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REPUBLIC ACT NO.876 AN ACT TO AUTHORIZE THE MAKING OF ARBITRATION AND SUBMISSION AGREEMENTS, TO PROVIDE FOR THE APPOINTMENT OF ARBITRATORS AND THE PROCEDURE FOR ARBITRATION IN CIVIL CONTROVERSIES, AND FOR OTHER PURPOSES Section 1. Short Title. - This Act shall be known as "The Arbitration Law." Section 2. Persons and matters subject to arbitration. - 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. Such submission or contract shall be valid, enforceable and irrevocable, save upon such grounds as exist at law for the revocation of any contract. Such submission or contract may include question arising out of valuations, appraisals or other controversies which may be collateral, incidental, precedent or subsequent to any issue between the parties. A controversy cannot be arbitrated where one of the parties to the controversy is an infant, or a person judicially declared to be incompetent, unless the appropriate court having jurisdiction approve a petition for permission to submit such controversy to arbitration made by the general guardian or guardian ad litem of the infant or of the incompetent. But where a person capable of entering into a submission or contract has knowingly entered into the same with a person incapable of so doing, the objection on the ground of incapacity can be taken only in behalf of the person so incapacitated. Section 3. Controversies or cases not subject to the provisions of this Act. This Act shall not apply to controversies and to cases which are subject to the jurisdiction of the Court of Industrial Relations or which have been submitted to it as provided by Commonwealth Act Numbered One hundred and three, as amended. Section 4. Form of arbitration agreement. - A contract to arbitrate a controversy thereafter arising between the parties, as well as a submission to arbitrate an existing controversy shall be in writing and subscribed by the party sought to be charged, or by his lawful agent. The making of a contract or submission for arbitration described in section two hereof, providing for arbitration of any controversy, shall be deemed a consent of the parties to the jurisdiction of the Court of First Instance of the province or city where any of the parties resides, to enforce such contract or submission. Section 5. Preliminary procedure. - An arbitration shall be instituted by: (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. The demand shall be served upon any party either in person or by registered mail. In the event that the contract between the parties provides for the appointment of a single arbitrator, the demand shall be set forth a specific time within which the parties shall agree upon such arbitrator. If the contract between the parties provides for the appointment of 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 fifteen 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 ten days from the date of such notice. (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. (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. Section 6. Hearing by court. - A party aggrieved by the failure, neglect or refusal of another to perform under an agreement in writing providing for arbitration may petition the court for an order directing that such arbitration proceed in the manner provided for in such agreement. Five days notice in writing of the hearing of such application shall be served either personally or by registered mail upon the party in default. The court shall hear the parties, and upon being satisfied that the making of the agreement or such failure to comply therewith is not in issue, shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement. If the making of the agreement or default be in issue the court shall proceed to summarily hear such issue. If the finding be that no agreement in writing providing for arbitration was made, or that there is no default in the proceeding thereunder, the proceeding shall be dismissed. If the finding be that a written provision for arbitration was made and there is a default in proceeding thereunder, an order shall be made summarily directing the parties to proceed with the arbitration in accordance with the terms thereof. The court shall decide all motions, petitions or applications filed under the provisions of this Act, within ten days after such motions, petitions, or applications have been heard by it. Section 7. Stay of civil action. - If any suit or proceeding be brought upon an issue arising out of an agreement providing for the arbitration thereof, the court in which such suit or proceeding is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration, shall stay the action or proceeding until an arbitration has been had in accordance with the terms of the agreement: Provided, That the applicant, for the stay is not in default in proceeding with such arbitration. Section 8. Appointment of arbitrators. - If, in the contract for arbitration or in the submission described in section two, provision is made for a method of naming or appointing an arbitrator or arbitrators, such method shall be followed; but if no method be provided therein the Court of First Instance shall designate an arbitrator or arbitrators. 1 unless the time so fixed is extended by the written agreement of the parties to the submission or contract or their attorneys. The arbitrator or arbitrators shall have the power at any time. Oath of arbitrators. Arbitrators shall have the power to administer the oaths to all witnesses requiring them to tell the whole truth and nothing but the truth in any testimony which they may give in any arbitration hearing. Section 12.The arbitrators may be challenged only for the reasons mentioned in the preceding section which may have arisen after the arbitration agreement or were unknown at the time of arbitration.Arbitrators shall have the power to require any person to attend a hearing as a witness. before rendering the award. No person appointed to served as an arbitrator shall be related by blood or marriage within the sixth degree to either party to the controversy. Persons having a direct interest in the controversy which is the subject of arbitration shall have the right to attend any hearing. in the following instances: (a) If the parties to the contract or submission are unable to agree upon a single arbitrator. (e) The court shall. . as the case may be. a person appointed to serve as an arbitrator shall discover any circumstances likely to create a presumption of bias. fails to be present at such hearing or fails to obtain an adjournment thereof. or (b) to declare the office of such arbitrator vacant. While the challenging incident is discussed before the court. but an award by the majority of them is valid unless the concurrence of all of them is expressly required in the submission or contract to arbitrate. The hearing may proceed in the absence of any party who. set a time and place for the hearing of the matters submitted to them. otherwise. or. after appointment but before or during hearing. arbitrators must be sworn. adjournment may be ordered by the arbitrators upon their own motion only at the hearing and for good and