Litigation and dispute resolution in the Philippines are generally done through court proceedings that are accusatorial or adversarial in nature. The Philippine legal system is generally considered to be a mix of both civil and common law. Legal processes are conducted through both written submissions and oral arguments.
For commercial disputes, alternative modes of resolution are also available to the parties – normally through arbitration, court-annexed/referred mediation, early neutral evaluation, mediation-arbitration and mini-trial (Section 3(a), Alternative Dispute Resolution Act of 2004).
The Philippine court system generally follows a hierarchical structure, comprised of the first level courts composed of the Municipal Trial Courts (MTCs), Metropolitan Trial Courts (MeTCs), Municipal Trial Courts in Cities (MTCCs) and Municipal Circuit Trial Courts (MCTCs); the second level courts composed of the Regional Trial Courts (RTCs); and the appellate courts like the Court of Appeals, the Court of Tax Appeals, the Sandiganbayan, and the Supreme Court.
The Amended Philippine Judiciary Reorganization Act provides for the jurisdictional division between first-and-second-level courts by considering the complexity of a case and the experience needed by the judges assigned to hear it (First Sarmiento vs. PBCOM, G.R. No 202836, 19 June 2018).
Some RTCs are also designated as Special Commercial Courts and Family Courts. Likewise, the Philippines also has Shari’a courts that adjudicate cases involving The Code of Muslim Personal Laws of the Philippines. Further, the Philippines also has an anti-graft collegial court called the Sandiganbayan and a Court of Tax Appeals dedicated to resolving tax disputes and controversies between the state and taxpayers, including civil and criminal cases for violation of tax laws (Section 7, Republic Act (RA) 1125, as amended by RA 9282).
The Supreme Court is the highest court and has the power to review, revise, reverse, modify, or affirm – on appeal or certiorari – final judgments or orders of lower courts, as the law or the Rules of Court may provide, in cases involving:
Generally, court filings and proceedings are open to the public. The presumption that the public has a right to see and copy judicial records applies to those documents which properly come before the court in the course of an adjudicatory proceeding and which are relevant to the adjudication (Hilado vs. Reyes, A.M. No RTJ-05-1910, 15 April 2005). The Philippine Constitution likewise provides for the right of the people to access official records and documents.
However, the law provides that certain proceedings and information can be kept confidential under particular circumstances. Examples include the following instances:
Generally, litigation in the Philippines is done with the aid of lawyers who are duly authorised members of the Philippine bar. Applicants for admission as members of the bar must be citizens of the Philippines, at least 21 years of age, of good moral character and Philippine residents. Additionally, they should have satisfactorily completed the necessary courses in a law school or university duly recognised by the Philippine government and passed the bar examinations administered by the Supreme Court. The Philippine Constitution limits the practice of law as a profession to Filipino citizens.
Generally, the parties to a suit in the Philippines fund their own litigation. While there are no specific rules expressly prohibiting third-party litigation funding, the Canons of Professional Ethics prohibit lawyers from having any financial interest in the subject of litigation (Rule 42 of the Canons of Professional Ethics).
However, third-party funding can arguably be legal in an instance where there is a valid assignment of rights or credit to be subsequently collected through legal action. In such an assignment, the creditor, through a legal transfer, such as a contract of sale, dation in payment, donation, transfers his or her right or credit to a third-party assignee who then succeeds as a real party in interest (Article 1624, Civil Code).
See 2.1 Third-Party Litigation Funding.
See 2.1 Third-Party Litigation Funding.
See 2.1 Third-Party Litigation Funding.
See 2.1 Third-Party Litigation Funding.
Generally, there is no prohibition on the imposition of contingency fees in litigation. Lawyers are usually paid at an hourly rate, by a contingent fee or a combination of both – depending on the arrangement with the client. However, these arrangements are subject to Supreme Court supervision that ensures the fees are not excessive, tainted with undue influence, fraud or imposition. Likewise, Philippine rules prohibit champerty for public policy considerations (Rule 42 of the Canons of Professional Ethics; Spouses Cadavedo vs. Lacaya, G.R. No 173188, 15 January 2014).
See 2.1 Third-Party Litigation Funding.
Plaintiffs intending to file a complaint must comply with the conditions precedent imposed by law. Otherwise, the court may dismiss the complaint through a motion to dismiss filed by the defendants. Examples of required conditions precedent include earnest efforts toward a compromise (which have failed) before a suit is filed between members of the same family (Article 151, Family Code) and conciliation proceedings between parties who reside in the same city or municipality, except in specific instances enumerated under the law (Section 408, RA 7160).
