SIXTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
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Introduced by Senator Maria Lourdes Nancy S. Binay 
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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 
of2011, 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 Jpparent that cases will be ultimately decided only after several years from their 
filing. Th~ 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 Dispute 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. As 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. The parties are given the flexibility to agree upon the 
procedures that will govern the process, whieh results in parties having more faith in the 
integrity of the arbitration process. 
Arbitration is not a novel concept in the Philippines. In lact, Republic Act 9285, otherwise 
known as "The Aiternalive Dispute Resoiulion Act (ADR) of 2004" promotes and grants the 
patties the option to resOIi to alternative dispute resolution such as arbitration. Executive 
Order No. 1008 (Construction Industry Arbitration Law), on the othcr hand, mandated 
arhitration as the default process 101' construction disputes. Accordingly, the Construction 
Industry Arbitration Commission has the original and exclusive jurisdiction over disputcs 
arising fi'om or connected to construction contracts. 
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 thc judiciary. 
Seeking remedies with the court directly without going through arbitration would merit molu 
proprio dismissal of the case. Moreover, resources that had been devoted to the cases 
involving the Areas of Dispute can now be shifted to other cases, resulting in a more emeicnt 
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 arbitrator 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 the 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 
or 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 
dispu.te resolution. 
ln vkw orthe foregoing, the timely passage of this bill is earnestly requested. 
Senator 


/ 
SIXTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
S.B. No. 2:~ 1 
Introduced by Senator Maria Lourdes Nancy S. Binay 
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AN ACT CREATING THE PHILIPPINE ARBITRATION COMMISSION AND 
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INSTITUTIONALIZING COMPULSORY ARBITRATION FOR SPECIFIC AREAS OF 
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DISPUTE, AND FOR OTHER PURPOSES 
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Be it enacted by the Senate and the House of Representatives of the Philippines in Congress 
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assembled: 
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SECTION 1. Title. This Act shall he known as the "Philippine Arbitration Commission Act 
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of 2013." 
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SECTION 2. Declaration of Policy. 
The State grants to all persons the right to speedy 
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disposition of their cases before all judicial, quasi-judicial, or administrative bodies. 
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Consistent with this Constitutional mandate and to achieve efficient means of resolving 
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specific cases pending before all courts in the Philippines before an impartial and neutral 
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body, it is hereby declared the policy of the State to require compulsory arbitration for select 
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areas of dispute through the Philippine Arbitration Commission. 
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SECTION 3. Creation, Scope and Jurisdiction. The Philippine Arbitration Commission (the 
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"Commission") is hereby created and shall have original and exclusive jurisdiction over all 
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disputes arising from, or connected with the following areas: (a) medical malpractice; (b) 
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insurance laws; (c) maritime laws; Cd) intellectual property law; and (e) intra-corporate 
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matters (collectively, the "Areas of Dispute"). 
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Excluded from the coverage of this law are disputes arising from: (i) employer-employee 
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relationships, which shall continue to be governed by Presidential Decree No. (PD) 442, 
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otherwise known as the "Labor Code of the Philippines," as amended; (ii) territorial disputes 
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in the high seas with neighboring countries; and (iii) construction disputes, which shall 
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continue to be governed by the Executive Order No. l008, otherwise known as the 
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"Construction Industry Arbitration Law." 
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SECTION 4. Applicability of the ADR Act. 
The provISions of the ADR Act and its 
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Implementing Rules and Regulations, in so far as they are not inconsistent, shall apply to the 
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proceedings contemplated in this Act. 
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SECTION 5. Definition of Terms. For purposes ofthis Act, the following terms shall mean: 
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(a) 
"Arbitral Tribunal" means a sole Arbitrator or a panel of three Arbitrators. 
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(b) 
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(g) 
(h) 
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(i) 
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"Arbitration Agreement" means an agreement by the parties to submit to arbitration 
all or certain disputes which have arisen or which may arise between them in respect 
of a defined legal relationship, whether contractual or not. An arbitration agreement 
may be in the form of an arbitration clause in a contract or in the form of a separate 
agreement 
"Arbitrator" shall be such persons as described in Section 12 of this Act 
"Foreign Arbitrator" shall mean a person who is not a national of the Philippines. 
"Insurance disputes" shall mean all agreements and transactions governed by 
Presidential Decree No 612, otherwise known as the "Insurance Code" 
"Intellectual Property disputes" shall mean all disputes governed under RA 8293 and 
shall consist of (i) copyright and related rights; (ii) trademarks and service marks, (iii) 
geographic indications; (iv) industrial designs; (v) patents, (vi) layout-designs 
(topographies) of integrated circuits; and (g) protection of undisclosed information 
"J nternational Party" shall mean an entity whose place of business is outside the 
Philippines_ Jt shall not include a domestic subsidiary of such international pal1y or a 
co-venturer in a joint venture with a party which has its place of business in the 
Philippines. 
"Intra-Corporate disputes" sha1i cover the to1iowing acts' 
(i) 
(ii) 
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Devices or schemes employed by, or any act of, the board of directors, 
business 
associates, 
oftlcers 
or 
partners, 
amounting 
to 
tJ-aud 
or 
misrepresentation which may be detrimental to tbe interest of the public and/or 
of the stockholders, partners, 01 members of any corporation, partnership, or 
association; 
Controversies ansmg out of intra-corporate, partnership, or association 
relations, between and among stockholders, members, or associates; and 
between, any or all oftbem and the corporation, partnership, or association of 
which they are stockholders, members, or associates, respectively; 
Controversies in the election or appointment of directors, trustees, officers, or 
managers of corporations, partnerships, or associations; 
Derivative suits; and 
Inspection of corporate books. 
"Maritime" disputes" shall mean all disputes governed by (i) Act No. 2616, otherwise 
blown as the "Salvage Law", (ii) Commonwealth Act No. 65, otherwise known as 
"Carriage of Goods by Sea Act", (iii) provisions on Common Carriers under RA 386, 
otherwise known as the "Civil Code of the Philippines," (i'v) PD 1521, otherwise 
known as the "Ship M011gage Decree of 1978", (v) RA 9295, otherwise known as the 
"Domestic Shipping Development Act of 2004", (vi) Commercial Contracts tor 
Transportation under the Code of Commerce, and other similar and related laws 


