EIGHTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES
First Regular Session
SENATE
S.B. NO. 1149
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*19 NOV-5 P6 22
Introduced by Senator Maria Lourdes Nancy S. BinayE,Vl■Dly,•
AN ACT
CREATING 
THE 
PHILIPPINE 
ARBITRATION 
COMMISSION 
AND 
INSTITUTIONALIZING COMPULSORY ARBITRATION FOR SPECIFIC 
AREAS OF DISPUTE, AND FOR OTHER PURPOSES
EXPLANATORY NOTE
Our Constitution grants to all persons the right to speedy disposition of their 
cases before all judicial, quasi-judicial, or administrative bodies. However, this 
right remains good only in paper and is currently infeasible given our present 
judicial system.
At the end of 2006, our lower courts have 716,040 cases pending. Five years 
later, at the end of 2011, the number of cases pending was reduced, though not 
significantly, to 614,888. On the other hand, 25,319 and 6,344 cases were 
pending before the third level courts and the Supreme Court, respectively at the 
end of 2011. The overall case disposal rate was not impressive either. The 
percentage mainly ranges below 50% which means case input or the influx of 
cases is greater than case output or the disposition of cases. Enhanced Justice 
on Wheels Program, 
the Small Claims Project and the Judiciary Case 
Management System are just a few of the continuous administrative and judicial 
reforms designed to further improve the case disposal rates of our courts.
It is also apparent that cases will be ultimately decided only after several years 
from their filing. The long and tedious process of a lawsuit costs a lot of money.


resources and time not only to the parties but also to the judiciary. The much- 
awaited justice has been dragged longer than it should be. Indeed, justice 
delayed is justice denied.
It is appropriate and timely to introduce mandatory arbitration to disputes 
involving medical malpractice, insurance law, maritime laws, intellectual property 
law and intra-corporate matters, or collectively known as the "Areas of Dispute".
These Areas of Disputes are logically included because of their peculiar nature 
and suitability for arbitration. For instance, medical malpractice cases often 
involve loss of people's lives. It is but unacceptable to fathom the reality of 
seeking damages for a claim that had been long buried, literally. The urgency of 
obtaining indemnity in maritime disputes cannot be overlooked as time is really 
of the essence, especially when they involve perishable goods and wastage of 
assets. Intra-corporate disputes on the other hand, would be best resolved in a 
manner that gives the parties greater autonomy and flexibility. At these cases 
involve disputes within the corporation, judicial intervention must be kept at the 
minimum. Intellectual property cases entail technical skills and highly specialized 
knowledge; hence, it is more proper to settle these with arbitrators equipped 
with expertise in the subject matter.
Arbitration is defined as a dispute resolution process wherein disputes are 
resolved out of court. It entails the use of a neutral third party -  an arbitrator or 
an arbitration panel. Although the akin to that of the courts, the arbitration 
process is less formal and need not be bound by the strict rules of evidence. 
These parties are given the flexibility to agree upon the procedures that will 
govern the process, which results in parties having more faith in the integrity of 
the arbitration process.