sufficient cause. faithfully and fairly to hear and examine the matters in controversy and to make a just award according to the best of their ability and understanding. In case of declination or the failure of an arbitrator or arbitrators to duly accept their appointments the parties or the court. Arbitrators may also require the retirement of any witness during the testimony of any other witness. and must cause notice thereof to be given to each of the parties. the selection or appointment must be in writing. by any officer authorized by law to administer an oath. Any such vacancy shall be filled in the same manner as the original appointment was made.Subject to the terms of the submission or contract. Appointment of additional arbitrators. but the attendance of any other person shall be at the discretion of the arbitrators. the challenging party may renew the challenge before the Court of First Instance of the province or city in which the challenged arbitrator. . resides. Challenge of arbitrators. No party shall select as an arbitrator any person to act as his champion or to advocate his cause. Section 14. They shall have the power to subpoena witnesses and documents when the relevancy of the testimony and the materiality thereof has been demonstrated to the arbitrators. according to the importance of the controversy involved in any of the preceding cases in which the agreement is silent as to the number of arbitrators. or appointed by one party to the contract and by the proper Court. Any party desiring to be represented by counsel shall notify the other party or parties of such intention at least five days prior to the hearing. or (c) If either party to the contract fails or refuses to name his arbitrator within fifteen days after receipt of the demand for arbitration. shall fail to agree upon or to select the third arbitrator. shall proceed to appoint a substitute or substitutes for the arbitrator or arbitrators who decline or failed to accept his or their appointments. or a practicing attorney-at-law. may select or appoint a person as an additional arbitrator. The arbitrators shall require the other party to submit such evidence as they may require for making an award. Subpoena and subpoena duces tecum. This oath shall be required of every witness before any of his testimony is heard. Section 10. . No one other than a party to said arbitration.The Court of First Instance shall appoint an arbitrator or arbitrators. fiduciary or other interest in the controversy or cause to be decided or in the result of the proceeding. Thereafter the parties may agree in writing: (a) to waive the presumptive disqualifying circumstances. Section 11. which might prejudice the right of any party to a fair and impartial award. Section 9. Section 13. The hearing can be postponed or adjourned by the arbitrators only by agreement of the parties. or unless the parties have continued with the arbitration without objection to such adjournment. any of them. Procedure by arbitrators. after due notice. (f) Arbitrators appointed under this section shall either accept or decline their appointments within seven days of the receipt of their appointments. An award shall not be made solely on the default of a party. or a person in the regular employ of such party duly authorized in writing by said party. as the case may be.Any person appointed to serve as an arbitrator must be of legal age. The challenge shall be made before them. or has any personal bias. the hearing or arbitration shall be suspended. . in its discretion appoint one or three arbitrators. in full-enjoyment of his civil rights and know how to read and write. All of the arbitrators appointed in any controversy must attend all the hearings in that matter and hear all the allegations and proofs of the parties.Before hearing any testimony. No adjournment shall extend the hearing beyond the day fixed in the submission or contract for rendering the award. without prejudice to the 2 . If they do not yield to the challenge. and when payment of the cost thereof is assumed by such party or parties.Where a submission or contract provides that two or more arbitrators therein designated or to be thereafter appointed by the parties. Such additional arbitrator must sit with the original arbitrators upon the hearing. . and his successor has not been appointed in the manner in which he was appointed. Qualifications of arbitrators. if there be more than one. shall be permitted by the arbitrators to represent before him or them any party to the arbitration. No person shall serve as an arbitrator in any proceeding if he has or has had financial. within five days after appointment if the parties to the controversy reside within the same city or province. and it shall be continued immediately after the court has delivered an order on the challenging incident. or (d) If the arbitrators appointed by each party to the contract. The arbitrators shall arrange for the taking of a stenographic record of the testimony when such a record is requested by one or more parties. or (b) If an arbitrator appointed by the parties is unwilling or unable to serve. the arbitrator shall immediately disclose such information to the parties. . If. if any are specified therein. or within fifteen days after appointment if the parties reside in different provinces. or which he believes might disqualify him as an impartial arbitrator. are arbitrators selected as prescribed herein must. Form and contents of award. settled their dispute. or (c) That the arbitrators were guilty of misconduct in refusing to postpone the hearing upon sufficient cause shown. at the commencement of the hearing. Confirmation of award. or (b) That there was evident partiality or corruption in the arbitrators or any of them. The arbitrators shall have the power to decide only those matters which have been submitted to them. when such assessment shall be deemed necessary. he shall be deemed to have waived his right to reply. the written award of the arbitrators shall be rendered within thirty days after the closing of the hearings or if the oral hearings shall have been waived. may direct a new hearing either before the same arbitrators or before a new arbitrator or 3 . unless any party who shall have received notice thereof fails to appear. . In the event that the parties to an arbitration have. The arbitrators shall have the power to assess in their award the expenses of any party against another party. Section 21. shown at any time before the award is rendered.Unless the parties shall have stipulated by written agreement the time within which the arbitrators must render their award.Arbitration under a contract or submission shall be deemed a special proceeding.The parties to a submission or contract to arbitrate may. Notice of such motion must be served upon the adverse party or his attorney as prescribed by law for the service of such notice upon an attorney in action in the same court.At any time within one month after the award is made. Parties may also submit a written argument. the court must make an order vacating the award upon the petition of any party to the controversy when such party proves affirmatively that in the