Under the Civil Code, there is a five-year prescriptive/limitation period from the time the right of action accrues if the law does not specifically fix any period for initiating the claim. Otherwise, the following apply:
The limitation period is interrupted when an action is filed before the court, when there is a written extrajudicial demand by the creditors and when there is any written acknowledgment of the debt by the debtor.
Jurisdiction over the defendant is acquired either upon a valid service of summons or the defendant's voluntary appearance in court. If the defendant does not voluntarily appear in court, jurisdiction can be acquired by personal or substituted service of summons (Ong vs. Co, G.R. No 206653, 25 February 2015). Jurisdiction, however, can also be acquired if the defendant voluntarily submits to the jurisdiction of the court by appearing through his or her counsel in filing the appropriate pleadings (Spouses Crisologo vs. Omelio, A.M. No RTJ-12-2321, 03 October 2012).
A civil action is commenced by the filing of the original complaint in court (Section 5, Rule 1, Rules of Court (ROC)). Jurisdiction over the subject matter is determined by examining the material allegations of the complaint and the relief sought (First Sarmiento vs. PBCOM, G.R. No 202836, 19 June 2018). As jurisdiction is a matter of substantive law, the established rule is that the statute in force at the time of the commencement of the action determines the jurisdiction of the court (BPI vs. Hong, G.R. No 161771, 15 February 2012).
Additionally, the complaint or initiatory pleading must be accompanied by a certificate against forum shopping, stating under oath that the plaintiff or principal party has not commenced any action or filed any claim, before filing the complaint, involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his or her knowledge, no such other action or claim is pending therein. Further, the same certificate should contain a complete statement of the present status of any other pending action or claim of a similar nature. Finally, the plaintiff should undertake, in the certificate, if he or she learns that a similar action or claim has been filed or is pending, to report that fact within five days (Section 5, Rule 7, ROC).
As a matter of right, a party may amend his or her complaint once at any time before a responsive pleading is served (Section 2, Rule 10, ROC). Likewise, after a responsive pleading is served, substantial amendments may be made only with the court's leave (Section 3, Rule 10, ROC).
In the Philippines, a defendant is notified of the action brought against him or her through the service of summons. Service of the writ is also the means by which the court acquires jurisdiction over his or her person (Licaros vs. Licaros, G.R. No 150656, 29 April 2003). The summons may be served by the sheriff, his or her deputy, or any other proper court officer, or for justifiable reasons by any suitable person authorised by the court issuing the summons (Section 3, Rule 14, ROC), whether in person (Section 6, Rule 14, ROC), or by substituted service, leaving copies of the summons at the defendant's residence with some person of suitable age and discretion then residing therein, or leaving the copies at the defendant's office or regular place of business with some competent person in charge thereof (Section 7, Rule 14, ROC).
As a rule, when defendants do not reside and are not found in the Philippines, Philippine courts cannot try any case against them because of the impossibility of acquiring jurisdiction over their person unless they voluntarily appear in court. But when the case is one of actions in rem or quasi in rem, enumerated in Section 15 Rule 14 of the Rules of Court, Philippine courts have jurisdiction to hear and decide the case. Actions in personam and actions in rem or quasi in rem differ in that actions in personam are directed against specific persons and seek personal judgments. On the other hand, actions in rem, or quasi in rem, are directed against the thing or property or status of a person and seek judgments with respect thereto as against the whole world (Licaros vs. Licaros, G.R. No 150656, 29 April 2003).
A defendant who is a non-resident and is not found in the country may be served with summons by extraterritorial service in four instances:
In these instances, extraterritorial service of summons may be effected under any of three modes:
A defendant that is a foreign private juridical entity not registered in the Philippines, or without any local agent, may still, with leave of court, be effected with service of summons outside of the Philippines through any of the following means:
Except in cases of annulment or declaration of nullity of marriage, or of legal separation, if the defending party fails to answer within the time allowed, the complainant may move to declare the defending party in default. Subsequently, the court can proceed to render judgment granting the claimant such relief as the complaint may warrant, unless the court, in its discretion, requires the claimant to submit evidence. Such reception of evidence may be delegated to the clerk of the court (Section 3, Rule 9, ROC).
The Rules of Court specifically provides for class suits. In a class suit, the subject matter of the controversy must be one of common or general interest to persons so numerous that it is impracticable to join all as parties. In this instance, a number of these litigants, whom the court finds to be sufficiently numerous and representative to fully protect the interests of all concerned, may sue or defend for the benefit of all. Any party with an interest shall have the right to intervene to protect his or her individual interest (Section 12, Rule 3, ROC). An element of a class suit is the adequacy of representation. In determining the question of fair and adequate representation of members of a class, the court must consider the following:
Cost estimates for litigation including court filing fees, out-of-pocket expenses and attorney’s fees are usually discussed at the beginning of an engagement. Generally, filing fees are around 2% of the total amount of the claim based on the complaint. However, there is currently no rule or law requiring lawyers to provide cost estimates at the outset. The fees that lawyers may charge are, however, governed by the Code of Professional Responsibility. Likewise, arrangements between clients and lawyers for fees are subject to supervision by the Supreme Court to ensure that the fees are not excessive, tainted with undue influence, fraud, or imposition.
