Commercial Arbitration

Last verified on Monday 3rd May 2021

Commercial Arbitration: Philippines

John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

SyCip Salazar Hernandez & Gatmaitan

Infrastructure

1. Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?

Philippines

The Philippines is a party to the New York Convention (Convention) after ratifying it on 6 July 1967. Upon ratification, the Philippines declared that it signed the Convention on the basis of reciprocity, and would apply the Convention to the recognition and enforcement of awards made only in the territory of another contracting state and only to differences that arise out of legal relationships, whether contractual or not, which are considered commercial in nature under the national law of the state that is making the declaration.

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

2. Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?

Philippines

The Philippines is a party to the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (ICSID Convention).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

3. Is there an arbitration act or equivalent and, if so, is it based on the UNCITRAL Model Law? Does it apply to all arbitral proceedings with their seat in your jurisdiction?

Philippines

Republic Act No. 9285 (2004), or the Alternative Dispute Resolution Act of 2004 (ADR Act) principally governs arbitration in the Philippines. Under the ADR Act, (i) the 1985 UNCITRAL Model Law (Model Law) primarily governs international commercial arbitration that may be seated in the Philippines; (ii) Republic Act No. 876 (1953), or the Arbitration Law (RA 876), continues to govern domestic arbitration, subject to the provisions of the ADR Act and the Model Law; and (iii) Executive Order No. 1008 (1985) (EO 1008) governs construction disputes in the Philippines. To date, the Philippines has not yet adopted the 2006 Model Law.

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

4. What arbitration bodies relevant to international arbitration are based within your jurisdiction? Do such bodies also act as appointing authorities?

Philippines

The following arbitration bodies are based in the Philippines:

  • Construction Industry Arbitration Commission (CIAC), which was created in 1986 by virtue of EO 1008 and has original and exclusive jurisdiction over “contracts entered into by parties involved in construction in the Philippines, whether the disputes arises before or after the completion of the contract, or after the abandonment or breach thereof”,
  • Philippine Dispute Resolution Center, Incorporated (PDRCI), which was organised in 1996 by the Philippine Chamber of Commerce and Industry to provide alternative dispute resolution services in the Philippines and has forged cooperation agreements with various international arbitration centres, and
  • Philippine International Center for Conflict Resolution (PICCR), which was organised by the Integrated Bar of the Philippines (IBP) in 2019 to, among others, provide alternative dispute resolution services all over the Philippine archipelago. The CIAC, PDRCI and PICCR also act as appointing authorities. In ad hoc arbitrations, the IBP National President serves as the appointing authority.

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

5. Can foreign arbitral providers operate in your jurisdiction?

Philippines

There is no explicit prohibition against foreign arbitral providers having offices in the Philippines, subject to compliance with legal requirements for doing business. There is also no prohibition having arbitration proceedings under the rules of foreign arbitration institutions being seated, or having hearings held, in the Philippines.    

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

6. Is there a specialist arbitration court? Is the judiciary in your jurisdiction generally familiar with, and supportive of, the law and practice of international arbitration?

Philippines

There is as yet no specialist arbitration court in the Philippines; however, arbitration-related proceedings are ordinarily assigned to trial courts designated as commercial courts. In any case, the Philippine judiciary is supportive of the law and practice of international arbitration. In particular, the Philippine Supreme Court has enacted the Special Rules of Court on Alternative Dispute Resolution (Special ADR Rules) that govern arbitration-related court proceedings, such as applications for interim relief and the enforcement and setting aside of awards. In the case of Mabuhay Holdings Corp. v. Sembcorp Logistics Limited (G.R. No. 212734, 5 December 2018), the Supreme Court recognised the state’s policy in favour of arbitration and the enforcement of awards by, among other things, adopting a narrow approach in determining whether the enforcement of an award would be contrary to public policy.

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

Agreement to arbitrate

7. What, if any, requirements must be met if an arbitration agreement is to be valid and enforceable under the law of your jurisdiction? Can an arbitration agreement cover future disputes?

Philippines

Philippine law requires that an arbitration agreement must be in writing. This means that it is contained in a document, signed by the parties, or in any other means of telecommunication providing a record of the agreement, or in an exchange of statements of claim and defence wherein the agreement’s existence is alleged by a party without being denied by the other party. The reference in a contract to a document that contains an arbitration clause shall constitute an arbitration agreement, provided that the contract is in writing, and the reference is such as to make that clause part of the contract (Department of Justice Circular No. 98, ADR Act’s Implementing Rules and Regulations [ADR Act IRR], articles 4.7 and 5.6). Parties may agree that future disputes be referred to arbitration. In this regard, the Philippine Supreme Court ruled, in Hygienic Packaging Corporation v Nutri-Asia, Inc (G.R. No. 201302, 23 January 2019), that in affixing signatures on a contract containing an arbitration agreement, the parties must show that they intended to be bound by the terms and conditions of the contract, including the arbitration agreement.  