arbitration proceedings: (a) The award was procured by corruption. or if none be specified. Proceeding in lieu of hearing. but not be limited to. the court. All exhibits shall remain in the custody of the Clerk of Court during the course of the arbitration and shall be returned to the parties at the time the award is made. Hearing by arbitrators. When hearings are thus reopened the effective date for the closing of the hearings shall be the date of the closing of the reopened hearing. submit their dispute to arbitration by other than oral hearing. Section 24. the arbitrators shall declare the hearing closed unless the parties have signified an intention to file briefs. and by the sole arbitrator. . in its discretion. and wilfully refrained from disclosing such disqualifications or of any other misbehavior by which the rights of any party have been materially prejudiced. Each party shall have an opportunity to reply in writing to any other party's statements and proofs. The arbitrators shall be the sole judge of the relevancy and materiality of the evidence offered or produced. Grounds for vacating award. the arbitrators shall specifically inquire of all parties whether they have any further proof or witnesses to present.rights of any party to petition the court to take measures to safeguard and/or conserve any matter which is the subject of the dispute in arbitration. Fees of arbitration. if more than one. Briefs may filed by the parties within fifteen days after the close of the oral hearings. Each party shall provide all other parties to the dispute with a copy of all statements and documents submitted to the arbitrators. Any application to the court. . . Definite time limit for the filing of such briefs must be fixed by the arbitrators at the close of the hearing. upon good cause. and shall produce such additional evidence as the arbitrators shall require or deem necessary to an understanding and determination of the dispute. as provided in section twenty-eight. Section 17. upon the receipt of a negative reply from all parties. if any. shall have jurisdiction. This period may be extended by mutual consent of the parties. The arbitrators may make an ocular inspection of any matter or premises which are in dispute.The hearing may be reopened by the arbitrators on their own motion or upon the request of any party. or (d) That the arbitrators exceeded their powers. Section 19. as prescribed herein. . shall be filed within five days following such fifteen-day period. . Reopening of hearing. Time for rendering award. and shall not be bound to conform to the Rules of Court pertaining to evidence.In any one of the following cases. they may request of the arbitrators that such settlement be embodied in an award which shall be signed by the arbitrators. They may also submit their respective contentions to the duly appointed arbitrators in writing. fraud. ask both parties for brief statements of the issues in controversy and/or an agreed statement of facts. Then the hearing shall be closed by the arbitrations after the receipt of briefs and/or reply briefs. but such inspection shall be made only in the presence of all parties to the arbitration. that one or more of the arbitrators was disqualified to act as such under section nine hereof. if there is only one. Section 15. the Court of First Instance for the province or city in which one of the parties resides or is doing business. by written agreement. Where an award is vacated. final and definite award upon the subject matter submitted to them was not made. together with all documentary proof. . modified or corrected. or a judge thereof. or in which the arbitration was held. or other undue means. but if such party fails to do so within seven days after receipt of such statements and proofs. Arbitration deemed a special proceeding. Thereafter the parties may offer such evidence as they desire. Briefs. The parties may submit an agreed statement of facts. the reply briefs. and all negotiations towards settlement of the dispute must take place without the presence of the arbitrators.alf-itc Section 20. which shall include.Arbitrators may.The award must be made in writing and signed and acknowledged by a majority of the arbitrators. the specific performance of a contract. any party to the controversy which was arbitrated may apply to the court having jurisdiction.The fees of the arbitrators shall be fifty pesos per day unless the parties agree otherwise in writing prior to the arbitration. The terms of the award shall be confined to such disputes. or in refusing to hear evidence pertinent and material to the controversy. . Each party shall be furnished with a copy of the award. Section 16. . The arbitrators in their award may grant any remedy or relief which they deem just and equitable and within the scope of the agreement of the parties. Section 23. that a mutual. during the course of such arbitration. Upon the delivery to the arbitrators of all statements and documents. . or so imperfectly executed them. No arbitrator shall act as a mediator in any proceeding in which he is acting as arbitrator. Section 18. hereunder shall be made in manner provided for the making and hearing of motions.At the close of the hearings. this shall include a statement of facts. the arbitrators shall declare the proceedings in lieu of hearing closed. in which event such inspection shall be made in the absence of such party. and thereupon the court must grant such order unless the award is vacated. Section 22. within thirty days after the arbitrators shall have declared such proceedings in lieu of hearing closed. together with any reply statements. except as otherwise herein expressly provided. Arbitrators shall receive as exhibits in evidence any document which the parties may wish to submit and the exhibits shall be properly identified at the time of submission. of which the court specified in the contract or submission. for an order confirming the award. Death of party. Section 27. costs. Title XIV. Where the court vacates an award. (b) A verified of the award. Section 29. or an evident mistake in the description of any person. or temporary administrator of his estate. or other paper used upon the application to confirm. modify. or vacating an award. not affecting the merits of the decision upon the matter submitted. his executor or administrator. the defect could have been amended or disregarded by the court. you will not be released until you have paid the last penny. and the judge will hand you over to the guard. the court must enter judgment in the name of the original party. thing or property referred to in the award. correct. modifying. . With the progress of civilization. Costs of the application and the proceedings subsequent thereto may be awarded by the court in its discretion. Our Lord preached:Settle with your opponent quickly while on the way to court with him. .In any one of the following cases. if any. by common agreement. The magistrate or praetor. a judgment in an action. vacate. or (c) Where the award is imperfect in a matter of form not affecting the merits of the controversy. Thus. Section 28. or contract to arbitrate.The provisions of chapters one and