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"Medical Malpractice disputes" shall mean such failure of the medical professional, 
whether medical doctor, nurse, laboratory technician or the like, to follow the 
accepted standards of care, there being fault or negligence in the practice of his 
profession, resulting in physical injuries or death to the patient 
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SECTION 6 
Compositloll of the CommisslOlI. 
The Commission shall consist of a 
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Chairman, and seven (7) members, all to be appointed by President of the Republic of the 
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Philippines 
The Dean of the University of the Philippines College of Law shall be the 
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Chairman of the Commission The Secretaries of the Department of Health and Department 
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of Transportation and Communicalion 
Chairman (,f the Secunties and 
Exchange 
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Commission, Commissioner of the Insurance Commission and Director General of 
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Intellectual Property Office shall serve as ex officio members. The remaining member of the 
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Commission shall be appointed to the Commission provided 
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(a) 
(b) 
(c) 
(d) 
He is a member of the Philippine Bar with at least ten (10) years experience and 
specialization in corporate law, civil law, insurance law, torts and damages, 
intellectual property law, maritime law or arbitration, 
He is a holder of a masters degree in law, 
I-Ie is a licensed medical doctor for with at least ten (l0) years experience, 
specializing in chosen fields of medicine, including surgery, internal medicine, 
anesthesiology, etc, or 
He is recognized to be an expert in the fIeld of insurance, maritime and intellectual 
property with proven track record and at least ten (J 0) years experience in whom the 
business sector and the State can have confidence. 
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SECT lOr: 7. Functions and Powers of the CommissIOn. The Commission shall assist in the 
conduct of arbitrations for matters falling within the Areas of Dispute. It shall perform the 
following functions: 
(a) 
(b) 
(c) 
(d) 
To formulate and adopt an arbitration program relating to the Areas of Dispute; 
To formulate policies and prescribe rules and procedures to settle controversies 
relating to Areas of Dispute brought before it; 
To supervise the arbitration program, and exercise such authority related thereto with 
regard to the appointment, replacement and chall enging of the arbitrators, and 
To direct its oftlcers and employees to perform such functions as may be assigned to 
them from time to time. 
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SECTION 8 Compensation. The members of the Commission shall receive such salaries, 
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per diems and allowances in accordance with existing laws in the performance of their duties 
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and in carrying out the business of the Commission. 
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SECTION 9. term. The term of office of the members of the Commission shall be six (6) 
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years; provided that, of the Commission members first appointed, the Chairman shall hold 


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office for six (6) years; a member for five (5) years, another member for four (4) years, 
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another member for three (3) years, and the last member for (2) years The appointment to 
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any vacancy in the Commission shall only be for the unexpired pOltion of the term of the 
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predecessor. 
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SECTION 10. Qllorllm and VollIIg. The presence of a majority of the members of the 
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Commission shall constitute a quorum The decisions of the Commission shall be arrived at 
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by a majority vote of the quorum 
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SECTION 11. "'eeretanat. The Commission shall have a Secretariat that is attached to the 
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University of the Philippines Law Center, to be headed by an Executive Director, to be 
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appointed by the Commission, who shall be responsible Jar receiving requests for arbitration 
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and other pleadings, for notifying the parties thereto, for ilxing and receiving filing fees, 
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deposits, bosts of arbitration, administrative charges and other fees. Ii shall be the duty of the 
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Executive Director to notifY the parties of the awards made by the Arbitrators. 
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The Commission is authorized to appoint the consultants, personnel and staff as may be 
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allowed by law 
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SECTlON 12. Arbitrators. A sole arbitrator or three arbitrators (the "Arbitral Tribunal") 
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may settle a dispute covered by this Act Only arbitrators accredited by the Commission (the 
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"Arbitrator") shall be allowed to arbitrate disputes covered by this Act. 
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SECTION 13. Qllal!/icatiolls of Arbitrators. Given the highly specialized and technical 
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nature of the Areas of Dispute, Arbitrators shall possess the following minimum 
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qualifications: 
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(a) 
(b) 
He is a member of the Philippine Bar with at least five (5) years experience and 
specialization in corporate law, civil Jaw, insurance law, tOlts and damages, 
intellectual property law, maritime law or arbitration, 
He is recognized to be an expert 111 his tield with proven track record in whom the 
business sector and the State can have confidence 
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SECTlON l4. 
A Ilthority to Act as Mediator. By written agreement of the parties to a 
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dispute, an Arbitrator may act as mediator. The parties may also agree in writing that, 
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following a successful mediation, the mediator shall issue the settlement agreement in the 
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form of an arbitral award. 
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SECTION 15. Appointment ()f Foreign Arbitrator. The Commission shall promulgate rules 
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to allow for the appointment of a Foreign Arbitrator as co-arbitrator or chairman of an 
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Arbitral Tribunal a person who has not been previously accredited by the Commission; 
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Provided that: 
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(a) 
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(b) 
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One of the parties to tbe dispute is an International Party; 
The person appointed agreed to abide by the arbitration rules and policies of the 
Commission; 