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

8. Are any types of dispute non-arbitrable? If so, which?

Philippines

Philippine law enumerates, by way of exception, the following matters that cannot be subject to arbitration: (i) labour disputes; (ii) the civil status of persons; (iii) the validity of marriage; (iv) any ground for legal separation; (v) the jurisdiction of courts; (vi); future legitime; (vii) future support; (viii) criminal liability; and (ix) those which by law cannot be compromised (ADR Act, section 6).  

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

9. Can a third party be bound by an arbitration clause and, if so, in what circumstances? Can third parties participate in the arbitration process through joinder or a third-party notice?

Philippines

Contracts, such as an arbitration agreement, generally take effect only between the parties, their assigns, and heirs, as provided in article 1311 of the Civil Code of the Philippines (Civil Code). Thus, as a general rule, a third party cannot be bound by an arbitration agreement. Known exceptions to the relativity of contracts include: (i) doctrine of piercing the veil of corporate fiction, and (ii) when an agent signs on behalf of the principal and in accordance with the orders of the principal. The Philippine Supreme Court, however, has not applied these exceptions in order to bind a third party to an arbitration agreement.

Joinder of third parties may also be allowed under the circumstances set out in the applicable arbitration rules, and in the ADR Act IRR in the case of ad hoc arbitrations. Further, the 2015 PDRCI Arbitration Rules (PDRCI Rules) and the 2019 PICCR Handbook and Arbitration Rules (PICCR Rules) both allow a party wishing to join an additional party to the arbitration to submit the appropriate request to the institution or the tribunal once constituted.

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

10. Would an arbitral tribunal with its seat in your jurisdiction be able to consolidate separate arbitral proceedings under one or more contracts and, if so, in what circumstances?

Philippines

The parties and the tribunal may agree to consolidate different arbitral proceedings or hold concurrent hearings, upon such terms as may be agreed upon. The tribunal has the power to consolidate only if the parties confer such power to it (ADR Act IRR, articles 4.45 and 5.45).

Consolidation may be allowed under the PDRCI and the PICCR arbitration where (i) parties agree to consolidate, (ii) all the claims in the arbitrations are made under the same arbitration agreement, or (iii) generally, in both or all arbitrations, there is a common question of law or fact, or related reliefs, and the institutional body finds the arbitration agreements to be compatible (PICCR Rules, article 10; PDRCI Rules, article 10).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

11. Is the "group of companies doctrine" recognised in your jurisdiction?

Philippines

The ‘group of companies doctrine’ has not been expressly recognised by the Philippine Supreme Court as to bind non-parties to an arbitration agreement. However, the Supreme Court has recognised instances wherein it has allowed the piercing of the corporate veil if the corporation is used as a vehicle for fraud or as an alter ego of a person (namely, directors, trustees or officers of a corporation) (Lanuza, Jr. v. BF Corp., G.R. No. 174938, 1 October 2014). Having said that, this doctrine of piercing of the corporate veil has not yet been applied by the Supreme Court to bind non-parties to an arbitration agreement.

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

12. Are arbitration clauses considered separable from the main contract?

Philippines

Philippine courts recognise the principle of separability of the arbitration clause. Thus, an arbitration clause shall be treated as an agreement independent of the other terms of the contract of which it forms part. Thus, even if the contract where the arbitration clause is found is deemed void, it shall not automatically invalidate the arbitration clause (Special ADR Rules, rule 2.2).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

13. Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunals jurisdiction and competence?

Philippines

Philippine law recognises the competence-competence principle. Thus, the tribunal may initially rule on its own jurisdiction, including any objections regarding the existence or validity of the arbitration agreement or any condition precedent to the filing of a request for arbitration, and Philippine courts are directed to exercise judicial restraint in ruling on these issues.

When a Philippine court is asked to determine whether the arbitration agreement is void, inoperative, or incapable of being performed, the court must make only a prima facie determination of that issue. The court must suspend the action and refer the parties to arbitration, unless it makes a prima facie determination that the agreement is void, inoperative, or incapable of being performed (Special ADR Rules, rules 2.2 and 2.4). 