Motions to dismiss the complaint initiating the civil action may be filed prior to trial and within the time for – but before filing – the answer to the complaint (Section 1, Rule 16, ROC).
Interim remedies are also available and can be obtained from the court. These include remedies such as a 72-hour temporary restraining order (TRO), a 20-day TRO and a preliminary injunction, which may also be granted at any stage of an action or proceeding prior to the judgment or final order, requiring a party or a court, agency or a person to refrain from a particular act or acts (Rule 58, ROC).
Likewise, another example of a remedy is a writ of preliminary attachment to have the property of the adverse party attached as security for the satisfaction of any judgment that may be recovered. This writ may be granted, upon the proper grounds, at the commencement of the action or at any time before judgment (Rule 57, ROC).
If an answer fails to tender an issue, or otherwise admits the material allegations of the adverse party’s pleading, the court can, on motion of that party, direct judgment on the pleadings, except in actions for declaration of nullity or annulment of marriage or for legal separation (Section 1, Rule 34, ROC).
Motions for summary judgments can also be filed by the claimant/petitioner or the defendant/respondent, if the court finds that the responsive pleading filed by the adverse party with respect to a claim, counterclaim or cross-claim or to a petition for declaration of relief does not tender a genuine issue as to any material fact and that one party is entitled to a judgment as a matter of law (Section 1, Rule 35, ROC).
The motion for summary judgment must be accompanied by supporting affidavits, depositions, or admissions and served on the adverse party ten days before the scheduled hearing. At least three days before the scheduled hearing, the adverse party can file his or her opposition or comment with opposing affidavits, depositions or admissions. After the hearing, the judgment sought will be rendered forthwith if the pleadings, supporting affidavits, depositions, and admissions on file show that, except as to the amount of damages, there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law (Rule 35, ROC).
Motions to dismiss the complaint initiating the civil action may be made before trial on the following grounds:
Interested parties not named as a plaintiff/claimant or defendant may join a lawsuit as plaintiffs or be joined as defendants. The joinder of parties is compulsory for those parties to an interest without whom no final determination of claims can be made (Section 7, Rule 3, ROC). Likewise, joinder as plaintiffs or defendants is permitted for all persons with a right to relief and/or against whom a right to relief is alleged to exist in respect to, or arising out of, the same transaction or series of transactions subject of the lawsuit (Section 6, Rule 3, ROC).
A complaint-in-intervention, cross-claim, or even a third-party complaint can be filed to have all relevant parties joined in the lawsuit.
The court is empowered to make such orders as may be just to prevent any plaintiff or defendant from being embarrassed or put to expense in connection with any proceedings in which he or she may have no interest. (Section 6, Rule 3, ROC)
As a general rule, costs are paid by the losing party, but the courts usually leave the parties to shoulder their own costs. Courts also have the power to order that the payment of costs be shared by both parties (Section 1, Rule 142, ROC).
However, there is no procedural rule that provides that a party can request the court to direct the other party to provide security for defendant’s costs except in the case of preliminary attachment, where the plaintiff or any proper party may have the property of the adverse party attached as security for the satisfaction of any judgment that may be recovered (Section 1, Rule 57, ROC).
It should also be noted that to obtain an interim remedy, the claimant must give a bond executed to the adverse party in the amount fixed by the court in its order granting the issuance of the writ, guaranteeing that the latter will pay all the costs that can be awarded to the adverse party (Section 4, Rule 57; Section 4, Rule 58; Section 2, Rule 59; Section 2, Rule 60, ROC).
Regarding interim remedies, the party applying for the order must give a bond executed in favour of the adverse party in the amount fixed by the court in its order granting the issuance of the writ, guaranteeing that the latter will pay all the costs that may be awarded to the adverse party and all damages that he or she can sustain by reason of the writ issued, if the court finally judges that the applicant was not entitled to the writ (Section 4, Rule 57; Section 4, Rule 58; Section 2, Rule 59; Section 2, Rule 60, ROC).
Interim applications for preliminary injunction on matters of extreme urgency can be granted within an immediate time frame for a period effective for 72 hours. Then, within the 72-hour period, the judge before whom the case is pending shall conduct a summary hearing to determine whether the temporary restraining order shall be extended until the application for preliminary injunction can be heard. In no case shall the total period of effectivity of the temporary restraining order exceed 20 days, including the original 72 hours. Thereafter, within the 20-day period, the judge must order the party or person to show cause, at a specified time and place, why the injunction should not be granted; determine, within the same period, whether or not the preliminary injunction shall be granted; and accordingly issue the corresponding order (Section 5, Rule 58, ROC).
