formulated by the parties in
the Terms of Reference (TOR) and submitted to them
for resolution, and
e. where the award is imperfect in a matter of form not
affecting the merits of the controversy.
The motion shall be acted upon by the Arbitral Tribunal or
the surviving/remaining members.
Moreover, the parties may appeal the final award to the
CA through a petition for review under Rule 43 of the
Rules of Court.
Records do not show that any of the foregoing remedies
were availed of by petitioner. Instead, it filed the May 19,
2010 Motion for Reconsideration of the Arbitral Award,
which was a prohibited pleading under the Section 17.2
Rule 17 of the CIAC Rules, thus rendering the same final
and executory.
Accordingly, the case was remanded to the RTC for
confirmation proceedings pursuant to Rule 11 of the
Special ADR Rules which requires confirmation by the
court of the final arbitral award. This is consistent with
Section 40, Chapter 7 (A) of RA 9285 which similarly
requires a judicial confirmation of a domestic award to
make the same enforceable:
SEC. 40. Confirmation of Award.– The confirmation of a
domestic arbitral award shall be governed by Section 23
of R.A. 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 confirmation of a domestic award shall be made by
the regional trial court in accordance with the Rules of
Procedure 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.
During the confirmation proceedings, petitioners did not
oppose the RTC’s confirmation by filing a petition to
vacate the Arbitral Award under Rule 11.2 (D) of the
Special ADR Rules. Neither did it seek reconsideration of
the confirmation order in accordance with Rule 19.1 (h)
thereof. Instead, petitioner filed only on September 10,
2012 a special civil action for certiorari before the CA
questioning the propriety of (a) the RTC Order dated
September 12, 2011 granting respondent’s motion for
issuance of a writ of execution, and (b) Order dated July
9,2012 denying its motion to quash. Under Rule 19.26 of
the Special ADR Rules, "[w]hen the Regional Trial Court, in
making a ruling under the Special ADR Rules, has acted
without or in excess of its jurisdiction, or with grave abuse
of discretion amounting to lack or excess of jurisdiction,
and there is no appeal or any plain, speedy, and
adequate remedy in the ordinary course of law, a party
may file a special civil action for certiorari to annul
or set aside a ruling of the Regional Trial Court."
Alternative Dispute Resolution 2019 | ATTY. BATA