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

14. Are there particular issues to note when drafting an arbitration clause where your jurisdiction will be the seat of arbitration or the place where enforcement of an award will be sought?

Philippines

As a party to the New York Convention, the Philippines generally recognises and enforces the parties’ arbitration agreement. Having said that, considering that the CIAC has been granted by law original and exclusive jurisdiction over construction disputes in the Philippines, the Philippine Supreme Court reads arbitration clauses found in construction contracts, or other contracts that may relate to construction in the Philippines, as providing for CIAC arbitration if such arbitration clause is silent, or providing for CIAC arbitration as an alternative if such arbitration clause names a different arbitration institution. Thus, if the parties to a construction dispute have entered or enter into an arbitration agreement, the parties may refer their construction dispute to CIAC arbitration regardless of the absence of, or different, agreement on the specific arbitration institution under which rules the arbitration shall proceed. Stated differently, Philippine law reads into the arbitration agreement, of parties in a Philippine construction dispute, CIAC arbitration as an alternative, giving the parties a choice of arbitration under the CIAC Rules or the arbitration rules of the specified arbitration institution. 

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

15. Is institutional international arbitration more or less common than ad hoc international arbitration? Are the UNCITRAL Rules commonly used in ad hoc international arbitrations in your jurisdiction?

Philippines

Institutional international arbitration appears more common in the Philippines than ad hoc international arbitration. UNCITRAL Rules are commonly used in ad hoc international arbitrations in the Philippines.

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

16. What, if any, are the particular points to note when drafting a multi-party arbitration agreement with your jurisdiction in mind? In relation to, for example, the appointment of arbitrators.

Philippines

Multi-party arbitration agreements should explicitly include a procedure for the appointment of the arbitrators.

The PDRCI and PICCR arbitration rules allow the multiple claimants and multiple respondents to jointly nominate/appoint the arbitrators (PDRCI Rules, article 15; and PICCR Rules, article 12). The CIAC’s Revised Rules of Procedure Governing Construction Arbitration (CIAC Rules) allow the multiple parties to agree on the method for constituting the tribunal, otherwise the CIAC will appoint the arbitrators (CIAC Rules, section 9.1.2)

However, the ADR Act IRR does not address this issue (ADR Act IRR, articles 4.11[c] and 5.10[c]).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

Commencing the arbitration

17. How are arbitral proceedings commenced in your jurisdiction? Are there any key provisions under the arbitration laws of your jurisdiction relating to limitation periods of which the parties should be aware?

Philippines

The commencement of arbitral proceedings is generally determined by the procedure adopted by the parties.

Under the PDRCI, PICCR, and CIAC arbitration rules, arbitration is generally deemed commenced when the notice of, or request for, arbitration is filed and received by the institution, and the filing fee is paid (PDRCI Rules, article 4; PICCR Rules, article 4; and CIAC Rules, section 3.4).

Ad hoc international commercial arbitration is commenced upon receipt by the respondent of a request for that dispute to be referred to arbitration. In ad hoc domestic arbitration, it is commenced upon the delivery to the respondent of a demand for arbitration (ADR Act IRR, article 4.21 and 5.20).

Parties are free to agree as to the limitation period for the commencement of the arbitration for so long as the period is reasonable. Absent any such agreement, the dispute that arose from a written contract must be commenced within 10 years from the time the dispute arose (Civil Code, article 1144).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

Choice of law

18. How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?

Philippines

The substantive law that shall govern the dispute depends on the ‘choice of law’ provision in the contract. In the absence of agreement, the tribunal shall apply the conflict of law rules which it considers applicable. In all cases, the tribunal shall decide based on the terms of the contract and taking into account the usages of the trade that applies to the transaction (ADR Act IRR, articles 4.28 and 5.28). In Saudi Arabian Airlines v. Court of Appeals (G.R. No. 122191, 8 October 1998), the Philippine Supreme Court held that the applicable law shall be determined based on the place that has the most significant relationship or the place where the relationship between the parties is centered. The relevant factors to determine the law that has the most substantive relationship are among others: 

  • the nationality of a person, his domicile, his residence, his place of sojourn, or his origin;
  • the seat of a legal or juridical person, such as a corporation;
  • the situs of a thing, that is, the place where a thing is, or is deemed to be situated; 
  • the place where an act has been done;
  • the place where an act is intended to come into effect; 
  • the intention of the contracting parties as to the law that should govern their agreement; and 
  • the place where judicial or administrative proceedings are instituted or done.