Arbitration is not a novel concept in the Philippines. In fact, Republic Act 9285, 
otherwise known as " The Alternative Dispute Resolution Act (ADR) o f 2004' 
promotes and grants the parties the option to resort to alternative dispute 
resolution such as arbitration. Executive Order No. 1008 (Construction Industry 
Arbitration Law), on the other hand, mandated arbitration as the default process 
for construction disputes. Accordingly, the Construction Industry Arbitration 
Commission has the original and executive jurisdiction over disputes arising from 
or connected to construction contract.
The mandatory arbitration before the Philippine Arbitration Commission would 
definitely alleviate the recurring problem of clogged dockets in our courts. 
Decongestion of cases will soon be realized as a number of cases could be taken 
out of the jurisdiction of the judiciary. Seeking remedies with the court directly 
without going through arbitration would merit motu proprio (H\s'mssd\ of the case. 
Moreover, resource that have been devoted to the cases involving the Areas of 
Dispute can now be shifted to other cases, resulting in a more efficient and 
expeditious manner of their disposition.
Compulsory arbitration is equally beneficial to the parties. Not only would the 
process be faster than a lawsuit, an arbitration or arbitral tribunal is equipped 
with expertise necessary to resolve the subject matter of the dispute. Moreover, 
unlike court cases that are open to the public, arbitration proceedings are kept 
confidential. Hence, the parties are assured that only those privy to the case 
shall have information about the records of the proceedings.
This bill is also in consonance with the core principles of the current 
administration -  justice, fairness and inclusiveness. By enacting this bill, we will 
be able to deliver justice and fairness in the most expeditious manner. Also, 
Philippines is currently seen as the emerging "Investment Destination" of large 
multinational companies seeking to diversify their operations. With the greater


transparency and high comfort level of doing business in the country, foreign 
investors are more inclined to invest here in our country. Accordingly, this bill will 
definitely augment their decision to shift here as it affords them greater 
democracy in settling disputes.
Thus, this bill seeks to provide an efficient and expeditious dispute resolution, 
supplementing those already provided in the Alternative Dispute Resolution Act; 
achieve the goal of decongestion of court dockets which would ultimately result 
in cost savings and preservation of judicial resources; afford parties greater 
autonomy and flexibility in resolving disputes; and attract more investments in 
our country as a result of this sophisticated yet economical dispute resolution.
In view of the foregoing, the timely passage of this bill is earnestly requested.
MARIA LOURDES NAI»CY S. BINAY 
Senator


EIGHTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
)
First Regular Session 
)
SENATE
S.B. NO. 1149
i( lh» ^rfrrtar?
NOV -5  
P 6  ■•22
Introduced by Senator Maria Lourdes Nancy S. Binl^'
■CfeivcDir___
AN ACT
CREATING 
THE 
PHILIPPINE 
ARBITRATION 
COMMISSION 
AND 
INSTITUTIONALIZING COMPULSORY ARBITRATION FOR SPECIFIC 
AREAS OF DISPUTE, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House o f Representatives o f the Philippines in 
Congress assembled:
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Section 1. Title. -  This Act shall be known as the "Philippine Arbitration
2 
Commission Act of 2019."
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Sec. 2. Declaration o f Policy. -  The State grants to all persons the right to
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speedy disposition 
of their cases 
before 
all judicial, 
quasi-judicial, 
or
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administrative bodies. Consistent with this Constitutional mandate and to achieve
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efficient means of resolving specific cases pending before all courts in the
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Philippines before an impartial and neutral body, it is hereby declared the policy
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of the State to require compulsory arbitration for select areas of dispute through
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the Philippine Arbitration Commission.
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Sec. 3. Creation, Scope and Jurisdiction. The Philippine Arbitration Commission
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(the "Commission") is hereby created and shall have the original and exclusive
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jurisdiction over all disputes arising from, or connected with the following areas:
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(a) medical malpractice; (b) insurance laws; (c) maritime laws; (d) intellectual
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property law; and (e) intra-corporate matters (collectively, the "Areas of
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Dispute").


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Excluded from the coverage of this law are disputes arising from: (i) employer-
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employee relationships, which shall continue to be governed by Presidential
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Decree No. (PD) 442, otherwise known as the "Labor Code of the Philippines," as
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amended; (ii) territorial disputes in the high seas with neighboring countries; and
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(iii) construction disputes, which shall continue to be governed by the Executive
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Order No. 1008, otherwise known as the "Construction Industry Arbitration Law."
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Sec. 4. Applicability o f Alternative Dispute Resolution Act o f 2004. -  The
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provisions of the ADR Act and its Implementing Rules and Regulations, in so far
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as they are not inconsistent, shall apply to the proceedings contemplated in this
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Act.
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Sec. 5. Definition o f Terms. -  For purposes of this Act, the following terms shall
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mean:
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(a) "Arbitral Tribunal" means a sole Arbitrator or a panel of three Arbitrators.
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(b) "Arbitration Agreement" means an agreement by the parties to submit to
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arbitration all or certain disputes which have arisen or which may arise between
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them in respect of a defined legal relationship, whether contractual or not. An
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arbitration agreement may be in the form of an arbitration clause in a contract or
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in the form of a separate agreement.
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(c) "Arbitrator" shall be such persons as described in Section 12 of this Act.
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(d) "Foreign Arbitrator" shall mean a person who is not a national of the
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Philippines.
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(e) "Insurance disputes" shall mean all agreements and transactions governed
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by Presidential Decree No. 612, otherwise known as the "Insurance Code".
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(f) "Intellectual Property disputes" shall mean all disputes governed under RA
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8293 and shall consist of (i) copyright and related rights; (ii) trademarks and
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service marks, (iii) geographic indications; (iv) industrial designs; (v) patents;
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(vi) layout-designs (topographies) of integrated circuits; and (vii) protection of
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undisclosed information.


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(g) "International Party" shall mean an entity whose place of business is
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outside the Philippines. It shall not include a domestic subsidiary of such
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international party or a co-venturer in a joint venture with a party which has its
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place of business in the Philippines.
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(h) "Intra-Corporate disputes" shall cover the following acts:
6 (i)Devises or schemes employed by, or any act of, the board of directors, business
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associates, officers or partners, amounting to fraud or misrepresentation which
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may be detrimental to the interest of public and/or of the stockholders, partners,
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or members of any corporation, partnership, or association;
10 (ii)Controversies arising out of intra-corporate, partnership, or association relations,
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between and among stockholders, members, or associates; and between, any or
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all of them and the corporation, partnership, or association of which they are
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stockholders members, or associates, respectively;
14(iii)Controversies in the election or appointment of directors, trustees, officers, or 
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managers of corporations, partnerships, or associations; 
l6(iv)Derivative suits; and
17 (v)Inspection of corporate books.
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(i) 
"Maritime disputes" shall mean all disputes governed by (i) Act No. 2616,
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otherwise known as the "Salvage Law", (ii) Commonwealth Act No. 65, otherwise
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known as "carriage of Goods by Sea Act", (iii) provisions of Common Carriers
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under RA 386, otherwise known as the "Civil Code of the Philippines," (iv) PD
22 
1521, otherwise known as the "Ship Mortgage Decree of 1978", (v) RA 9295,
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otherwise known as the "Domestic Shipping Development Act of 2004", (vi)
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Commercial Contracts for Transportation under the Code of Commerce, and
25 
other similar and related laws.
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(j) 
"Medical Malpractice disputes" shall mean such failure of the medical
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professional, whether medical doctor, nurse, laboratory technician or the like, to
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follow the accepted standards of care, there being fault or negligence in the
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practice of his profession, resulting in physical injuries or death to the patient.


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Sec. 6. Composition o f the Commission. The Commission shall consist of a
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Chairman and seven (7) members, all to be appointed by President of the
3 
Republic of the Philippines. The Dean of the University of the Philippines College
4 
of Law shall be the Chairman of the Commission. The Secretaries of the
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Department of Health and the Department of Transportation, Chairman of the
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Securities 
and 
Exchange 
Commission, 
Commissioner 
of 
the 
Insurance
7 
Commission, and Director General of Intellectual Property Office shall serve as ex
8 
officio members. The remaining member of the Commission shall be appointed
9 
to the Commission provided:
10 
(a) 
He is a member of the Philippine Bar with at least ten (10) years experience
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and specialization in corporate law, civil law, insurance law, torts and damages,
12 
intellectual property law, maritime law or arbitration.
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(b) He is a holder of a masters degree in law.
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(c) He is a licensed medical doctor for with at least ten (10) years experience,
15 
specializing in chosen fields of medicine, including surgery, internal medicine,
16 
anesthesiology, etc, or
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(d) 
He is recognized to be an expert in the field of insurance, maritime and
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intellectual property with proven track record and at least ten (10) years
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experience in whom the business sector and the State can have confidence.
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Sec. 7. Functions and Powers o f the Commission. -  The Commission shall assist
22 
in the conduct of arbitrations for matters failing with the Areas of Dispute. It
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shall perform the following functions:
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(a) To formulate and adopt an arbitration program relating to the Areas of
25 
Dispute;
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(b) To formulate policies and prescribe rules and procedures to settle
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controversies relating to Areas of Dispute brought before it;
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(c) 
To supervise the arbitration program, and exercise such authority related
29 
thereto with regard to the appointment, replacement and challenging of the
30 
arbitrators; and


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(d) To direct its officers and employees to perform such functions as may be 
assigned to them from time to time.
Sec. 8. Compensation. -  The members of the Commission shall receive such 
salaries, per diems and allowances in accordance with existing laws in the 
performance of their duties and in carrying out the business of the Commission.
Sec. 9. Term. -  The term of office of the members of the Commission shall be 
six (6) years; provided that, of the Commission members first appointed, the 
Chairman shall hold office for six (6) years; a member of five (5) years, another 
member for four (4) years, another member for three (3) years, and the last 
member for (2) years. The appointment to any vacancy in the Commission shall 
only be for the unexpired portion of the term of the predecessor.
Sec. 10. Quorum and Voting. -  The presence of a majority of the members of 
the Commission shall constitute a quorum. The decisions of the Commission shall 
be arrived by a majority vote of the quorum.
Sec. 11. Secretariat. -  The Commission shall have a Secretariat that is attached 
to the University of the Philippines Law Center, to be headed by an Executive 
Director, to be appointed by the Commission, who shall be responsible for 
receiving requests for arbitration and other pleadings, for notifying the parties 
thereto, for fixing and receiving filing fees, deposits, costs of arbitration, 
administrative charges and other fees. It shall be the duty of the Executive 
Director to notify the parties of the awards made by the Arbitrators.
The Commission is authorized to appoint the consultants, personnel and staff as 
may be allowed by law.
Sec. 12. Arbitrators. A sole arbitrator or three arbitrators (the "Arbitral Tribunal") 
may settle a dispute covered by this Act. Only arbitrators accredited by the


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Commission (the "Arbitrator") shall be allowed to arbitrate disputes covered by 
this Act.
Sec. 13. Qualifications o f Arbitrators. -  Given the highly specialized and technical 
nature of the Areas of Dispute, Arbitrators shall possess the following minimum 
qualifications:
(a) 
He is a member of the Philippine Bar with at least five (5) years experience 
and specialization in corporate law, civil law, insurance law, torts and damages, 
intellectual property law, maritime law or arbitration.
(b) 
He is recognized to be an expert in his field with proven track record in 
whom the business sector and the State can have confidence.
Sec. 14. Authority to Act as Mediator. -  By written agreement of the parties to a 
dispute, an Arbitrator may act as mediator. The parties may also agree in writing 
that, following a successful mediation, the mediator shall issue the settlement 
agreement in the form of an arbitral award.
Sec. 15. Appointment o f Foreign Arbitrator. -  The Commission shall promulgate 
rules to allow for the appointment of a Foreign Arbitrator as co-arbitrator or 
chairman of an Arbitral Tribunal a person who has not been previously accredited 
by the Commission; Provided that
(a) 
One of the parties to the dispute is an International Party;
(b) The person appointed agreed to abide by the arbitration rules and policies 
of the Commission;
(c) 
He is either a: (i) co-arbitrator upon the nomination of the International 
Party; or (ii) is the common choice of the two Commission-accredited arbitrators 
first appointed, one of whom was nominated by the International Party; and
(d) The Foreign Arbitrator shall be independent of, and of a different nationality 
from the International Party.


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Sec. 16. Powers o f the Arbitral Tribunal. -  Without prejudice to the powers set
2 
out in any other provision of this Act, the ADR Law and in the Model Law, an
3 
Arbitral Tribunal shall have powers to make orders against any party for:
4 
(a) 
Security for costs;
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(b) 
Discovery of documents and interrogatories;
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(c) 
Giving of evidence by affidavit;
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(d) Grant of interim measures of protection under Sections 28 and 29 of the
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ADR Act;
9 
(e) 
Samples to be taken from, or any observation to be made of, or experiment
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conducted upon, any property which is or forms part of the subject matter of the
11 
dispute;
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(f) 
Securing the amount in dispute;
13 
(g) 
Ensuring that any award which may be made in the arbitral proceedings is
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not rendered ineffectual by the dissipation of assets by a party; and
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(h) An interim injunction or any other interim measure.
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Sec. 17. Immunity from Suit -  An arbitrator shall not be liable for:
18 
(a) 
Negligence in respect of anything done or omitted to be done in the
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capacity of arbitrator; and
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(b) Any mistake in law, fact or procedure made in the course of arbitral
21 
proceedings or in the making of an arbitral award.
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Sec. 18. Appointment o f Experts. -  The Arbitral Tribunal or the Arbitrator, if
24 
requested by the disputing parties, may utilize the services of technical or legal
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experts to give guidance on technical questions calling for specialized knowledge
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in the settlement of the disputes. If the either or both parties make the request
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for an expert, the Arbitrator or the Arbitral Tribunal shall confirm the
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appointment of the expert. If the sole arbitrator makes the request for an expert,
29 
the Commission must confirm the appointment of the expert.


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Sec. 19. Arbitration Expenses. Arbitration expenses shall include the filing fee, 
administrative charges, Arbitrator/s' fees, fee and expenses of the expert and 
such other reasonable fees as deemed necessary by the Commission.
Sec. 20. Deposit -  The Commission shall be authorized to fix the amount to be 
deposited that must be equivalent to the expected arbitration expenses. The 
deposit shall be paid to the Secretariat before arbitration proceedings shall 
commence. Payment shall be shared equally by the parties or be paid by any of 
them. If one party fails to contribute his share in the deposit, the other party 
must pay in full. If both parties fail to tender the required deposit, the case shall 
be considered dismissed by the parties shall still be liable to pay one-half of the 
agreed administrative charge.
Sec. 21. Court to Dismiss Case Invoiving any o f the Areas o f Dispute. -  A regular 
court before which a matter falling within any of the Areas of Dispute is filed 
shall, upon becoming aware, but not later than the pre-trial conference, dismiss 
the case and refer the parties to arbitration to be conducted by the Commission.
Sec. 22. Awards and Judiciai Review. -  The arbitral award shall be binding upon 
the parties. The provisions of Chapter 7 of the ADR Act shall govern the award, 
judicial review and enforcement of the arbitral award.
Sec. 23. Funding. -  The amount of fifty million pesos (P 50,000,000.00) is 
hereby authorized to be released and shall be included in the General 
Appropriations Act of the year following its enactment into law and thereafter to 
cover the operating and capital expenses of the Commission.
Sec. 24. Separabiiity Cause. -  The provisions of this Act are declared to be 
separable and if any provision or the application thereof is held invalid or 
unconstitutional, the validity of the other provisions shall not be affected.
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Sec. 25. Repealing Clause. -  All provisions of existing laws, proclamations, 
decrees, letters of instruction and executive orders contrary to or inconsistent 
with this Act are hereby repealed or modified accordingly.
Sec. 26. Effectivity Clause. -  This Act shall take effect immediately.
Approved,