PHILIPPINES Trends and Developments Contributed by: Rowena L Garcia-Flores, Patricia Kay L. Tysmans-Clemente, Joseph Anthony I. Malaya and Roslyn Bianca R. Mangaser, Angara Abello Concepcion Regala & Cruz (ACCRALAW)
or the freedom of the party to make their own arrange- ments to resolve their disputes”. The use of alterna- tive dispute resolution (ADR) is thus encouraged and actively promoted as an important means of achieving speedy and impartial justice and de-clogging court dockets. Several rules are thus in place to cater to judgments – both domestic and international – ren- dered in arbitration proceedings. As a general rule, arbitral awards are final and binding. Courts are to refrain from making their own findings of fact, and should instead uphold the State’s policy regarding arbitration. There are exclusive grounds for recognition and enforcement (as explained in the case of Tuna Processing, Inc v Philippine Kingford Inc , GR No 185582, 29 February 2012), and there are only lim- ited grounds on which Philippine courts are allowed to vacate or refuse the enforcement of arbitral awards. If the Regional Trial Court is asked to set aside an arbitral award in a domestic or international arbitration on any ground other than those provided in the Spe- cial Alternative Dispute Resolution Rules (the “Special ADR Rules”), the court shall entertain such ground for the setting-aside or non-recognition of the arbitral award only if it amounts to a violation of public policy. A domestic arbitral award – that is, one which is not international as defined in Article 3 of the Model Law – can be confirmed by a court in the Philippines at any time within one month after the award is made. The court must confirm such award unless it is vacated, modified or corrected. Once confirmed, the arbitral award shall be enforced in the same manner as final and executory decisions of the Regional Trial Court. Under the Special ADR Rules, however, the following are the only grounds to vacate an award in a domestic arbitration: • the arbitral award was procured through corrup- tion, fraud or other undue means; • there was evident partiality or corruption in the arbitral tribunal or any of its members; • the arbitral tribunal was guilty of misconduct or any form of misbehaviour that has materially prejudiced the rights of any party, such as refusing to post- pone a hearing upon sufficient cause shown or to hear evidence pertinent and material to the contro- versy;
• one or more of the arbitrators was disqualified to act as such under the law and wilfully refrained from disclosing such disqualification; or • the arbitral 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. Nevertheless, in the case of Maynilad Water Services, Inc v National Water and Resources Board , GR No 181764, etc, 7 December 2021 ( Maynilad ) involving a domestic arbitral award, the Supreme Court ruled that, if the arbitral award in favour of Maynilad was confirmed, it would result in a disproportionate price difference between two areas when there was no substantial distinction between the water consumers therein, which would effectively result in the violation of equal protection under the 1987 Philippine Consti- tution. Finding that the confirmation of the domestic arbitral award would injure the public, the Supreme Court ruled to deny its recognition as being contrary to public policy. Similarly, the Supreme Court ruled in favour of vacat- ing an arbitral award in the 2022 case of Lone Con- gressional District of Benguet Province v Lepanto Consolidated Mining Company , GR No 244063, 21 June 2022 ( District of Benguet ) by applying and mak- ing use of public policy considerations. The case of District of Benguet involved a domestic arbitral award rendered by an ad hoc arbitral tribu- nal in favour of Lepanto Consolidated Mining Com- pany and Far Southeast Gold Resources, Inc against the Republic of the Philippines. Here, the Supreme Court put a premium on the protection of the “rights of indigenous cultural communities to their ancestral lands to ensure their economic, social and cultural well-being”. The invoked public policy was found to be “clear, explicit, well defined and dominant” – ie, “it is directly ascertainable by reference to a statute, implementing administrative rules and court decisions and not merely from ambiguous and murky general considerations of supposed public interests”. The arbitral tribunal cannot be said to have merely erred in the interpretation or application of the law – it mani- festly disregarded this and the law’s underlying public policy.
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