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

Appointing the tribunal

19. Does the law of your jurisdiction place any limitations in respect of a partys choice of arbitrator?

Philippines

Under the ADR Act and the Model Law, there are no explicit criteria for an arbitrator under international commercial arbitration. The parties may freely determine the number of arbitrators. No person may be excluded from consideration by reason of nationality, unless the parties otherwise provide. The parties are also free to agree on the procedure to select the arbitrators (ADR Act IRR, articles 4.11 and 5.10).

Under domestic arbitration, an arbitrator must have legal capacity and be literate. Further, the arbitrator must not (i) be related blood or marriage within the sixth degree to either party, (ii) have had had financial, fiduciary or other interest in the controversy, or (iii) have any personal bias (RA 876, section 10).

Under the CIAC Rules, the arbitrators shall possess the competence, integrity, and leadership qualities to resolve any construction dispute expeditiously and equitably. They may include engineers, architects, construction managers, engineering consultants, and businessmen familiar with the construction industry and lawyers who are experienced in construction disputes. Generally, only CIAC-accredited arbitrators may be nominated by the parties. A nominee who is not CIAC-accredited may only be appointed as arbitrator if the nominee (i) is the parties’ common nominee; (ii) possesses the technical/legal competence to handle the construction dispute involved; and (iii) has signified his availability/acceptance of his possible appointments (CIAC Rules, rule 8).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

20. Can non-nationals act as arbitrators where the seat is in your jurisdiction or hearings are held there? Is this subject to any immigration or other requirements?

Philippines

The Special ADR Rules explicitly provides that no person is precluded from acting as an arbitrator by reason of his/her nationality, unless otherwise agreed by the parties (Special ADR Rules, rule 7.4).

There are no special immigration requirements that apply particularly to arbitrators. Furthermore, a temporary visa is generally not required if the arbitrator is a national of a country that has diplomatic relations with the Philippines and their stay in the Philippines does not exceed 30 days.

Under CIAC Rules, a foreign arbitrator not accredited by CIAC may be appointed as a co-arbitrator or chairperson of an arbitral tribunal for a construction dispute if the dispute is a construction dispute in which one party is an international party. In which case, the foreign arbitrator to be appointed shall not be of the same nationality as the international party in the dispute. Moreover, the foreign arbitrator must be nominated by the international party or is the common choice of the two CIAC-accredited arbitrators, one of whom was nominated by the international part. (CIAC Rules, rule 9.4).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

21. How are arbitrators appointed where no nomination is made by a party or parties or the selection mechanism fails for any reason? Do the courts have any role to play?

Philippines

If the parties fail to determine the number of arbitrators, there shall be three arbitrators. If the parties fail to agree on the selection procedure, each party shall appoint one arbitrator, with the third arbitrator to be selected by the two prior appointees. An appointing authority shall appoint an arbitrator, at the request of any party, if (i) a party fails to appoint an arbitrator within 30 days of the receipt of the request from the other party, or (ii) if the two arbitrators fail to agree on the third arbitrator within 30 days of their appointment (ADR Act IRR, articles 4.11[c][i]). Institutional bodies are the default appointing authority in institutional arbitrations (CIAC Rules, rules 10. 2 and 10.4; PDRCI Rules, articles 13.2 and 14.2; PICCR Rules, articles 12.2 and 12.4), while the National President of the IBP is the default appointing authority in ad hoc arbitrations.   

The parties may generally apply to the Philippine courts to act as the appointing authority if (i) the institution fails to perform its duty as appointing authority within a reasonable time in an institutional arbitration, and (ii) if the National President of the IBP or its duly authorised representative fails to act within the allotted period in an ad hoc arbitration (Special ADR Rules, rule 6.1[a][b] in relation to ADR Act IRR, article 4.11[d]).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

22. Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?

Philippines

There is no express law granting arbitrators a general immunity from suit. But, arbitrators are not civilly liable for acts done in the performance of their duties, unless there is a clear showing of bad faith, malice or gross negligence (ADR Act, section 5, in relation to the Administrative Code of 1987, Book 1, Chapter 9, section 38[1]).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

23. Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?

Philippines

There is no Philippine law specifically providing for security for the payment of arbitrator’s fees. Arbitrators in ad hoc arbitrations will have to enter into an arrangement with the parties for the deposit for arbitration expenses and arbitrator’s fees subject to liquidation and return of any balance, if any, after the arbitration is terminated. The PDRCI have on occasion agreed to provide secretariat services to ad hoc arbitrations for a fee, which includes fundholding services for the deposits of the parties.

