B. Republic Act No. 9285 - An Act to Institutionalize the Use of an Alternative Dispute Resolution System in the Philippines and to Establish the Office for Alternative Dispute Resolution, and for Other Purposes (also known as the ADR Act of 2004) .. 315 C. UNCITRAL Model Law on __ International Commercial Arbitration (United Nations document A/40/17, annex 1) (As adopted by the United Nations Commission on International Trade Law on 21 of Foreign Arbitral Awards (also known as the New York Convention) .... 366 E. Special Rules of Court on Alternative Dispute Resolution (also known as ‘the Special ADR Rutles) . 375 Executive Order No. - Creating an = 1008 Arbitration Machinery for the Philippine Construction Industry... 462 CHAPTER 1 THE ARBITRATION AGREEMENT Party Autonomy It is the declared policy of the State to actively promote party autonomy in the resolution of disputes or the freedom of the parties to make their own arrangements to resolve their disputes. Towards this end, the State encourages and actively promotes the use of Alternative Dispute Resolution as an important means to achieve speedy and impartial justice and de-clog court dockets. In the exercise of party autonomy, parties are able to choose any ADR mechanism for the resolution of disputes. Arbitration is one form of ADR, if not the only form of ADR, which results in a binding and enforceable resolution of disputes. The exercise of party autonomy is manifested in several ways in arbitration. For example, the parties are able to select their arbitrators or to participate in the process for the selection of their arbitrators ~ the number of arbitrators, the qualifications of the arbitrators, or the period for their selection. In the exercise of party autonomy, the parties can select the substantive law that will determine their rights and obligations. They are free to agree on the procedure to be * RA 9285, Section 22__|_COMMERCIAL ARBITRATION UNDER PHILIPPINE LAW. (CHAPTER 1: THE ARBITRATION AGREEMENT | 3 followed in the conduct of arbitral proceedings.? They can also select the seat of arbitration, ‘The essence of party autonomy is best appreciated if arbitration is compared to litigation. In contrast to what has been mentioned above regarding the rights of the part relative to arbitration in the exercise of party aut igation the parties cannot choose the judge who will resolve their dispute or the procedure that the judge will follow in the resolution of the dispute. Arbitration Agreement is the Law between the Contracting Parties ‘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. A contract is required for arbitration to take place and to be binding.+ Philippine law makes a distinction between (1) arbitration agreement and (2) submission agreement. The distinction dates back to the 1924 case of Vega v. San Carlos Milling Co, Ltd, 51 Phil. 908, where the Supreme Court distinguished between “agreements to submit existing differences and agreements to submit differences which may arise in the future”> More specifically, the distinction between arbitration and submission agreements is indicated by the title of RA 876 ~ “An Act to Authorize the Making of Arbitration and Submission Agreements, to Provide for the Appointment of 2 Special ADR Rules, Rule 23 2 s Ine. v. San Fernando Regala Trading, Inc, 641 SCRA 31 it) 9 Citing 5 CJ. 42 Arbitrators and the Procedure for Arbitration in Civil r Purposes”. RA 876 does not have mn of terms which should provide mm agreement and submission agreement. The distinction between the two is found in Section 2 of RA 876. There is a submission agreement when two or more persons or parties submit to the arbitration of one or more arbitrators any controversy existing between them at the time of the submission. On the other hand, it is an arbitration agreement when the parties to any contract agree to settle by arbitration a controversy thereafter arising betwoeen them. The case of Ormoc Sugarcane Planters’ Association, Inc. v. Court of Appeals, 596 SCRA 630 (2009), makes the same distinction. A submission agreement is “an agreement submitting, an existing matter or difference to .". On the other hand, an agreement to submit to arbitration is “an agreement to submit to arbitration some future dispute, usually stipulated upon in a civil contract between the parties.” From a reading of Section 2 of RA 876, what determines whether an agreement is a submission agreement or an arbitration agreement is the time when the controversy arises, or when it is expected to arise (if it will ever arise). If the controversy or dispute exists at the