two. as. including the judgment thereon shall be governed by the Rules of Court in so far as they are applicable. The order may modify and correct the award so as to effect the intent thereof and promote justice between the parties. and you will be thrown into prison. Otherwise. Effectivity. of the Civil Code shall remain in force. Section 26. the appointment of the arbitrator or arbitrators. and be subject to all the provisions relating to. . probity and good sense the parties in conflict reposed full trust. Amen and I say to you. referred them for decision to a private person designated by the parties. . (a) The submission. Chapter 5:25-26 wherein Our Lord Jesus Christ preached the wisdom of going to and out of court settlement. persons not specially trained but in whose morality. in Republican Rome. within which to make the award.An appeal may be taken from an order made in a proceeding under this Act. . and any provision limiting the time in which the arbitrators may make a decision shall be deemed applicable to the new arbitration and to commence from the date of the court's order. Cagayan de Oro City). arbiter and judge (judex) were synonymous. Section 25. not exceeding fifty pesos and disbursements may be awarded to the prevailing party and the payment thereof may be enforced in like manner as the payment of costs upon the motion in an action.The party moving for an order confirming. modify. . HISTORICAL BACKGROUND History tells us that amicable settlement of litigious cases is a highly efficient and effective instrument in the settlement of disputes. affidavit. If any provision of this Act shall be held invalid the remainder that shall not be affected thereby. Papers to accompany motion to confirm. (c) Each notice. modify or correct an award must be served. judgment may be entered in conformity therewith in the court wherein said application was filed. the court must make an order modifying or correcting the award. and the proceedings thereupon are the same as where a party dies after a verdict. Section 30. the proceedings may be begun or continued upon the application of. and clarifying the issues.Notice of a motion to vacate. Even the Holy Bible chronicled this mode in the Book of St. Conflict is inherent in human society so much so that much effort has been expended in devising ways of resolving it. modify or correct award: when made. or from a judgment entered upon an award through certiorari proceedings. by: Justice Myrna Dimaranan Vidal I. Approved: June 19. but such appeals shall be limited to questions of law. Judgment. Section 32. All other laws and parts of laws inconsistent with this Act are hereby repealed. . Upon confirming an award. modifying or correcting an award. The proceedings upon such an appeal. after noting down the conflicting claims of litigants. as prescribed by law for the service upon an attorney in an action.arbitrators to be chosen in the manner provided in the submission or contract for the selection of the original arbitrator or arbitrators. and if it had been a commissioner's report. Appeals. 1953 Effective Tool in Settlement of Business Disputes (Excerpts of the lecture delivered during the Chamber-to-Chamber IIDialogues with the Business Sector and Integration of Mediation in Business on 29 March 2005 at the Xavier Sports and Country Club.Where a party dies after making a submission or a contract to arbitrate as prescribed in this Act. physical fighting has been ruled out and instead.This Act shall take effect six months after its approval. The judgment shall be docketed as if it were rendered in an action. your opponent will hand you over to the judge. upon the application of any party to the controversy which was arbitrated: (a) Where there was an evident miscalculation of figures. Repealing clause. Grounds for modifying or correcting award. 4 . and a copy of each of the court upon such application. the court may issue an order extending the time within which notice of a motion to confirm. or vacate award. and each written extension of the time.Upon the granting of an order confirming. or notice to. The judgment so entered shall have the same force and effect in all respects. modify or correct the award must be served upon the adverse party or his counsel within thirty days after award is filed or delivered. Motion to vacate. and it may be enforced as if it had been rendered in the court in which it is entered. or (b) Where the arbitrators have awarded upon a matter not submitted to them. If awarded. . correcting. History dating back to the Golden Age of Rome reveals that the early judges called upon to solve private conflicts were primarily the arbiters. more pacific means have been evolved. the amount thereof must be included in the judgment. Matthew. correct or vacate such award. Section 31. where a party has died since it was filed or delivered. In any such case. shall at the time that such motion is filed with the court for the entry of judgment thereon also file the following papers with the Clerk of Court. 3%. D. the sheer weight of court litigations arising from development and growth. On the other hand. We add to the list the matter of court vacancies which Associate Justice Artemio Panganiban of the Supreme Court acknowledged in a speech delivered during the 2005 anniversary celebration of Bantay Katarungan to be the major cause of court delay. after such court has acquired jurisdiction of the dispute. mediation or conciliation. In the Philippines. Congress enacted RA 9285 or the Alternative Dispute Resolution Act (ADR Law) of 2004 which declares that it is a policy of the State to encourage and actively promote the use of Alternative Dispute Resolution systems as an important means to achieve speedy and impartial justice and declog court dockets. the Supreme Court issued S. WAYS OF ENFORCEMENT OF SETTLEMENT AGREEMENTS IN MEDIATION UNDER ADR LAW (other than Court-Annexed) 5 . It is mandatory. The term mediation used under ADR Law includes conciliation. A highly specialized form of domestic dispute resolution involving construction disputes is governed by the Construction Industry Arbitration Law. VI. V. and neglect and laxity on the part of judges. IV. while domestic arbitration shall continue to be governed by RA 876. Mediation Mediation is a dispute resolution procedure in which an impartial third party. a survey disclosed the problem of judicial delay in the Philippines as due to such factors as the misuse of the due process and the abuse of legal technicalities. mini-trial. There are no less than 739 vacancies out of 2. parties first proceed to mediation to define the dispute and settle as many issues as possible. In this kind of combination. The provisions of the ADR Law do not apply to courtannexed mediation. The mediator. FORMS OF ALTERNATIVE DISPUTE RESOLUTIONS What is Alternative Dispute Resolution? It is defined as any process or procedure used to resolve a dispute or controversy. early neutral evaluation. He serves as a clarifier and facilitator without dictating settlement. The most common is the mediationarbitration (Med-Arb). not court-annexed mediation or mandatory mediation. They cover voluntary mediation only. On 2 April 2004. or any combination thereof. Combination of Alternative Dispute Resolution A particular alternative dispute resolution may be combined with the other types of alternative dispute resolutions. acts as the referee to help the contending parties settle their dispute. C. The distinction between court-annexed mediation and court-referred mediation is important. has no authority to make the parties reach an agreement. II. there must a binding agreement of the parties to mediate their dispute. Arbitration Arbitration is defined by ADR Law as a voluntary dispute resolution process in which one or more arbitrators. It is the reference by mutual agreement or consent of the parties of a controversy or dispute to selected persons for an informal hearing and extra-judicial determination and resolution. delay and expenses of ordinary litigation. court-referred mediation is mediation ordered by a court to be conducted in accordance with an agreement of the parties when an action is prematurely commenced in violation of such agreement. 