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

Challenges to arbitrators

24. On what grounds may a party challenge an arbitrator? How are challenges dealt with in the courts or (as applicable) the main arbitration institutions in your jurisdiction? Will the IBA Guidelines on Conflicts of Interest in International Arbitration generally be taken into account?

Philippines

A challenge to an arbitrator may be made only if there are circumstances that exist giving rise to justifiable doubts as to impartiality or independence, or if the arbitrator does not possess the required qualifications as agreed by the parties. If a party appointed the arbitrator or if the former participated in the selection, the party may only challenge the arbitrator for reasons of which the party became aware after the appointment was made (ADR Act IRR, articles 4.12[b] and 5.11[b]).

The aggrieved party may request the appointing authority to rule on the challenge. If the appointing authority fails or refuses to rule or act on the challenge, within such period as allowed under the applicable rule or, in the absence thereof, within 30 days from receipt of the request, the aggrieved party may renew that challenge in court (Special ADR Rules, rule 7.2).

The IBA Guidelines on Conflicts of Interest in International Arbitration for its arbitration proceedings (IBA Guidelines) are generally taken into account and persuasive, in resolving challenges.

Under the CIAC Rules, an arbitrator may be challenged by a party based on:

  • relationship by blood or marriage within the sixth degree of either party to the controversy, or to counsels within the fourth degree, computed according to the rules of civil law;
  • financial, fiduciary or other interest in the controversy;
  • partiality or bias; or
  • incompetence, or professional misconduct (CIAC Rules, rule 9.6).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

Interim relief

25. What main types of interim relief are available in respect of international arbitration and from whom (the tribunal or the courts)? Are anti-suit injunctions available where proceedings are brought elsewhere in breach of an arbitration agreement?

Philippines

Parties may apply to a tribunal, or Philippine courts before the constitution of the tribunal or after the constitution when the tribunal has no power to act or is unable to act effectively, for the grant of interim relief in order to prevent irreparable loss or injury, provide security for the performance of any obligation, produce or preserve any evidence, and compel any other appropriate act or omission. These include but are not limited to (i) preliminary injunctions against a party, (ii) appointment of a receiver, and (iii) detention, preservation or inspection of the subject property of the arbitration (ADR Act, sections 28 and 29). An anti-suit injunction is in the nature of a preliminary injunction and may be sought from a tribunal or a Philippine court to restrain a party from pursuing a proceeding in breach of an arbitration agreement.

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

26. Does the law of your jurisdiction allow a court or tribunal to order a party to provide security for costs?

Philippines

The ADR Act grants the tribunal and courts the power to grant interim relief to provide security for the performance of any obligation (ADR Act, section 28[b][2]). This power is broad and may be invoked to cover security for costs, although this has not been confirmed by case law.

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

Procedure

27. Are there any mandatory rules in your jurisdiction that govern the conduct of the arbitration (eg, general duties of the tribunal and/or the parties)?

Philippines

Arbitration proceedings seated in the Philippines are primarily governed by the rules agreed upon by the parties and, failing such agreement, such procedure as the tribunal may consider appropriate, as supplemented by the provisions of the ADR Act and the ADR Act IRR. This is consistent with the contractual nature of arbitral proceedings. It affords the parties substantial autonomy over the proceedings where the parties are free to agree on the procedure to be observed during the proceedings (Fruehauf Electronics v. Technology Electronics, G.R. No. 204197, 23 November 2016).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

28. What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration?

Philippines

If the respondent fails to communicate its defence, the arbitration shall continue and the failure is not treated as an admission of the claimant’s allegations. If any party fails to appear at a hearing or to produce documentary evidence, the tribunal may continue the proceedings and make the award based on the evidence before it (ADR Act IRR, articles 4.25 and 5.25; CIAC Rules, rule 4.2).

If the respondent fails to appoint an arbitrator within 30 days of receipt of a request to do so, the appointment may be made by the appointing authority, upon request of a party (ADR Act IRR, article 4.11[c] and article 5.10[c]).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

29. What types of evidence are usually admitted, and how is evidence usually taken? Will the IBA Rules on the Taking of Evidence in International Arbitration generally be taken into account?

Philippines

Parties generally offer testimonial evidence of an ordinary or expert witness, as well as documentary evidence supporting the testimony of its witnesses. Parties are given the opportunity to submit judicial affidavits of their witnesses, to which are attached the documentary evidence relevant to the testimony. The opposing party will be given an opportunity to cross-examine the witness during a hearing, where the tribunal may also ask clarificatory questions. In this regard, the parties generally agree that the IBA Rules on the Taking of Evidence in International Commercial Arbitration be taken into account by, or at the least guide, the arbitrators. The power of the tribunal to determine the conduct of the arbitration includes the power to determine the admissibility, relevance, materiality and weight of any evidence (ADR Act IRR, articles 4.19 and 5.18; CIAC Rules, rule 13.6 to 13.9).