time that the parties have no agreement to arbitrate the controversy or dispute, and it is only when the controversy or dispute is already existing that the parties agree to submit the dispute to arbitration, that agreement is a submission agreement. On the other hand, if the par S enter into an agreement to settle by arbitration a froversy or dispute which might arise in the future, that agreement is an arbitration agreement. An illustration of a submission agreement may be found in the case of Asset Privatization Trust v. Court of Appealsé, where the di between the parties arose *300SCRA 579 (1998)4_|_ COMMERCIAL, ARBITRATION UNDER PHILIPPINE LAW, arbitration agreement in place. Hence, the dispute was already existing, but there was no pre-existing arbitration agreement. One of the parties filed an action before the Regional Trial Court for the resolution of the dispute. While the action was pending in court, the parties decided to execute a “Compromise and Arbitration Agreement” in which they agreed to withdraw their claims from the court and to submit to arbitration for the resolution of their claims. The dispute existed ahead of the arbitration agreement. There are more illustrations of an arbitration agreement as compared to a submission agreement in Philippine jurisprudence. One may be found in the case of Mindanao Portland Cement Corporation v. McDonough Construction Co. of = Florid@, in which the contracting parties agreed in their | contract that “in the event of disagreement”, the parties shall submit the matter to arbitration. Here, the arbitration agreement existed ahead of the dispute. ‘An agreement to arbitrate a controversy or dispute, whether it is a submission agreement or an arbitration agreement, as defined in Section 2 of RA 876, is valid, enforceable and irrevocable, save upon such grounds as exist at law for the revocation of any contract In the case of Frabelle Fishing Corporation v. Philippine ‘American Life Insurance Company, 530 SCRA 543 (2007), the Court held that an “arbitration agreement is the law between s. They are, therefore, expected to abide by it in good faith”? This court ruling is consistent with Article 1159 of the vil Code, which provides that “obligations arising from 719 SCRA 808 (1967) RA 876, Section 2 9 Citing Fiesta World Mall Corporation v. Linberg Philippines, Inc, 499 SCRA 932, ‘338 (2006); LM Power Engineering Corporation v. Capitol Industrial Construction Groups, Inc, 999 SCRA 562 (2008) (CHAPTER 1: THE ARBITRATION AGREEMENT | 5 —_—_—_—_—_—_—————————_ contracts have the force of law between the contracting parties and should be complied with in good faith.” An agreement to arbitrate is a contract, the relation of the parties is contractual, and the rights and liabilities of the parties are controlled by the law of contracts.i? In an agreement for arbitration, the ordinary elements of a valid contract must appear, including an agreement to abide by the award, either in express language or by implication." An arbitration agreement binds the parties thereto, as well as their assigns and heirs.!? At the heart of a submission agreement or an arbitration agreement is the agreement of the contracting parties to settle their dispute by arbitration. The law defines arbitration as a voluntary dispute resolution process in which one or more arbitrators, appointed in accordance with the agreement of the parties, or rules promulgated pursuant to law, resolve a dispute by rendering an award.!? Arbitration is one of the alternative modes of dispute resolution that is now rightfully vaunted as the “wave of the future” in international relations, and is recognized worldwide. To brush aside a contractual agreement calling for arbitration in case of disagreement between the parties would therefore be a step backward. ‘The foregoing discussion was largely taken from RA 876 which governs domestic arbitration.}5 + Ormoc Sugarcane Planters' Association, Inc v. Court of Appeals, 596 SCRA 630, 640 (2009), citing 5 Am Jur 2d Appeal and Error, Arbitration and Award, 527, nid, "Maria Luisa Park Association, Inc, v. Almendras, 588 SCRA 663, 676 (2009) 8 RA 9285, Section 3(d) 14 Frabelle Fishing Corporation v. Philippine American Life Insurance Company, 530 SCRA 543 (2007), citing Sea-Land Service, Inc. v. Court of Appeals, 327 SCRA 135 (2000), BF Corporation v. Court of Appeals, 288 SCRA 267, 286 (1998) % RA 876, Section 32; National Union Fire Insurance Company of Pittsburg v. Stolt-Nielsen Philippines, Inc, 184 SCRA. 682, 688 (1990); Cargill Philippines, Inc. v. Sar Fernando Regala Trading, Inc, 641 SCRA 31 (2011)