The Rules of Court provides for modes of discovery in civil cases (Rules 23 to 28, ROC).
Among the modes of discovery, deposition upon oral examination or written interrogatories can be made to take the testimony of any person, whether a party or not, at the instance of any party, by leave of court, after jurisdiction has been obtained over any defendant or over property which is the subject of the action. Likewise, depositions can be taken without leave of court after an answer has been served (Rule 23, ROC). Under these same conditions, written interrogatories to parties can also be made by a party desiring to elicit material and relevant facts from any adverse parties. These adverse parties may include a public or private corporation or a partnership or association. In such instances, the information should be elicited from any officer thereof competent to testify in its behalf (Rule 25, ROC). Motions for production or inspection of documents, including, papers, books, accounts, letters, photographs, objects or tangible things which constitute or contain evidence material to any matter involved in the action and which are in the possession, custody or control of any party can also be ordered upon showing of good cause (Section 1, Rule 27, ROC).
Perpetuation of testimony may also be undertaken by a person who desires to perpetuate his or her own testimony or that of another person regarding any matter that may be cognisable in any court of the Philippines. This is done by filing a verified petition in the court of the place of the residence of any expected adverse party (Rule 24, ROC). Written requests for admission can also be made by a party upon any other party for the admission by the latter of the genuineness of any material and relevant document described in the request or of the truth of any material and relevant matter of fact set forth in the request. This may be done at any time after issues have been joined (Rule 24, ROC).
Submission to physical or mental examination can also be ordered by the court in an action in which the mental or physical condition of a party is in controversy (Rule 28, ROC).
Discovery from third parties can be obtained through a subpoena. By a subpoena, the courts can require a person to attend and to testify at the hearing or the trial of an action, or at any investigation conducted by a competent authority, or for the taking of his or her deposition. It may also require him or her to bring with him or her any books, documents, or other things under his or her control, in which case it is called a subpoena duces tecum (Section 1, Rule 21, ROC).
Generally, modes of discovery are employed under the supervision of, and subject to, the court’s approval and discretion.
Availment of modes of discovery is likewise premised upon good cause warranting them. In this regard, among other instances, courts can wholly disallow or partially limit availment of modes of discovery when a deposition is shown to be conducted in bad faith or in such a manner as to unreasonably annoy, embarrass, or oppress the deponent or party (Section 18, Rule 23, ROC). Likewise, when a motion to produce concerns documents, papers, books, accounts, letters, photographs, objects or tangible things that are privileged in nature, courts can wholly disallow or partially limit such availment (Section 1, Rule 27, ROC).
Also, see 5.1 Discovery and Civil Cases.
The ROC provides for modes of discovery (Rules 23 to 28, ROC).
The ROC expressly recognises attorney-client privilege. An attorney cannot, without the consent of his or her client, be examined as to any communication made by the client to him or her, or his or her advice given thereon in the course of, or with a view to, professional employment, nor can an attorney's secretary, stenographer, or clerk be examined, without the consent of the client and his or her employer, concerning any fact the knowledge of which has been acquired in a professional capacity (Section 24, Rule 130, ROC).
The ROC relating to evidence recognise disqualification by reason of privileged communication. The following persons cannot testify as to matters learned in confidence between them: husband and wife, attorney and client, physician and patient, and priest and penitent. Matters learned by a public officer in relation to the communication made to him in official confidence are similarly non-disclosable (Section 24, Rule 130, ROC). Likewise, other privileged matters that are not specifically mentioned by the ROC include voters and their vote, trade secrets, information contained in tax census returns, bank deposits with exceptions and identity of government informers. The records, evidence and arbitral award in arbitration proceedings are also confidential and must not be published, subject to exceptions provided by law (Section 23, RA 9285).
Also, see 5.1 Discovery and Civil Cases and 5.3 Discovery in This Jurisdiction.
Injunctive relief is granted at any stage of an action or proceeding prior to the judgment or final order, requiring a party or a court, agency or a person to refrain from a particular act or acts. It may also require the performance of a particular act or acts, in which case it shall be known as a preliminary mandatory injunction (Section 1, Rule 58, ROC). An injunction may come in the form of a 72-hour temporary restraining order (TRO), a 20-day TRO or a preliminary injunction to subsist during the course of the proceedings (Section 5, Rule 58, ROC).