Under the CIAC Rules, an arbitral tribunal is not bound by technical evidentiary rules. Aside from witness testimonies and documentary evidence, the arbitral tribunal may also conduct a site inspection of any building, place or premises, or require video presentations (CIAC Rules, rules 13.5 and rule 13.10).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

30. Will the courts in your jurisdiction play any role in the obtaining of evidence?

Philippines

A party may petition the court to direct any person or entity, which is found in the Philippines, to:

  • comply with a subpoena;
  • appear as witness;
  • allow physical examination of a person’s condition, or inspection of a thing or premises;
  • allow recording or documentation of a person, thing or premises;
  • allow the examination and copying of documents; and
  • perform any similar acts (Special ADR Rules, rule 9.5).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

31. What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?

Philippines

The tribunal has the power to require the production of documents (ADR Act IRR, articles 4.27 and 5.27). To enforce such a directive, a party may petition a Philippine court to assist in the taking of evidence (Special ADR Rules, rule 9.5).

Under the CIAC Rules, the arbitral tribunal may order the production of real or documentary evidence upon the motion of a party or on its own initiative (CIAC Rules, rule 13.5.1).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

32. Is it mandatory to have a final hearing on the merits?

Philippines

Hearings are not mandatory. In international commercial arbitration, subject to any contrary agreement by the parties, the tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of documents and other materials. However, unless the parties have agreed that no hearings shall be held, the tribunal shall hold such hearings at an appropriate stage of the proceedings, if so requested by a party (ADR Act IRR, article 4.24).

In domestic arbitration, the parties may agree to submit their dispute to arbitration other than through oral hearing. The parties may submit an agreed statement of facts. They may also submit their respective contentions to the duly appointed arbitrators in writing; this shall include a statement of facts, together with all documentary proof (R.A 876, section 18).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

33. If your jurisdiction is selected as the seat of arbitration, may hearings and procedural meetings be conducted elsewhere?

Philippines

Unless otherwise agreed by the parties, the tribunal may meet at any place appropriate for consultation among its members, for hearing witnesses, experts, or the parties, or for inspection of goods, other property or documents (ADR Act IRR, articles 4.20 and 5.19).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

Award

34. Can the tribunal decide by majority?

Philippines

Unless otherwise agreed by the parties, any decision of a tribunal shall be made by a majority of all its members. For procedural questions, it may be decided by a presiding arbitrator, if authorised by the parties or all the members of the tribunal (ADR Act IRR, articles 4.29 and 5.29; CIAC Rules, rule 16.2).          

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

35. Are there any particular types of remedies or relief that an arbitral tribunal may not grant?

Philippines

Philippine law does not limit the types of remedies or relief that a tribunal may grant in a valid arbitration, except that the tribunal should not exceed its powers.

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

36. Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?

Philippines

Philippine law does not prohibit the issuance of dissenting opinions. However, they are not common in practice.

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

37. What, if any, are the legal and formal requirements for a valid and enforceable award?

Philippines

The form and content of the award shall be:

  • in writing;
  • signed by the arbitrator or arbitrators;
  • state the reasons upon which it is based, unless the parties have agreed that no reasons shall be given or if the award is on agreed terms; and
  • state the date and place of arbitration.

After the award is made, a signed copy shall be delivered to each party (ADR Act IRR, articles 4.31 and 5.31; CIAC Rules, rule 16.3).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

38. What time limits, if any, should parties be aware of in respect of an award? In particular, do any time limits govern the interpretation and correction of an award?

Philippines

A request for correction or interpretation of the award from the tribunal must be made within 30 days from receipt of the award, unless a different period is agreed upon (ADR Act IRR, articles 4.33 and 5.33). In domestic arbitration, a petition for the correction of an award may also be filed with the courts within 30 days from receipt of the award (Special ADR Rules, rule 11.2[B]).

In domestic arbitration, a petition to confirm an award may be filed with the appropriate court at any time after the lapse of 30 days from receipt of the award. Petitions in court for the vacation of an arbitral may be filed not later than 30 days from receipt of the award (Special ADR Rules, rule 11.2[A]).