1008.or selected by them from an apposite listing (the album judicium) or else by having the arbiter chosen by lot. and then they engage in arbitration to settle issues that remain unresolved by the mediator. appointed in accordance with the agreement of the parties resolve a dispute by rendering an award. On 19 July 1953. Court-annexed mediation is defined under ADR Law as any mediation process conducted under the auspices of the court. International arbitration is governed by the Model Law on International Commercial Arbitration per Section 19 of the ADR Law. Circulars. The 1997 Rules of Civil Procedure requires the courts to consider the possibility of an amicable settlement or of a submission to alternative modes of resolution. unlike the arbitrator. Memoranda and Administrative Orders of 2001 making mediation as mandatory in certain types of civil cases. B. ARBITRATION One of the oldest forms of dispute resolution is arbitration which may be classified as either international or domestic. or a vacancy rate of 34. E. Mini-trial Mini-trial is defined under the ADR Law as a dispute resolution method in which the merits of a case are argued before a panel created by agreement of the parties comprising senior decision makers with or without the presence of a neutral third person after which the parties seek a negotiated settlement. in which a neutral third party participates to assist in the resolution of issues.C. A. CAUSES OF COURT DELAYS As far back as in 1967. The ADR Law mentions two kinds of mediation: court-annexed mediation and courtreferred mediation. LEGAL BASIS OF ALTERNATIVE DISPUTE RESOLUTION o remedy the sad state of long-drawn-out court litigations. This means that more than one third of the judicial courts are vacant. MEDIATION A more popular form of alternative dispute resolution is mediation. VII. neutral person with expertise in the subject of the dispute. EO No. being part of pre-trial. Under this law. the 1987 Constitution mandates the Supreme Court to promulgate rules that shall provide a simplified and inexpensive procedure for the speedy disposition of cases. It includes arbitration. III. This usually results when the parties insert a clause in their contract requiring a prior resort to mediation before the dispute may be brought to arbitration or filed in court. Pursuant to the constitutional provision. the dilatory tactics of lawyers.153 judicial positions in the Philippines. alternative dispute resolutions have come about to address the perennial problem of court delays. mutually chosen by the parties. Early neutral evaluation Early neutral evaluation is an alternative dispute resolution process whereby parties and their lawyers are brought together early in a pre-trial phase to present summaries of their cases and receive a non-binding assessment by an experienced. as amended by the ADR Law. This avoids the formalities. This falls within the exclusive jurisdiction of the Construction Industry Arbitration Commission (CIAC). other than by adjudication of a presiding judge of a court or an officer of a government agency. The hearing is usually held in private and the decision of the persons selected will be a substitute for a court judgment. the intervention of political pressure in court cases. the Philippine Congress enacted RA 876 otherwise known as the Arbitration Law which authorized the making of arbitration and submission agreements and provided for the appointment of arbitrators and the procedure for the arbitration in civil controversies. 3. but he may take down personal notes to guide him. reprimand. TO PROVIDE FOR THE APPOINTMENT OF ARBITRATORS AND THE PROCEDURE FOR ARBITRATION IN CIVIL CONTROVERSIES. the court shall proceed summarily to hear the petition. AND FOR OTHER PURPOSES  UNCITRAL Law – the Model Law is designed to assist States in reforming and modernizing their laws on arbitral procedure to take into account the particular features and needs of international commercial arbitration. A.A. VIII. Lawyers may attend the mediation proceedings. Order of Mediation – The trial court for civil cases with stampedmark Mediatable is mandated to issue an order during the pre-trial referring the case to the Philippine Mediation Center (PMC) unit for mediation and directing the parties to proceed immediately to the PMC unit. If no settlement is reached. ADR is already being practiced in labor proceedings under the Labor Code (NLRC. AND FOR OTHER PURPOSES  E. under the Katarungang Pambarangay Law and even in cases already filed in court. If there are obligations still to be complied with. This award shall be subject to enforcement under RA 876. ADVANTAGES OF MEDIATION 1. B. a motion to dismiss may be filed in court. Where there is a need to enforce the settlement agreement. or for abusive conduct during mediation proceedings. in accordance with such rules of procedure as may be promulgated by the Supreme Court. It covers all stages of the arbitral process from the arbitration agreement. As a result of mediation. contempt and such sanctions as are provided under the Rules of Court. The PMC will not keep a file of mediation proceedings except the report of the mediator. the trial court will impose the appropriate sanction including but not limited to censure. 85% of cases referred for court-annexed mediation had reached settlement. The mediator is mandated not to record the proceedings in any manner. It is faster – Many cases reached settlement in 1-2 sessions. IX. a petition may be filed by any of the parties with the same court. under the court-annexed mediation. a judgment may be entered which shall have the same force and effect in all respects as a judgment in an action. D. close to 100% comply with agreements reached in mediation. If the court finds the compromise agreement to be in order. there were 376 cases received by the Cagayan de Oro City Mediation Center and. 9285 – AN ACT TO INSTITUTIONALIZE THE USE OF AN ALTERNATIVE DISPUTE RESOLUTION SYSTM IN THE PHILIPPINES AND TO ESTABLISH THE OFFICE FOR ALTERNATIVE DISPUTE RESOLUTION. Selection of Mediator – The Supervisor of the PMC unit will assist the parties to select a mutually acceptable mediator from the list of available mediators. 876 – AN ACT TO AUTHORIZE THE MAKING OF ARBITRATION AND SUBMISSION AGREEMENTS. with the consent of both parties. 4. in case any or both of the parties absent himself/themselves. No. Submission of Report – The mediator will submit to the trial court status report on the progress of the proceedings at the end of the mediation period. the PMC unit was established on 18 October 2004. the case will be returned to the court of origin per a Certificate of Failed Mediation issued by the mediator. the composition and jurisdiction of the arbitral tribunal and the extent of court intervention through to the recognition and enforcement of arbitral award. It is heartening to note that as of January 2005. It reflects worldwide consensus on key aspects of international 6 . and it may be enforced as if it had been rendered in the court in which it is entered. Once granted. What la ws govern the ADR practice in the Philippines?  R. Labor Relations cases. in which case. Thereafter. judgment will be rendered in 6. but they must cooperate with the mediator to reach an amicable settlement of the case. It has only 120 cases pending. Surveys conducted after mediation sessions reveal a high level of satisfaction among disputing parties. No. 1008 – CREATING AN ARBITRATION MACHINERY IN THE CONSTRUCTION INDUSTRY OF THE PHILIPPINES  R. This is because court-annexed mediation proceedings like those voluntary mediation proceedings under the ADR Law are confidential. There are PMC units in courthouses or near the court premises to mediate the parties. Outcome of mediation – When the mediation results in realization of all claims of the plaintiff. C.A. the parties may execute a compromise agreement which will then be submitted to the court for approval. The other mode of enforcing the settlement agreement is for the parties to agree that the mediator shall become a sole arbitrator for the dispute and to treat the settlement agreement as an arbitral award. It restores relationships – Mediation is a proven way to restore relationships long torn by conflict. In Cagayan de Oro City.O. 2. 5. The order will be personally given to the parties during the pre-trial. 154 cases were settled. Conference – The mediator will hold a conference with all the parties involved in the case and will make serious attempts to settle the matter quickly. It is effective – In a recent pilot project conducted by PHILJA. out of these. COURT ANNEXED MEDIATION UNDER SUPREME COURT GUIDELINES accordance therewith.A. another joint conference may be held to consider various options proposed by the parties to the mediator to resolve the dispute. If mediation fails. and 102 cases were returned to court either because the parties did not want to mediate or the parties mediated but failed to reach an amicable settlement. hold separate caucuses with each party to enable the mediator to determine their respective real interests in the dispute. Is ADR a new c oncept in the Philippine setting? No. The enormous time and effort expended in litigation are avoided. B. The process addresses deeprooted sources of misunderstanding which are inimical to business concerns.). otherwise known as the Arbitration Law wherein the party wishing to implement the agreement may apply to the RTC for an order confirming an award. The parties may deposit the settlement agreement arrived at during the mediation process under the ADR Law with the appropriate clerk of a Regional Trial Court of the place where one of the parties resides. No. Since mediation is part of pre-trial. It is cost-saving – Unlike rigorous court proceedings. E. etc. mediation is quick and devoid of legal intricacies. the mediator may. The mediator will be considered an officer of the court. In arbitration proceedings. background or profession unless the special qualifications of a mediator are required in the mediation agreement. Also. blood or marriage within the sixth civil degree to either of the party to the controversy. amend or modify the jurisdiction of the Katarungang Pambarangay Law under R. 7160 or the Local Government Code of 1991. the information obtained shall be privileged and confidential. a petition may be filed with the at is party autonom y? Party autonomy is the freedom of parties to draw the course towards the resolution of their own conflicts. shall be in writing. No. The Arbitration proceeding if he has or had financial or fiduciary or other interest in the agreement. what is the result if the parties reach an amicable s ettlem ent? a. This may include the following: same court. the arbitrator or arbitration panel shall issue an arbitration award. the records. any party to a mediated settlement agreement. any person appointed to serve as an arbitrator must be of deposited with the Clerk of Regional Trial Court. mediator or conciliator? resulting from non-compliance. No. the court shall summarily hear the petition in accordance with the rules as may be promulgated by court.  Selection and appointment of a mediator. conciliator or an early neutral evaluator. which was In arbitration. In Mediation.  Agreement on the place of the proceedings where the ADR shall take place. is made. in which case. Where there is a need to enforce the settlement agreement. R. paid to obtain the judicial enforcement of the order. arbitrator. may upon breach thereof.7 Definition and Form of Arbitration Agreement.   Agreement on the applicable rules to apply. At any time within one month after the award for issues arbitrated. The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement attorney’s fees. If the parties fail to reach an agreement as to the venue. telex. telecommunication which provide a record of the agreement. the place of the ADR shall be any place convenient and appropriate to the parties. and thereupon the court must grant such order unless the award is vacated. the mediator shall issue a settlement agreement which may be deposited with the appropriate Clerk of Regional Trial Court in the place where the parties resides. 9285 did not repeal. iation and arbitration. modified or corrected. as defined in Articles 1. telegrams or other means of and impartial award. Who can be an arbitrator. including all expenses and reasonable In mediation. exchange of statements of claim and defense in which the existence of an agreement. In addition.6 A4. no person shall serve as an arbitrator in any rticle 4. In Arbitration. legal age. 7 . a person does not need to possess special qualifications. or in an What is the prot ection given to the parties in the ADR proc es s? In mediation proceedings. or in an exchange of statements of claim and defense in which the existence of an agreement is alleged by one party and not denied by another. any party to the controversy may apply to the court having jurisdiction for an order confirming the award. if the parties reach an agreement. An controversy or cause to be decided or in the result of proceeding. or has agreement is in writing if it is contained in a document signed by the any personal bias which might prejudice the right of any party to a fair parties or in an exchange of letters. b. No person appointed to serve as an arbitrator shall be related by agreement.A. evidence and the arbitral awards are confidential and shall not be published except with the consent of the parties or for limited purpose of disclosing to the court relevant documents in cases where resort to the court is allowed. hat are the rem edies if one of t he parties fai led to c omply wit h the agreem ent? A party who does not comply with the order shall be liable for all damages 2. and Agreement on the language to be used in the proceedings. No.A. in full enjoyment of civil rights and knows how to read and file a verified petition with the same court to enforce the said mediated write.arbitration practice having been accepted by States of all regions and the different legal or economic systems of systems of the world. RULE 4 – Jurisdiction of Arbitral Tribunal Article 4. 8 . Venue and Jurisdiction. falling such agreement. Such stipulation carries with it a waiver of the right to appeal from an arbitral award but without prejudice to judicial review by way of certiorari under Rule 65 of the Rules of Court. Competence of Arbitral Tribunal to Rule on its Jurisdiction. Article 4. (e) A party may bring a petition under this Article before the court in accordance with the Special ADR Rules. under the law of the Philippines. The notice shall be sent at least fifteen (15) days before the date set Article 4. decisions on matters beyond the scope of the submission to arbitration. or (ii) the Court finds that: (aa) the subject-matter of the dispute is not capable of settlement by arbitration under the law of the Philippines. the court shall send notice to the parties at their address of record in the arbitration. or the act to be enjoined is located. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. or (bb) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case. (b) An arbitral award may be set aside by the Regional Trial Court only If: (i) the party making the application furnishes proof that: (aa) a party to the arbitration agreement was under some incapacity . Article 4. Proceedings for recognition and enforcement of an arbitration agreement or for vacation or setting aside of an arbitral award. In a special proceeding for recognition and enforcement of an arbitral award. or (bb) the award is in conflict with the public policy of the Philippines.39. shall be deemed as special proceedings and shall be filed with the Regional Trial Court where: (a) the arbitration proceedings are conducted.38. or if any party cannot be served notice at such address. The losing party who appeals from the judgment of the court recognizing and enforcing an arbitral award shall be required by the Court of Appeals to post a counter-bond executed if favor of the prevailing party equal to the amount of the award in accordance with the Special ADR Rules.33 (Correction and Interpretation of Award. Any stipulation by the parties that the arbitral tribunal’s award or decision shall be final. Aplication for Setting Aside an Exclusive Recourse against Arbitral Award. when asked to set aside an award. Appeal from Court Decision on Arbitral Awards.provided that the contracts is writing and the reference is such as to make that clause part of the contract.37. (a) The arbitral tribunal may rule on its own jurisdiction. which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. only the part of the award which contains decisions on matters not submitted to arbitration may be set aside. (a) Recourse to a court against an arbitral award may be made only by application for setting aside in accordance with second and third paragraphs of this Article. provided that. including any objections with respect to the existence or validity of the arbitration agreement or any condition precedent to the filing of the request for arbitration. if the decisions on matters submitted to arbitration can be separated from those not so submitted. unless such agreement was in conflict with a provision of ADR Act from which the parties cannot derogate. and any application with a court for arbitration assistance and supervision. where appropriate and so requested by a party. For that purpose. Article 4. or contains. (c) where any of the parties to the dispute resides or has its place of business. may. suspend the setting aside proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity resume the arbitral proceedings or take such other action as in the arbitral tribunal's opinion will eliminate the grounds for setting aside. A decision of the Regional Trial Court recognizing. was not in accordance with ADR Act.34.16. (b) where the asset to be attached or levied upon. is valid. vacating or setting aside an arbitral award may be appealed to the Court of Appeals in accordance with the rules of procedure to be promulgated by the Supreme Court. at such party’s last known address. and therefore not appealable. or (dd) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties. except appeal. If a request had been made under Article 4. or. Additional Award) from the date on which that request has been disposed of by the Arbitral tribunal (d) The court. or the said agreement is not valid under the law to which the parties have subjected it or. an arbitration clause. enforcing. or (d) in the National Capital Judicial Region at the option of the applicant. failing any indication thereon. or (cc) the award deals with a dispute not contemplated by or not failing within the terms of the submission to arbitration. (c) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the award or. Notice of Proceedings to Parties. (c) If the petition for recognition or enforcement of the arbitral award is filed by a party and a counter-petition for the rejection of the arbitral award is filed by the other party. Recognition and Enforcement. Any other ground raised shall be disregarded by the Regional Trial Court. (f) If the Regional Trial Court has recognized the arbitral award but an application for rejection and/or) suspension of enforcement of that award is subsequently made. or (e) the award has not become binding on the parties or has been set aside or suspended by a court of the country in which. under the law of the country where the award was made. on grounds of comity and reciprocity. the party shall supply a duly certified translation thereof into such language.35 (Recognition and Enforcement). may be refused. Recognition or enforcement of an arbitral award. Recognition and enforcement of an arbitral award may also be refused if the Regional Trial Court where recognition and enforcement is sought finds that: (a) the subject-matter of the dispute is not capable of settlement by arbitration under the law of Philippines. was not in accordance with the law of the country where the arbitration too place. at the request of the party against whom it is provoked. NON-CONVENTION AWARD. recognize and enforce a non-convention award as a convention award. (a) A foreign arbitral award rendered in a state which is not a party to the New York Convention will be recognized upon proof of the existence of comity and reciprocity and may be treated as a convention award. suspend the proceedings to enforce the award. that award was made. and may also. if it considers the petition to be proper. (b) The petition for recognition and enforcement of such arbitral awards shall be filled with the Regional trial Court In accordance with Special ADR Rules. if the decisions on matters submitted to arbitration can be separated from those not so submitted. remit the award to the arbitral tribunal for appropriate 9 . on the application of the party claiming recognition or enforcement of that award. or it contains decisions on matters beyond the scope of the submission to arbitration. made in a state. (e) A foreign arbitral award when confirmed by the Regional Trial Court. the Regional Trial Court may. A party to a foreign arbitration proceeding may oppose an application for recognition and enforcement of the arbitral award in accordance with the Special ADR Rules only on the grounds enumerated under paragraph (a) and (c) of Article 4. or (b) the recognition or enforcement of the award would be contrary to the public policy of the Philippines. If not so treated and if no comity or reciprocity exists. that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced. shall be recognized and enforced as a foreign arbitral award and not as a judgment of a foreign court.36. B. (i) Convention Award . vacate or suspend the decision to enforce that award and may also. shall be enforced in the same manner as final and executory decisions of courts of law of the Philippines. (c) The party relying on an award or applying for its enforcement shall file with the Regional Trial Court the original or duly authenticated copy of the award and the original arbitration agreement or a duly authenticated copy thereof.RULE 6 – Recognition and Enforcement of Awards Article 4.35. (d) A foreign arbitral award when confirmed by a court of a foreign country. or under the law of which. order the other party seeking rejection or suspension to provide appropriate security. the Regional Trial Court may. The petitioner shall establish that the country in which the foreign arbitration award was made is a party to the New York Convention (ii) Non-Convention Award – The recognition and enforcement of foreign arbitral awards not covered by the New York Convention shall be done in accordance with procedural rules to be promulgated by the Supreme Court. or (d) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or. or (b) the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise in able to present his case. Grounds for Refusing Recognition or Enforcement. provided that. which is a party to the New York Convention. if it considers the counter-petition to be proper but the objections thereto may be rectified or cured. (b) If the Regional Trial Court has recognized the arbitral award but a petition for suspension of enforcement of that award is subsequently made. If the award or agreement is not made in an official language of the Philippines. under the law applicable to them. the non-convention award cannot be recognized and/or enforced but may be deemed as presumptive evidence of a right as between the parties in accordance with Section 48 of the Rules of Court. the Regional Trial Court may. under some incapacity. on the application of the party claiming recognition or enforcement of that award. shall be enforced subject to the provisions of this Article and of Article 4. A CONVENTION AWARD. order the other party seeking suspension to provide appropriate security. Article 4. or (c) the award deals with dispute not contemplated by or not failing within the terms of the submission to arbitration. only if the party furnishes to the Regional Trial Court proof that: (a) The parties to the arbitration agreement are. failing such agreement. upon petition in writing to the regional trial Court.36 (Grounds for Refusing Recognition or Enforcement). if it considers the application to be proper. The court may.The New York Convention shall govern the recognition and enforcement of arbitral awards covered by said Convention. failing any indication thereon. or the said agreement is not valid under the law to which the parties have subjected it or. (a) A foreign arbitral award shall be recognized as binding and. Article 4. where a party has died since it was filed or delivered. Notice of Proceedings to Parties. vacating or setting aside an arbitral award may be appealed to the Court of Appeals in accordance with the rules of procedure to be promulgated by the Supreme Court. A decision of the Regional Trial Court recognizing. Proceedings for recognition and enforcement of an arbitration agreement or for vacation or setting aside of an arbitral award. shall be deemed as special proceedings and shall be filed with the Regional Trial Court where: (a) the arbitration proceedings are conducted. Appeal from Court Decision on Arbitral Awards. The notice shall be sent at least fifteen (15) days before the date set for the initial hearing of the application. or the act to be enjoined is located. (c) where any of the parties to the dispute resides or has its place of business.38. Such stipulation carries with it a waiver of the right to appeal from an arbitral award but without prejudice to judicial review by way of certiorari under Rule 65 of the Rules of Court. the court must enter judgement in the name of the original party. Upon recognizing an award.action and in the meantime suspend the recognition and enforcement proceedings and may also on the application of the petitioner order the counter-petitioner to provide appropriate security. and therefore not appealable. the court shall send notice to the parties at their address of record in the arbitration. In any such case. Summary nature of proceedings before the court.39. or (d) in the National Capital Judicial Region at the option of the applicant. or if any party cannot be served notice at such address. Venue and Jurisdiction.43. and the proceedings thereupon are the same as where a party dies after a verdict. except appeal. Where a party dies after making a submission or a contract to arbitrate as prescribed in these Rules. In a special proceeding for recognition and enforcement of an arbitral award. at such party’s last known address.37. his/her executor or administrator. (b) where the asset to be attached or levied upon. Death of a Party. The losing party who appeals from the judgment of the court recognizing and enforcing an arbitral award shall be required by the Court of Appeals to post a counter-bond executed if favor of the prevailing party equal to the amount of the award in accordance with the Special ADR Rules. Article 4. enforcing. or temporary administrator of his/her estate. and any application with a court for arbitration assistance and supervision. or notice to. the court may issue an order extending the time within which notice of a motion to recognize or vacate an award must be served. A petition for recognition and enforcement of awards brought before the court shall be heard and dealt with summarily in accordance with the Special ADR Rules. is valid.42. the proceedings may be begun or continued upon the application of. Article 4. Article 4. Any stipulation by the parties that the arbitral tribunal’s award or decision shall be final. 10 . Article 4.