ALTERNATIVE DISPUTE RESOLUTION
By. Atty. Gabriel Robeniol not affect the validity of the arbitration
CASES
Korea Technologies Co., Ltd., v. Lerma
Why it held ADR as a waive of the future in
international relations?
Being an inexpensive, speedy and amicable method
of settling disputes, arbitration along with
mediation, conciliation and negotiation is
encouraged by the Supreme Court. Aside from
unclogging judicial dockets, arbitration also hastens
the resolution of disputes, especially of the
commercial kind. It is thus regarded as the wave of
the future in international civil and commercial
disputes. Brushing aside a contractual agreement
calling for arbitration between the parties would be
a step backward.
Which governs in arbitration?
Established in this jurisdiction is the rule that the
law of the place where the contract is made governs.
Lex loci contractus. The contract in this case was
perfected here in the Philippines. Therefore, our
laws ought to govern. Nonetheless, Art. 2044 of the
Civil Code sanctions the validity of mutually agreed
arbitral clause or the finality and binding effect of
an arbitral award. Art. 2044 provides, Any
stipulation that the arbitrators award or decision
shall be final, is valid, without prejudice to Articles
2038, 2039 and 2040.
The arbitration clause which stipulates that the
arbitration must be done in Seoul, Korea in
accordance with the Commercial Arbitration Rules
of the KCAB, and that the arbitral award is final and
binding, is not contrary to public policy.
Having said that the instant arbitration clause is not
against public policy, we come to the question on
what governs an arbitration clause specifying that in
case of any dispute arising from the contract, an
arbitral panel will be constituted in a foreign
country and the arbitration rules of the foreign
country would govern and its award shall be final
and binding.
Gonzales v. Climax Mining Ltd.
The Supreme Court explained the doctrine as
follows:
The separability of the arbitration agreement is
especially significant to the determination of
whether the invalidity of the main contract also
nullifies the arbitration clause. Indeed, the doctrine
denotes that the invalidity of the main contract,
also referred to as the container contract, does
agreement. Irrespective of the fact that the main
contract is invalid, the arbitration
clause/agreement still remains valid and
enforceable.
Why was there a reversal between the two cases?
This brings us back to G.R. No. 161957. The
adjudication of the petition in G.R. No. 167994
effectively modifies part of the Decision dated 28
February 2005 in G.R. No. 161957. Hence, we now
hold that the validity of the contract containing
the agreement to submit to arbitration does not
affect the applicability of the arbitration clause
itself. A contrary ruling would suggest that a
partys mere repudiation of the main contract is
sufficient to avoid arbitration. That is exactly the
situation that the separability doctrine, as well as
jurisprudence applying it, seeks to avoid.
Since the complaint for arbitration in Gonzales did
not raise mining disputes as contemplated under RA
No. 7942 but only issues relating to the validity of
certain mining related agreements, this Court held
that such complaint could not be arbitrated before
the PA-MGB.
ABS-CBN Broadcasting Corporation v. World
Interactive Network Systems Japan Co., Ltd.
The Supreme Court enumerated the judicial
remedies an aggrieved party to an arbitral award
may take, namely:
a. A petition in the proper RTC to issue an
order to vacate the award on the grounds
provided for in Section 24 of RA 876;
b. A petition for review in the CA under Rule
43 of the Rules of Court on questions of
fact, of law, or mixed questions of fact and
law; and
c. A petition for certiorari under Rule 65 of the
Rules of Court should the arbitrator have
acted without or in excess of lack or excess
of jurisdiction.
Benguet Corporation v. DENR-Mines
Adjudication Board
Should the controversy be brought first to voluntary
arbitration?