In international commercial arbitration conducted in the Philippines, a petition in court for the enforcement and recognition of an award may be filed at any time from receipt of the award. A petition to set aside an award may only be filed within three months of receipt of the award (Special ADR Rules, rule 12.2).

In an arbitration conducted outside the Philippines, a petition in court to recognise and enforce a foreign award may be filed at any time after receipt of a foreign award (Special ADR Rules, rule 13.2).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

Costs and interest

39. Are parties able to recover fees paid and costs incurred? Does the "loser pays" rule generally apply in your jurisdiction?

Philippines

In principle, the costs of arbitration shall be borne by the unsuccessful party. The tribunal may however apportion between the parties such costs if apportionment is reasonable, based on the circumstances (ADR Act IRR, articles 4.46[d] and 5.46[d]).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

40. Can interest be included on the principal claim and costs? Is there any mandatory or customary rate?

Philippines

Philippine arbitration laws do not specifically prescribe principles governing the awarding of interest. However, under Philippine law, for an obligation that consists in the payment of a sum of money, and there is a breach, the interest shall be that stipulated by the parties in writing. If there is no stipulation, the legal rate is 6 per cent per annum (Civil Code, article 2209; Bangko Sentral ng Pilipinas Circular No. 799, series of 2013). If it is an obligation that does not involve a forbearance of money, an interest for damages awarded shall also be 6 per cent per annum. (Nacar v. Gallery Frames, G.R. No. 189871, 13 August 2013).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

Challenging awards

41. Are there any grounds on which an award may be appealed before the courts of your jurisdiction?

Philippines

Final awards in a commercial arbitration, whether in a domestic arbitration or an international commercial arbitration seated in the Philippines, are not subject to appeal before the Philippine courts. However, final awards in a CIAC arbitration, may be appealed to the Court of Appeals, then to the Supreme Court on (i) questions of law, or (ii) questions of fact if it is shown that:

  • the award was procured by corruption, fraud or other undue means;
  • there was evident partiality or corruption of the arbitrators or of any of them;
  • the arbitrators were guilty of misconduct in refusing to postpone the hearing upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; 
  • one or more of the arbitrators were disqualified to act as such under Section nine of RA 876 and wilfully refrained from disclosing such disqualifications or of any other misbehaviour by which the rights of any party have been materially prejudiced; or
  • 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 (see, Wyeth Philippines, Inc v CIAC, G.R. Nos. 220045-48, 22 June 2020).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

42. Are there any other bases on which an award may be challenged, and if so what?

Philippines

In domestic arbitration, a party may file a petition with the appropriate court to vacate an award on the following grounds:

  • corruption, fraud or other undue means;
  • evident partiality or corruption of the tribunal or its members;
  • misconduct or misbehaviour of the tribunal that materially prejudiced the rights of a party;
  • wilful non-disclosure by an arbitrator of their disqualification;
  • the tribunal exceeded its powers, or so imperfectly executed them, such that a complete, final and definite award upon the subject matter submitted to them was not made;
  • non-existence, invalidity or unenforceability of the arbitration agreement; and
  • minority or incompetence of a party (Special ADR Rules, rule 11.4).

In international commercial arbitration seated in and outside the Philippines, a party may file a petition with the appropriate court to set aside an award on the grounds enumerated under article V of the New York Convention, which include:

  • a party’s incapacity
  • improper notification regarding the appointment of arbitrators or the arbitral proceedings;
  • the award deals with a dispute outside the arbitral terms, or contains matters beyond the scope of arbitration;
  • the tribunal’s composition was not in accordance with the parties’ agreements or the law;
  • the award has not yet become binding;
  • the subject-matter of the dispute is incapable of settlement by arbitration under Philippine law; and
  • the recognition or enforcement of the award is against public policy (Special ADR Rules, rules 12.4 and 13.4).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

43. Is it open to the parties to exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?

Philippines

Article 2044 of the Civil Code provides that any stipulation that the arbitrators’ award or decision shall be final is valid, except when there is a mistake, fraud, violence, intimidation, undue influence or falsity of documents. Nonetheless, parties may not exclude any basis to challenge an award under the New York Convention, and adopted under the ADR Act. This issue, however, has not been resolved by the Philippine Supreme Court.

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

Enforcement in your jurisdiction

44. Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?

Philippines

A Philippine court may refuse to recognise or enforce an award if it finds that the award has been set aside or suspended by a court of the country in which that award was made (Special ADR Rules, Rule 13.4[a][v]).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

45. What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?

Philippines

The Philippines has a pro-enforcement policy and this was affirmed in the recent decision Mabuhay Holdings Corp. v. Sembcorp Logistics Limited (G.R. No. 212734, 5 December 2018) where the Philippine Supreme Court ruled, for the first time, that the narrow and restrictive approach must be adopted in defining public policy as a ground to refuse the recognition and enforcement of an award.