On matters of extreme urgency, injunctive relief can be granted for a period effective for 72 hours. Then, within the 72-hour period, the judge before whom the case is pending shall conduct a summary hearing to determine whether the temporary restraining order shall be extended until the application for preliminary injunction can be heard. In no case shall the total period of effectivity of the temporary restraining order extend for more than 20 days, including the original 72 hours. Thereafter, within the 20-day period, the judge must order the party or person to show, at a specified time and place, why the injunction should not be granted, determine within the same period whether or not the preliminary injunction shall be granted, and accordingly issue the corresponding order (Section 5, Rule 58, ROC).
As a general rule, no preliminary injunction shall be granted without hearing and prior notice to the party or person whose enjoinment is sought. However, injunctive relief can be granted ex parte for a period effective for 72 hours through a 72-hour temporary restraining order (TRO), if the matter is of extreme urgency and the applicant will suffer grave injustice and irreparable injury. Then, within the 72-hour period, the judge before whom the case is pending shall conduct a summary hearing to determine whether the TRO shall be extended until the application for preliminary injunction can be heard (Section 5, Rule 58, ROC).
The applicant for injunctive relief can be held liable for damages which may be sustained by reason of the injunction or temporary restraining order. In such an instance, the bond filed by the applicant upon the grant of the injunction in favour of the party or person enjoined and in an amount fixed by the court will answer for such damages (Section 4, Rule 58, ROC). At the trial, any damages to be awarded against the applicant or for the applicant, as well as to any party, shall be claimed, ascertained, and awarded. (Section 8, Rule 58, ROC).
Generally, injunctive relief covers only parties and properties within the jurisdiction of the court granting the same. In this regard, injunctive relief granted by the Supreme Court covers parties and properties within the entire country while relief granted by lower level courts is limited to the jurisdiction of that court.
The Rules of Court do not prohibit applicants from seeking injunctive relief against third parties. However, as a general rule, no preliminary injunction shall be granted without hearing and prior notice to the party or person whose enjoinment is sought (Section 5, Rule 58, ROC).
A respondent who does not comply with the terms of an injunction may be cited for indirect contempt punishable by imprisonment, fine or both (Ysasi vs. Judge Fernandez, G.R. No L-28593, 16 December 1968). Only the court which issued the injunction can impose a sanction for contempt of that injunction (Sections 4 and 5, Rule 71, ROC; Igot vs. CA, G.R. No 150794, 17 August 2004).
Trials are usually conducted pursuant to a pre-trial order limiting the issues; and in the following manner:
If several defendants, or third-party defendants and so forth, having separate defences are represented by different counsel, the court shall determine the relative order of presentation of their evidence (Section 5, Rule 30, ROC).
A case management hearing, in the form of a pre-trial conference, is held prior to trial. The parties consider the possibility of amicable settlement; the simplification of issues; the necessity or possibility of amendment of pleadings; the possibility of obtaining stipulation of facts and documents; the limitation of the number of witnesses; the advisability of preliminary reference of issues to a commissioner; the propriety of rendering judgment on the pleadings, summary judgment, or dismissal of the action; the advisability of suspending the proceedings; and any other matters that may aid in the prompt disposition of the action (Section 2, Rule 18, ROC). The parties file pre-trial briefs and judicial affidavits prior to the pre-trial conference in order to facilitate discussion of the issues. Likewise, upon the termination of the pre-trial conference, the court issues a pre-trial order which controls the trial. Courts also now conduct status hearings to ensure the timely filing of due pleadings, to inventory pending incidents and to ensure that hearings are continuously set until termination of the trial.
Jury trials are currently not available in the Philippines.
The ROC provides the rules on evidence (Rule 128-Rule 134, ROC). There are also special rules on electronic evidence providing for the offer, and use in evidence, of electronic documents or electronic data messages (Section 1, Rule 1, Supreme Court Rules on Electronic Evidence). As to admissibility, evidence is admissible when it is relevant to the issue and is not excluded by the law (Section 3, Rule 128, ROC). Evidence is relevant when it bears a relation to a fact in issue, so as to induce belief in its existence or non-existence. Evidence on collateral matters shall not be allowed, except when it tends in any reasonable degree to establish the probability or improbability of the fact in issue (Section 4, Rule 128, ROC).
The ROC expressly provide for expert witness testimony. The rules allow the opinion of a witness – on a matter requiring special knowledge, skill, experience or training which he or she is shown to possess – to be received in evidence (Section 49, Rule 130, ROC). The credibility of the expert witness and the evaluation of his or her testimony is left to the discretion of the trial court (Perez vs. People, G.R. No 191265, 14 September 2011).
See 1.3 Court Filings and Proceedings.