In other words, in the event a case that should
properly be the subject of voluntary arbitration is
erroneously filed with the courts or quasi-judicial
agencies, on motion of the defendant, the court or
quasi-judicial agency shall determine whether such
contractual provision for arbitration is sufficient and
effective. If in affirmative, the court or quasi-
judicial agency shall then order the enforcement of
said provision. Besides, in BF Corporation v. Court
of Appeals, we already ruled:
In this connection, it bears stressing that
the lower court has not lost its
jurisdiction over the case. Section 7 of
Republic Act No. 876 provides that
proceedings therein have only been
stayed. After the special proceeding of
arbitration has been pursued and
completed, then the lower court may
confirm the award made by the
arbitrator.
Agan v. PIATCO
It explained why the Supreme Court took
cognizance over the case:
1. Where a controversy involves significant
legal questions and the facts necessary to
resolve such legal questions are well
established and, hence, need not be
determined by a trial court, the Supreme
Court may assume jurisdiction over such
controversy.
2. The rule on hierarchy of courts may be
relaxed when the redress desired cannot be
obtained in the appropriate courts or where
exceptional and compelling circumstances
justify availment of a remedy within and
calling for the exercise of the Supreme
Courts primary jurisdiction.
3. Where petitioners are not parties to a
contract with an arbitration clause, they
cannot be compelled to submit to arbitration
proceedings; A speedy and decisive
resolution of all the critical issues in the
present controversy, including those raised
by petitioners, cannot be made before an
arbitral tribunal.
Uniwide Sales Realty and Resources Corp. v.
Tital-Ikeda
Aware of the objective of voluntary arbitration in
the labor field, in the construction industry, and in
any other area for that matter, the Court will not
assist one or the other or even both parties in any
effort to subvert or defeat that objective for their
private purposes. The Court will not review the
factual findings of an arbitral tribunal upon the
artful allegation that such body had
"misapprehended facts" and will not pass upon
issues which are, at bottom, issues of fact, no
matter how cleverly disguised they might be as
"legal questions." The parties here had recourse
to arbitration and chose the arbitrators
themselves; they must have had confidence in
such arbitrators. The Court will not, therefore,
permit the parties to relitigate before it the issues
of facts previously presented and argued before
the Arbitral Tribunal, save only where a clear
showing is made that, in reaching its factual
conclusions, the Arbitral Tribunal committed an
error so egregious and hurtful to one party as to
constitute a grave abuse of discretion resulting in
lack or loss of jurisdiction. Prototypical examples
would be factual conclusions of the Tribunal which
resulted in deprivation of one or the other party of a
fair opportunity to present its position before the
Arbitral Tribunal, and an award obtained through
fraud or the corruption of arbitrators. Any other,
more relaxed rule would result in setting at
naught the basic objective of a voluntary
arbitration and would reduce arbitration to a
largely inutile institution.
Metro Construction, Inc. v. Chatham Properties,
Inc.
Executive Order (EO) No. 1008 vests upon the
CIAC original and exclusive jurisdiction over
disputes arising from, or connected with, contracts
entered into by parties involved in construction in
the Philippines, whether the dispute arises before or
after the completion of the contract, or after the
abandonment or breach thereof.
CIAC is considered to be quasi-judicial agency
Circular No. 1-91 covers the CIAC; A quasi-judicial
agency or body has been defined as an organ of
government other than a court and other than a
legislature, which affects the rights of private
parties through either adjudication or rule-making.-
It is clear that Circular No. 1-91 covers the CIAC.
In the first place, it is a quasi-judicial agency. A
quasi-judicial agency or body has been defined as
an organ of government other than a court and other
than a legislature, which affects the rights of private
parties through either adjudication or rule-making.
The very definition of an administrative agency
includes its being vested with quasi-judicial powers.
The ever increasing variety of powers and functions
given to administrative agencies recognizes the
need for the active intervention of administrative
agencies in matters calling for technical knowledge
and speed in countless controversies which cannot
possibly be handled by regular courts. The CIACs
primary function is that of a quasi-judicial agency,
which is to adjudicate claims and/or determine
rights in accordance with procedures set forth in
E.O. No. 1008.