Thus, for failing to avail of the foregoing remedies before
resorting to certiorari, the CA correctly dismissed its
petition.
2. Note that the special civil action for certiorari
described in Rule 19.26 above may be filed to annul or
set aside the following orders of the Regional Trial Court.
a. Holding that the arbitration agreement is in
existent, invalid or unenforceable;
b. Reversing the arbitral tribunal’s preliminary
determination upholding its jurisdiction;
c. Denying the request to refer the dispute to
arbitration;
d. Granting or refusing an interim relief;
e. Denying a petition for the appointment of an
arbitrator;
f. Confirming, vacating or correcting a domestic
arbitral award;
g. Suspending the proceedings to set aside an
international commercial arbitral award and
referring the case back to the arbitral tribunal;
h. Allowing a party to enforce an international
commercial arbitral award pending appeal;
i. Adjourning or deferring a ruling on whether to set
aside, recognize and or enforce an international
commercial arbitral award;
j. Allowing a party to enforce a foreign arbitral
award pending appeal; and
k. Denying a petition for assistance in taking
evidence.
Further, Rule 19.7 of the Special ADR Rules precludes a
party to an arbitration from filing a petition for certiorari
questioning the merits of an arbitral award.
If so falling under the above-stated enumeration, Rule
19.28 of the Special ADR Rules provide that said certiorari
petition should be filed "with the [CA] within fifteen (15)
days from notice of the judgment, order or resolution
sought to be annulled or set aside. No extension of time
to file the petition shall be allowed."
In this case, petitioner asserts that its petition is not
covered by the Special ADR Rules (particularly, Rule 19.28
on the 15-day reglementary period to file a petition for
certiorari) but by Rule 65 of the Rules of Court
(particularly, Section 4 thereof on the 60-day
reglementary period to file a petition for certiorari), which
it claimed to have suppletory application in arbitration
proceedings since the Special ADR Rules do not explicitly
provide for a procedure on execution. The position is
untenable.
Execution is fittingly called the fruit and end of suit and
the life of the law. A judgment, if left unexecuted, would
be nothing but an empty victory for the prevailing party.
While it appears that the Special ADR Rules remain silent
on the procedure for the execution of a confirmed
arbitral award, it is the Court’s considered view that the
Rules’ procedural mechanisms cover not only aspects of
confirmation but necessarily extend to a confirmed
award’s execution in light of the doctrine of necessary
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JOSOL, MARAVILLA, MATURAN, OBINAY and RAYA | 23
implication which states that every statutory grant of
power, right or privilege is deemed to include all
incidental power, right or privilege.
As the Court sees it, execution is but a necessary incident
to the Court’s confirmation of an arbitral award. To
construe it otherwise would result in an absurd situation
whereby the confirming court previously applying the
Special ADR Rules in its confirmation of the arbitral award
would later shift to the regular Rules of Procedure come
execution. Irrefragably, a court’s power to confirm a
judgment award under the Special ADR Rules should be
deemed to include the power to order its execution for
such is but a collateral and subsidiary consequence that
may be fairly and logically inferred from the statutory
grant to regional trial courts of the power to confirm
domestic arbitral awards.
All the more is such interpretation warranted under the
principle of ratio legis est anima which provides that a
statute must be read according to its spirit or intent, for
what is within the spirit is within the statute although it is
not within its letter, and that which is within the letter but
not within the spirit is not within the statute. Accordingly,
since the Special ADR Rules are intended to achieve
speedy and efficient resolution of disputes and curb a
litigious culture, every interpretation thereof should be
made consistent with these objectives.
Thus, with these principles in mind, the Court so
concludes that the Special ADR Rules, as far as
practicable, should be made to apply not only to the
proceedings on confirmation but also to the confirmed
award’s execution.
Further, let it be clarified that – contrary to petitioner’s
stance – resort to the Rules of Court even in a suppletory
capacity is not allowed. Rule 22.1 of the Special ADR
Rules explicitly provides that "[t]he provisions of the Rules
of Court that are applicable to the proceedings
enumerated in Rule 1.1 of these Special ADR Rules have
either been included and incorporated in these Special
ADR Rules or specifically referred to herein." Besides, Rule
1.13 thereof provides that "[i]n situations where no
specific rule is provided under the Special ADR Rules, the
court shall resolve such matter summarily and be guided
by the spirit and intent of the Special ADR Rules and the
ADR Laws."
As above-mentioned, the petition for certiorari permitted
under the Special ADR Rules must be filed within a period
of fifteen (15) days from notice of the judgment, order or
resolution sought to be annulled or set aside. Hence,
since petitioner’s filing of its certiorari petition in CA-G.R.
SP No. 126458 was made nearly two months after its
receipt of the RTC’s Order dated July 9, 2012,or on
September 10, 2012, said petition was clearly dismissible.
3. Discounting the above-discussed procedural
considerations, the Court still finds that the certiorari
petition had no merit.
Indeed, petitioner cannot be said to have been
denied due process as the records undeniably
Alternative Dispute Resolution 2019 | ATTY. BATA
 ABAS, BASILISCO, BONTUYAN, CAMACHO, DOMINGO,
JOSOL, MARAVILLA, MATURAN, OBINAY and RAYA | 24

show that it was accorded ample opportunity to

ventilate its position. There was clearly nothing out of line
when the Arbitral Tribunal denied petitioner’s motions for
extension to file its submissions having failed to show a
valid reason to justify the same or in rendering the Arbitral
Award sans petitioner’s draft decision which was filed
only on the day of the scheduled promulgation of final
award on May 7, 2010.83 The touchstone of due process
is basically the opportunity to be heard. Having been
given such opportunity, petitioner should only blame itself
for its own procedural blunder.

On this score, the petition for certiorari in CA-G.R. SP No.

126458 was likewise properly dismissed.

Nevertheless, while the Court sanctions the dismissal by

the CA of the petition for certiorari due to procedural
infirmities, there is a need to explicate the matter of
execution of the confirmed Arbitral Award against the
petitioner, a government agency, in the light of
Presidential Decree No. (PD) 1445 otherwise known as the
"Government Auditing Code of the Philippines." Section
26 of PD 1445 expressly provides that execution of money
judgment against the Government or any of its
subdivisions, agencies and instrumentalities is within the
primary jurisdiction of the COA,

From the foregoing, the settlement of respondent’s

money claim is still subject to the primary jurisdiction of
the COA despite finality of the confirmed arbitral award
by the RTC pursuant to the Special ADR Rules. Hence, the
respondent has to first seek the approval of the COA of
their monetary claim. This appears to have been
complied with by the latter when it filed a "Petition for
Enforcement and Payment of Final and Executory Arbitral
Award" before the COA. Accordingly, it is now the COA
which has the authority to rule on this latter petition.

Alternative Dispute Resolution 2019 | ATTY. BATA