Judges take a lead role in the Philippine court system. Judges directly prepare the judgment or final order determining the merits of the case (Section 2, Rule 51, ROC). Examination of witnesses must also be done orally before a judge in open court (Section 1, Rule 132, ROC). Judges are not mere referees like those of a boxing bout, only to watch and decide the results of the game; they have as much interest as counsel in the orderly and expeditious presentation of evidence, calling attention of counsel to points at issue that are overlooked, directing them to ask questions that would elicit the facts on the issues involved, clarifying ambiguous remarks by witnesses, etc (People vs. Zheng, G.R. No 127580, 22 August 2000).
Large commercial disputes in the second level courts usually take between two and five years from the time of the filing of the complaint to the time of rendition of judgment. Appeal of the trial court judgment to the Court of Appeals and then to the Supreme Court also usually take between two and five years. While the ROC prescribe periods for resolution upon completion of all submissions, the end date for the timeframe varies depending on the state of congestion of the court dockets; on the parties’ availment of interim remedies, dispositive motions and modes of discovery; on the complexity of the commercial dispute in question; and on the documents and witnesses that need to be presented during the trial proper. Parties should study the possibility of early judgment applications and the possibility of settling the whole or portions of the dispute by alternative dispute resolution (ADR) to greatly reduce the timeframe.
Court approval is not necessary in the settlement of a lawsuit, since parties may freely to enter into stipulations in a compromise agreement (Gadrinab vs. Salamanca, G.R. No. 194560, 11 June 2014). However, court approval through a judicial compromise adds the effect of res judicata and that compromise becomes immediately executory and not appealable unless set aside by mistake, fraud, violence, intimidation, undue influence, or falsity of documents that vitiated the compromise agreement (Spouses Romera vs. Tan, G.R. No. 147570, 27 February 2004).
Parties may freely to enter into stipulations in a compromise agreement (Gadrinab vs. Salamanca, G.R. No. 194560, 11 June 2014). These stipulations may include clauses to support confidentiality and liquidated damages in cases of breach.
Court approved judicial compromise can be enforced by execution of the judgment (Spouses Romera vs. Tan, G.R. No. 147570, 27 February 2004). If the compromise is not approved by the court, parties can file a civil action to enforce the compromise agreement as a contract.
Compromises can be set aside if tainted by mistake, fraud, violence, intimidation, undue influence, or falsity of documents that vitiated the compromise agreement (Spouses Romera vs. Tan, G.R. No. 147570, 27 February 2004).
Awards in the form of compensatory damages and costs of suit, moral damages, nominal damages, temperate damages, liquidated damages and exemplary damages may be awarded to the successful litigant (Article 2217, 2221, 2224, 2226, Civil Code). A breach of an obligation generally gives rise to a cause of action for specific performance and compensatory damages (Article 1170, Civil Code). However, if the act whose performance is sought has become impossible or illegal, the payment of compensatory damages will be determined by the court (Article 1204, Civil Code).
Generally, in claiming for any kind of damages, that claim being civil in nature, the required standard of proof is preponderance of evidence. Preponderance of evidence is the weight, credit, and value of the aggregate evidence on either side and is usually considered to be synonymous with “greater weight of the evidence” or “greater weight of the credible evidence”.
Among the different types of damages that may be awarded, exemplary damages are awarded by way of example or correction; and only if a litigant is judged by the court to be entitled to any of the other types of damages (Article 2226, Civil Code). Moral damages can be awarded in cases where the winning party suffered from, among other things, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and physical suffering (Article 2217, Civil Code).
Interest is awarded on the total amount of a monetary judgment, which can include the recovery of the costs of litigation. Interest, in the amount of 6% per annum, will be imposed on the judgment of the court awarding a sum of money when it becomes final and executory; and until its satisfaction (Nacar vs. Gallery Frames, G.R. No. 189871, 13 August 2013; Central Bank of the Philippines Circular No. 799).
In enforcing a domestic judgment, the prevailing party must first file a motion to issue a writ of execution, within five years from the date of entry of the judgment. After this period, the winning party must commence a separate action, but before it is barred by the statute of limitation. The revived judgment may also be enforced by motion within five years from the date of its entry and thereafter by action before it is barred by the statute of limitations (Section 6, Rule 39, ROC).
In enforcing a foreign judgment, the prevailing party must file an action with the appropriate local court to enforce the judgment in the Philippines. This action can be defended on the grounds of lack of jurisdiction, lack of notice to the party, collusion, fraud, or clear mistake of law or fact (Section 48, Rule 39, ROC). It is essential that there should be an opportunity to challenge a foreign judgment, in order for the court in the Philippines to properly determine its efficacy (Mijares vs. Ranada, G.R. No. 139325, 12 April 2005).