This means that mere errors in the interpretation of the law or factual findings would not suffice to warrant refusal of enforcement under the public policy ground. The illegality or immorality of the award must reach a certain threshold such that, enforcement of the same would be against the State's fundamental tenets of justice and morality, or would blatantly be injurious to the public, or the interests of the society. This also means that even if the award is contrary to Philippine law, such fact alone would not be sufficient to refuse its enforcement. However, Mabuhay Holdings does not explain how this should be reconciled with article 5 of the Civil Code, which provides that “acts executed against the provisions of mandatory or prohibitory laws shall be void, except when the law itself authorises their validity.” This was not tested in Mabuhay Holdings considering that the award did not actually violate Philippine law. The Philippine Supreme Court may have to revisit this issue in the future.

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

46. To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

Philippines

State immunity is not among the recognised grounds to resist the enforcement of an award (Special ADR Rules, rules 11.4 and 12.4). Further, case law suggests that state immunity cannot be successfully raised as defence at the enforcement stage of commercial arbitration. In particular, Philippine case law provides that: (i) an agreement to submit any dispute to arbitration may be construed as an implicit waiver of immunity from suit, and (ii) the doctrine of immunity from suit is restricted to sovereign or governmental activities and cannot be extended to commercial, private and proprietary acts (China National Machinery & Equipment Corp. v Santamaria, G.R. No. 185572, 7 February 2012).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

Further considerations

47. To what extent are arbitral proceedings in your jurisdiction confidential?

Philippines

The arbitration proceedings shall generally be considered confidential and shall not be published. The exceptions are: (i) consent of the parties; and (ii) for the limited purpose of disclosing relevant documents to the court in cases when the judicial resort is allowed by law (ADR Act, section 23; CIAC Rules, rule 7.1). The court may issue a protective order to prevent or prohibit disclosure of information that contains secret processes, developments, research or such information that shall materially prejudice an applicant (Special ADR Rules, rule 10).

According to the Philippine Supreme Court in Fruehauf Electronics v Technology Electronics (G.R No. 204197, 23 November 2016), Philippine law highly regards the confidentiality of arbitration proceedings that it devised a judicial remedy to prevent the unauthorised disclosure of confidential information obtained from arbitration proceedings.

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

48. What is the position relating to evidence produced and pleadings filed in the arbitration? Are these confidential? Is there any way that they might be relied on in other proceedings (whether arbitral or court proceedings)?

Philippines

Since arbitration is a purely private mode of dispute resolution, the arbitration proceedings, including the records, evidence, and arbitral award, are considered confidential to avoid negative publicity and to protect the privacy of the parties (Fruehauf Electronics v Technology Electronics, G.R. No. 204197, 23 November 2016). Information obtained during arbitration proceedings may be disclosed to a Philippine court only in the instances wherein resort to the courts is allowed (ADR Act, section 23).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

49. What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?

Philippines

There is no specific mandatory code of ethics applicable to arbitrators. However, the Philippine Institute of Arbitrators has issued a Code of Professional Responsibility for its members. Likewise, if the arbitrator is a Philippine lawyer, the Code of Professional Responsibility promulgated by the Philippine Supreme Court for lawyers will apply.

Further, PDRCI adopted the (i) Rules of Ethics for International Arbitrators adopted by the International Bar Association (IBA); (ii) 2014 IBA Guidelines on Conflicts of Interest in International Arbitration; and (iii) IBA Guidelines on Party Representation in International Arbitration (PDRCI Administrative Guidelines, article 5).

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

50. Are there any particular procedural expectations or assumptions of which counsel or arbitrators participating in an international arbitration with its seat in your jurisdiction should be aware?

Philippines

There are none. Except with respect to CIAC arbitration of construction disputes, Philippine arbitration law and rules are generally consistent with international commercial arbitration practice.  

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

51. Is third-party funding permitted in your jurisdiction? If so, are there any rules governing its use?

Philippines

At present, there are no restrictions on the use of contingency or alternative fee arrangements or third-party funding for arbitration conducted in the Philippines. However, any champertous agreement by a lawyer is against public policy. A contingent fee contract, on the other hand, is permitted.

Answer contributed by John Christian Joy A. Regalado and Ricardo Ma. P.G. Ongkiko

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