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(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 bv the International Party. and 
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The Foreign Arbitrator shall be independent of, and of a different nationality from the 
International Party. 
SE;(:TlON l6 
Powers of the Arhitral hi/mllai Without prejudice to the powers set out in 
any other provision of Ihis Act, the ADR Law and in the Model Law. an Arbitral Tribunal 
shall have powers to make orders against any party for. 
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Security for costs; 
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Discovery of documents and interrogatories; 
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Giving of evidence by aftldavit, 
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Grant of interim measures ofptotection under Sections 28 and 29 of the ADR Act; 
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Samples to be taken from, or any observatIon to be made of; or experiment conducted 
upon, any property which is or forms part of the subject matter of the dispute; 
(1) 
Securing the amount in dispute; 
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Ensuring that any award which may be made in the arbitral proceediugs is not 
rendered ineffectual by the dissipation of assets by a party, and 
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An interim injunction or any other interim measure. 
SECTION 17. 1111111111111)1 (1'0111 Suit. An arbitrator shall not be liable for 
(a) 
Negligence in respect of anything done or omitted to be done in the capacity of 
arbitrator; and 
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(b) 
Any mistake in law, fact or procedure made in the course of arbitral proceedings or in 
the making of an arbitral award. 
SECTION 18. Appoint111ent of Experts, The Arbitral Tribunal or the Arbitrator, if requested 
by the disputing parties, may utilize the services of technical or legal experts to give guidance 
on technical questions calling for specialized knowledge in the settlement of the disputes. If 
the either or both parties make the request for an expert, the Arbitrator or the Arbitral 
Tribunal shall confirm the appointment of the expert. If the sole arbitrator makes the request 
for an expert, the Commission must confirm the appointment of the expert. 
SECTION 19. 
ArbitratlOl/ 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. 


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The administrative charges and Arbitrator/s' fees shall be computed on the basis of the 
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percentage of the sum in dispute to be fixed in accordance with the table of administrative 
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charges and Arbitrator/s' fees 
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SECTION 20. 
Deposit 
The Commission shall be authorized to fix the amount to be 
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deposited that must be equivalent to the expected arbitration expenses. The deposit shall be 
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paid to the Secretariat before arbitration proceedings shall commence 
Payment shall be 
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shared equally by the parties or be paid by any of them. If one party fails to contribute his 
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share in the deposit, the other party must pay in full. If both parties fail to tender the required 
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deposit, the case shall be considered dismissed bv the parties shall still be liable to pay one-
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half of the agreed administrative charge 
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SECTION 21. Court to Dismiss Case Involving any of the Areas a/Dispute. A regular court 
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before which a matter falling within any of the Areas of Dispute is filed shall, upon becoming 
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aware, but not later than the pre-trial conference, dismiss the case and refer the parties to 
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arbitration to be conducted by the Commission. 
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SECTION 22. Awards and Judicial /(el'iell'. The arbitral award shall be binding upon the 
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parties The provisions of Chapter 7 of the ADR Act shall govern the award, judicial review 
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and enfOlJcement of the arbitral award 
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SECTlON 23. I'flnding. The amoLlnt of fifty million pesos W50,000,000 00) is hereby 
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authorized to be released and shall be included in the General Appropriations Act of the year 
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following its enactment into law and thereafter to cover the operating and capital expenses of 
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the Commission. 
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SECTION 24. Separability Clause. The provisions of this Act are declared to be separable 
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and if any provision or the application thereof is held invalid or unconstitutional, the validity 
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of the other provisions shall not be affected. 
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SECTION 25 Repealing Clause 
All provisions of existing laws, proclamations, decrees, 
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letters of instruction and executive orders contrmy to or inconsistent with this Act are hereby 
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repealed or modified accordingly. 
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SECTION 26. Effectivity Clause. This Act shall take effect immediately 
Approved,