The Philippine court system generally follows a hierarchical structure comprised of the first level courts composed of the Municipal Trial Courts (MTCs), Metropolitan Trial Courts (MeTCs), Municipal Trial Court in Cities (MTCCs) and Municipal Circuit Trial Courts (MCTCs); the second level courts composed of the Regional Trial Courts (RTCs); and the appellate courts like the Court of Appeals, the Court of Tax Appeals, the Sandiganbayan, and the Supreme Court.
Following the hierarchical structure of the Philippine court system, the second level courts can exercise appellate jurisdiction over all cases decided by the first level courts (Section 22 of Batas Pambansa Blg. 129, as amended by RA 7691).
In the appellate level, the Court of Appeals is vested with appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of the Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, including the Securities and Exchange Commission, the Social Security Commission, the Employees' Compensation Commission and the Civil Service Commission, except those falling within the appellate jurisdiction of the Supreme Court (Section 9(3), RA 7902).
The Court of Appeals also exercises original jurisdiction over actions for annulment of judgments of second level courts, and issues writs of mandamus, prohibition, certiorari, habeas corpus, and quo warranto, and auxiliary writs or processes, whether or not in aid of its appellate jurisdiction (Section 9, RA 7902).
Lastly, the Supreme Court, being the highest level of the judiciary, is conferred with the power to review judgments of lower courts, including the Court of Appeals and to revise, reverse, modify, or affirm on appeal or certiorari, as the law may provide (Section 5 of Article VIII of the 1987 Philippine Constitution).
The appeal must be brought within 15 days from notice of the judgment or final order to be appealed. Where a record on appeal is required, the appellant must file a notice of appeal and a record on appeal within 30 days from notice of the judgment or final order (Section 3, Rule 41, ROC).
Any question of law or fact that has been raised in the lower court and that is within the issues framed by the parties is a potential ground for appeal (Section 15, Rule 44, ROC).
Conditions and requirements are imposed by the court in granting an appeal. The remedy of an appeal is not a matter of right but a mere statutory privilege. Accordingly, the parties invoking that privilege should faithfully comply with the requirements of the Rules of Court.(Heirs of Arturo Garcia vs. Iba, G.R. 162217, 22 July 2015).
Among the requirements, the appeal must be brought within 15 days from notice of the judgment or final order to be appealed. Where a record on appeal is required, the appellant must file a notice of appeal and a record on appeal within 30 days from notice of the judgment or final order (Section 3, Rule 41, ROC). Within the period for taking an appeal, the appellant shall pay, to the clerk of the court which rendered the judgment or final order appealed from, the full amount of the appellate court docket and other lawful fees. Proof of payment of these fees shall be transmitted to the appellate court together with the original record or the record on appeal (Section 5, Rule 40, 4, Rule 41, ROC).
The notice of appeal should indicate the parties to the appeal, specify the judgment or final order (or part thereof) appealed from, specify the court to which the appeal is being taken, and state the material dates showing the timeliness of the appeal (Section 5, Rule 41, ROC). In the record on appeal, the full names of all the parties to the proceedings shall be stated and it shall include the judgment or final order from which the appeal is taken and, in chronological order, copies of those pleadings, petitions, motions and all interlocutory orders as are related to the appealed judgment or final order for the proper understanding of the issue involved, together with such data as will show that the appeal was perfected on time (Section 6, Rule 41, ROC).
Among other powers, appellate courts have the power of execution pending appeal and to issue injunctive relief. In this regard, if the appeal has been duly perfected and finally resolved, the appellate court may, on a motion in the same case, when the interests of justice so require, direct the court of origin to issue the writ of execution (Section 1, Rule 39, ROC). Likewise, a preliminary injunction may be granted, at any stage of an action or proceeding prior to the judgment or final order by the Court of Appeals, requiring a party or a court, agency or a person to refrain from a particular act or acts. It may also require the performance of a particular act or acts, in which case it shall be known as a preliminary mandatory injunction (Section 2, Rule 58, ROC).
Generally, the costs are awarded to the successful party. However, the court has the discretion to rule that either party must pay the costs of an action, or that the costs are divided, provided that the reasons given are valid and equitable. No costs are allowed against the Republic of the Philippines, unless otherwise provided by law (Section 1, Rule 142, ROC).
Generally, the court has the discretion to rule that either party must pay the costs of an action, or that the costs are divided, provided that the reasons given are valid and equitable. In addition, the following factors are also considered in awarding costs:
See 9.3 Pre and Post-Judgment Interest.
The Philippine alternative dispute resolution (ADR) system means any process or procedure used to resolve a dispute or controversy, other than the adjudication of a presiding judge of a court or an officer of a government agency, as defined in the 2004 ADR Act, in which a neutral third person participates to assist in the resolution of issues (Article 1.6, Rule 2 of the Implementing Rules and Regulations of the Alternative Dispute Resolution Act of 2004 (IRR of the 2004 ADR Act)).
