DOMESTIC

ARBITRATION
By:
Sopongco, Coleen
San Pedro, Maria Criselda
Terrago, Nerissa
Ventura, Christine Liezel
Vergara, Miggy
 Introduction
Arbitration is defined in
Section 3(d) of the ADR Act as a
voluntary dispute resolution process
in which one or more arbitrators,
appointed in accordance with the
agreement of the parties or the rules
promulgated pursuant to this Act
resolve a dispute by rendering an
award.
 Kinds of Arbitration
1. International or Domestic Arbitration
International arbitration is governed
by Model Law on International Commercial
Arbitration pursuant to Section 19 of the ADR
Act.
Domestic Arbitration shall continue to
be governed by R.A 876, as amended by the
ADR Act.
A highly specialized form of domestic
dispute resolution limited to construction
disputes shall continue to be governed by the
Construction Industry Arbitration Law,
Executive Order No. 1008 (1985).
 Kinds of Arbitration
2. Foreign or Domestic Arbitration

A foreign arbitration is one where the

agreed or fixed place of arbitration is in a
foreign country, whereas in domestic
arbitration, the agreed place of arbitration is
the Philippines.
 Kinds of Arbitration
3. Voluntary or Compulsory Arbitration

A voluntary arbitration is a referral of a

dispute by the parties, pursuant to their
arbitration agreement, to an impartial third
person for a final and binding resolution.

Compulsory arbitration (arbitration

required for labor disputes) is a system whereby
the parties are compelled by law to submit their
dispute to an impartial third person for
arbitration.
 Kinds of Arbitration
4. Arbitrators may be binding and non-
binding

It is binding if it results in an award

which is subject to confirmation and when
confirmed by a court, is subject to enforcement
like any judgment of the court.

It is non-binding if the award, by

agreement of the parties or by law, is not
subject to confirmation and enforcement.
Objective of Arbitration
The basic objective of arbitration
is to provide speedy and inexpensive method of
settling disputes by allowing parties to avoid
the formalities, delay, expense and aggravation
which commonly accompany ordinary litigation,
especially litigation which goes through the
entire hierarchy of courts.

ADR enables the parties to resolve their

disputes amicably in a manner that is simple,
speedy, less confrontational, and more
productive of goodwill and lasting relationships.
Objective of Arbitration
The basic objective of arbitration
is to provide speedy and inexpensive method of
settling disputes by allowing parties to avoid
the formalities, delay, expense and aggravation
which commonly accompany ordinary litigation,
especially litigation which goes through the
entire hierarchy of courts.

ADR enables the parties to resolve their

disputes amicably in a manner that is simple,
speedy, less confrontational, and more
productive of goodwill and lasting relationships.
 DOMESTIC
ARBITRATION
DOMESTIC ARBITRATION
Domestic arbitration shall continue to be
governed by R.A No. 876, otherwise known as
“The Arbitration Law”, as amended by the ADR
Act. Articles 8, 10, 11, 12, 13, 14, 18 and 19,
and 29 to 32 of the Model law and Sections 22-
31 of the ADR Act are specifically applicable to
domestic arbitration.

In the absence of a specific applicable

provision, all other rules applicable to
international commercial arbitration may be
applied in a suppletory manner to domestic
arbitration.
 DOMESTIC ARBITRATION
Articles under the Model Law:
Art. 8 - Arbitration agreement and
substantive claim before court
Art. 10 - Number of arbitrators
Art. 11 - Appointment of arbitrators
Art. 12 - Grounds for challenge
Art. 13 - Challenge procedure
Art. 14 - Failure or impossibility to act
Art. 18 - Equal treatment of parties
Art. 19 - Determination of rules of
procedure
Art. 29 - Decision-making by panel of
arbitrators
Art. 30 – Settlement
Art. 31 - Form and contents of award
Art. 32 - Termination of proceedings
 DOMESTIC ARBITRATION
Sections under the Arbitration Act:
Sec. 22 – Legal Representation in
International Arbitration
Sec. 23 – Confidential of Arbitration
Proceedings
Sec. 24 - Referral to Arbitration
Sec. 25 - Interpretation of the Act
Sec. 26 - Meaning of "Appointing Authority”
Sec. 27 - What Functions May be
Performed by Appointing Authority
Sec. 28 - Grant of Interim Measure of Protection
Sec. 29 - Further Authority for Arbitrator to Grant Interim
Measure of Protection
Sec. 30 -Place of Arbitration
Sec. 31 - Language of the Arbitration
 DOMESTIC ARBITRATION
Arbitration Agreement is a Contract
Arbitration agreements are contracts
and must be interpreted under the accepted
rules of contract law. A contract need not be
contained in a single writing. It may be collected
from several different writings while do not
conflict with each other and which, when
connected show the parties, subject matter,
terms and consideration, as in contracts entered
into by correspondence.
 DOMESTIC ARBITRATION
Two Kinds of Arbitration Agreement
Under R.A. No. 876, Section 2, two
kinds of arbitration agreements are
contemplated, namely:
(a) An arbitration agreement usually
embedded in a contract in effect
providing that any future controversy arising
from such contract shall be subject to
settlement by arbitration; and
(b) an arbitration agreement to submit an
existing dispute to arbitration.

The first is known as a compromissoire

and the second, a compromis.
 DOMESTIC ARBITRATION
Form of Arbitration Agreement
R.A. 876, Section 4 requires that
an arbitration agreement or a submission
to arbitration shall be in writing and
subscribed by the party sought to be
charged or by his lawful agent.

If the arbitration agreement or

submission to arbitration is signed by
an agent, the law requires that the
agent be equipped with a special
power.
 DOMESTIC ARBITRATION
Who may be parties?
Under R.A. 876, Section 2, „two or
more persons or parties may submit to
the arbitration of one or more arbitrators
any controversy existing between them
at the time of the submission and which may be
the subject of an action, or the parties to
any contract may in such contract agree to
settle by arbitration a controversy thereafter
arising between them.
 DOMESTIC ARBITRATION
Who may be parties?
1. One of the parties is an infant or
a person judicially declared incompetent.
Rule: the appropriate court having jurisdiction
is required to approve a petition for permission
to submit the controversy to arbitration by the
general guardian ad litem of the infant
or of the incompetent.

2. A person capable of entering into a submission or contract

has knowingly entered into the same with a person incapable
of so doing.
Rule: the objection on the ground of incapacity can be taken
only in behalf of the person so incapacitated.
 DOMESTIC ARBITRATION
Waiver of Right to Object
The following constitutes a waiver of right to
object:
(a) Non-compliance with any
non-mandatory provision of the rules governing
domestic arbitration or any requirement under
the arbitration agreement when:
• He/she/it knows of such non-compliance;
and
• Proceeds with the arbitration without stating his/her/its
objections to such non-compliance without undue delay or if
a time-limit is provided therefor, within such period of time.
 DOMESTIC ARBITRATION
Waiver of Right to Object
(b) If an act is required or allowed to be
done under Chapter of the IRR of ADR Act, unless
The applicable rule or the agreement of the parties
Provides a different period for the act to be done,
it shall be done within a period of 30 days from
The date when such act could have been done
With legal effect.
 DOMESTIC ARBITRATION
Who may be appointed s arbitrator?
 Must be of legal age, in full enjoyment of
his/her civil rights and knows how to read
and write.
 Must not be related by blood or marriage
within the sixth degree to either party to the
controversy.
 Must have no current or even past financial,
fiduciary or other interest in the controversy or cause to be
decided or in the result of the proceeding, or has any
personal bias.

No person shall select as an arbitrator any person to act as

his/her champion or to advocate his/her cause.
 DOMESTIC ARBITRATION
Institution of Arbitration Of a Dispute
 Number of Arbitrators
Single Arbitrator - the demand shall be set forth
a specific time within which the parties shall agree
upon such arbitrator.
Three arbitrators - one to be selected by each
party, the demand shall name the arbitrator
appointed by the party making the demand;
and shall require that the party upon whom the
demand is made shall within thirty days after receipt thereof
advise in writing the party making such demand of the name
of the person appointed by the second party; such notice shall
require that the two arbitrators so appointed must agree upon
the third arbitrator within thirty days from the date of such
notice.
 DOMESTIC ARBITRATION
Matters Subject to Arbitration
Any controversy whether contracted or
contractual, may be submitted to arbitration. Such
submission or contract may include questions
arising out of valuations, appraisals or other
controversies which may be collateral, incidental,
precedent or subsequent to any issue between
the parties.
 DOMESTIC ARBITRATION
Matters NOT Subject to Arbitration
Labor disputes, as well as certain types
of disputes which are required to be submitted to
other methods of settlement may not
be submitted to arbitration under
Arbitration Law.
These are:
(1) Under the Mining Act, certain disputes are
to be settled by the “Panel of Arbitrators”.
(2) Under the Consumers Act of the Philippines by
the arbitration officer.
(3) Under HLURB Resolution No. R-586, series of 1996,
by “arbiters of the Housing and Land Use Regulatory Board”.
 DOMESTIC ARBITRATION
Matters NOT Subject to Arbitration
(4)The Civil Code of the Philippines excludes the
following questions from being submitted
to arbitration;
a. the civil status of persons;
b. the validity of a marriage or a legal separation;
c. any ground for legal separation;
d. future support;
e. the jurisdiction of courts; and
f. future legitime
 DOMESTIC ARBITRATION
Institution of Arbitration Of a Dispute
R.A. 876, Section 5 makes a distinction in the
procedure to be followed in instituting an
arbitration of a dispute between a case where
there is an arbitration agreement to
submit future disputes to arbitration
which is covered by paragraphs (a)
and (b) of this section, and one where
the agreement is to submit an
existing controversy to arbitration which is covered by
paragraph (d) of the same section. A submission, it requires its
filing with the Clerk of the Regional Trial Court having
jurisdiction of the submission agreement.
 DOMESTIC ARBITRATION
Institution of Arbitration Of a Dispute
(a) In the case of a contract to arbitrate
future controversies by the service by either party
upon the other of a demand for arbitration in
accordance with the contract. Such demand shall
be set forth the nature of the controversy,
the amount involved, if any, and the relief sought,
together with a true copy of the contract
providing for arbitration.

Requirement:
 The demand shall be served upon any party either in person
or by registered mail.
DOMESTIC ARBITRATION
Institution of Arbitration Of a Dispute
The NOTICE OF ARBITRATION under
the UNCITRAL Arbitration shall include
the following:
(a) A demand that the dispute
be referred to arbitration;
(b) The names and addresses of
the parties;
(c) A reference to the arbitration clause
or the separate arbitration agreement that is invoked;
(d) A reference to the contract out of or in relation to
which the dispute arises;
(e) The general nature of the claim and an indication
of the amount involved if any;
DOMESTIC ARBITRATION
Institution of Arbitration Of a Dispute
(f) The relief or remedy sought;
(g) A proposal as to the number of
arbitrators (i.e., one or three) if the parties
have not previously agreed thereon.
 DOMESTIC ARBITRATION
Institution of Arbitration Of a Dispute
(b) In the event that one party defaults in
answering the demand, the aggrieved party may
file with the Clerk of the Court of First Instance having
jurisdiction over the parties, a copy of the
demand for arbitration under the contract to
arbitrate, with a notice that the original demand
was sent by registered mail or delivered in
person to the party against whom the claim is
asserted. Such demand shall set forth the nature of the
controversy, the amount involved, if any, and the relief sought,
and shall be accompanied by a true copy of the contract
providing for arbitration.
 DOMESTIC ARBITRATION
Institution of Arbitration Of a Dispute
(c) In the case of the submission of an
existing controversy by the filing with the
Clerk of the Court of First Instance having
jurisdiction, of the submission agreement,
setting forth the nature of the controversy, and
the amount involved, if any. Such submission
may be filed by any party and shall be duly
executed by both parties.

(d) In the event that one party neglects, fails or refuses to

arbitrate under a submission agreement, the aggrieved party
shall follow the procedure prescribed in subparagraphs (a) and
(b) of this section.
 DOMESTIC ARBITRATION
Institution of Arbitration Of a Dispute
(c) In the case of the submission of an
existing controversy by the filing with the
Clerk of the Court of First Instance having
jurisdiction, of the submission agreement,
setting forth the nature of the controversy, and
the amount involved, if any. Such submission
may be filed by any party and shall be duly
executed by both parties.

(d) In the event that one party neglects, fails or refuses to

arbitrate under a submission agreement, the aggrieved party
shall follow the procedure prescribed in subparagraphs (a) and
(b) of this section.
 DOMESTIC ARBITRATION
Conduct of Arbitral Proceedings
(1) Equal treatment of Parties
(2) Determination of Rules of Procedure
(2.1) The parties are free to agree on the
the procedure to be followed by
the arbitral tribunal in conducting
proceedings subject to the
provisions of ADR Act.
(2.2) Failing such agreement, the arbitral
tribunal may subject to the provision of ADR Act
and conduct the arbitration in such a manner as it
considers appropriate.
 DOMESTIC ARBITRATION
Conduct of Arbitral Proceedings
(3) Place of Arbitration
(3.1) The parties are free to agree on the
place of arbitration.
(3.2) Metro Manila
(3.3) Members of the arbitral tribunal
may designate a place it considers
appropriate, unless
otherwise agreed by the parties.
(4) Language
(4.1) The parties are free to agree on the language or
languages to be used in the arbitral proceedings.
Failing such agreement, the language to be used shall
be English or Filipino.
 DOMESTIC ARBITRATION
Conduct of Arbitral Proceedings
(5) Statement of Claim
The Statement of Claim is equivalent to a
formal complaint under the Rules of Court and may
Be filed after the appointment of the
arbitrator or arbitrators. This
shall include the following particulars:
(a) The name and addresses
of the parties;
(b) A statement of facts supporting the claim;
(c) The points at issue; and
(d) The relief or remedy sought.
 DOMESTIC ARBITRATION
Conduct of Arbitral Proceedings
(5) Statement of Claim
The Statement of Claim is equivalent to a
formal complaint under the Rules of Court and may
Be filed after the appointment of the
arbitrator or arbitrators. This
shall include the following particulars:
(a) The name and addresses
of the parties;
(b) A statement of facts supporting the claim;
(c) The points at issue; and
(d) The relief or remedy sought.
 DOMESTIC ARBITRATION
Conduct of Arbitral Proceedings
(6) Fees and Costs
The following are the rules:
(a) The fees of the arbitrators shall be
agreed upon by the parties and the arbitrator/s
in writing prior to arbitration.
(b) The parties shall be responsible for
the payment of the administrative fees of an
arbitration institution and the cost of arbitration.
(c) The arbitral tribunal shall fix the costs of arbitration
in its award.
(d) The fees of the arbitral tribunal shall be reasonable
in amount taking into account the amount in dispute, the
complexity of the subject matter, the time spend by the
arbitrators and other relevant circumstances of the case.
 DOMESTIC ARBITRATION
Conduct of Arbitral Proceedings
Termination of Proceedings
(a) The arbitration proceedings are terminated by
the final award or by an order of the arbitral tribunal
(b) The arbitral tribunal shall issue an order for
the termination of the arbitration proceedings
when:
(i) The claimant withdraws his claim
(ii) The parties agree to terminate the proceedings
(iii) The arbitral tribunal finds it unnecessary or
impossible
(iv) The required fees are not paid
DOMESTIC ARBITRATION
Relevant Cases