There are several types of ADR process commonly used in the Philippines: arbitration, mediation, conciliation, and other familiar ADR modes. Among these types of ADR, the more popular processes are arbitration and mediation. The Supreme Court encourages use of arbitration since it is an inexpensive, speedy and amicable method of settling disputes. Aside from unclogging judicial dockets, arbitration also hastens the resolution of disputes, especially of the commercial kind. It is thus regarded as the future of international civil and commercial disputes (LM Power vs. Capitol Industrial, G.R. No. 141833, 26 March 2003).
The Philippine Legal System promotes ADR. The Supreme Court itself has promulgated the Special Rules of Court on Alternative Dispute Resolution that set a policy on arbitration. In this regard, where the parties have agreed to submit their dispute to arbitration, courts shall refer the parties to arbitration bearing in mind that such an arbitration agreement is the law between the parties and that they are expected to abide by it in good faith. Further, courts cannot refuse to refer parties to arbitration, even when that referral tends to oust a court of its jurisdiction (Rule 2.2A, Special Rules of Court on Alternative Dispute Resolution).
The following are ADR Institutions in the Philippines: Philippine Mediation Centre, Philippine Dispute Resolution Centre Inc (PDRCI), Construction Industry Arbitration Commission (CIAC), Office for Alternative Dispute Resolution, and the IBP Philippine International Center for Conflict Resolution, launched in 2019.
The Philippine law on arbitration includes the Civil Code of the Philippines, RA 876, the Arbitration Law, RA 9285 entitled the Alternative Dispute Resolution Act of 2004 (2004 ADR Act) and the Supreme Court’s A.M. No 07-11-08-SC dated 01 September 2009 entitled Special Rules of Court on Alternative Dispute Resolution (Special ADR Rules). Notably, the 2004 ADR Act implements the UNCITRAL Model Law on International Commercial Conciliation 2002 (UNCITRAL Model Conciliation Law).
The Philippine Alternative Dispute Resolution Act does not apply to the resolution or settlement of labour disputes, the civil status of persons, the validity of a marriage, any ground for legal separation, the jurisdiction of courts, future legitime, criminal liability and those disputes which by law cannot be compromised, such as future support (that is, the right to the support of spouses, descendants, ascendants and siblings at some future time) (Section 6, RA 9285; Article 2035, Civil Code).
As a general rule, errors of an arbitral tribunal are not subject to correction by the judiciary. As a private alternative to court proceedings, arbitration is meant to be an end, not the beginning, of litigation. Neither the Arbitration Law nor the Alternative Dispute Resolution Law allows a losing party to appeal from the arbitral award. The statutory absence of an appeal mechanism reflects the state's policy of upholding the autonomy of arbitration proceedings and their corresponding arbitral awards. Thus, the arbitral award is final and binding on the parties by reason of their contract – the arbitration agreement (Fruehauf Electronics Philippines Corp. vs. Technology Electronics Assembly and Management Pacific Corp., G.R. No 204197, 23 November 2016; Rule 19.7, Supreme Court Special Rules of Court on Alternative Dispute Resolution).
Nonetheless, an arbitral award is not absolute. The Supreme Court Special Rules of Court on Alternative Dispute Resolution recognises that the court can vacate or set aside the decision of an arbitral tribunal upon a clear showing that the award suffers from any of the infirmities or grounds for vacating an arbitral award under the ADR Law and (UNCITRAL) Model Law. The grounds for vacating a domestic arbitral award under Section 24 of the ADR Law contemplate the following scenarios:
The decision and orders of the Regional Trial Court relating to the arbitral award can be reviewed by the Court of Appeals and subsequently by the Supreme Court (Rules 19.8, 19.12 and 19.36, Special Rules of Court on Alternative Dispute Resolution). Another exception to the general rule is an arbitral award rendered by the Construction Industry Arbitration Commission (CIAC), which is appealable to the Court of Appeals (Rule 43, ROC).
For a domestic award, at any time after the lapse of 30 days from receipt by the petitioner of the arbitral award, he or she may petition the court to confirm that award. The petition for confirmation of a domestic arbitral award may be filed with the Regional Trial Court having jurisdiction over the place in which one of the parties is doing business, where any of the parties reside or where arbitration proceedings were conducted (Rule 11.2A, 11.3, Special Rules of Court on Alternative Dispute Resolution).
For foreign arbitration proceedings, any party to a foreign arbitration may petition the court to recognise and enforce a foreign arbitral award at any time after receipt of a foreign arbitral award. This petition shall be filed, at the option of the petitioner, with the Regional Trial Court: