Updates in Philippine Law and Jurisprudence

The Philippine Supreme Court and the Legislative Department have recently updated the rules, law and jurisprudence on:

• electronic filings of pleadings and other submissions to lower courts;
• the procedure governing construction arbitration;
• arbitral awards tested on the grounds of public policy; and
• the simplified Philippine Domestic Adoption Law.

Electronic filings of pleadings and other submissions to lower courts

The Supreme Court has mandated that, by 5 April 2024, the primary manner of filing of all pleadings, motions and other court submissions before any court shall be through electronic transmission. The transition to electronic filing is expected to reduce the costs of litigation by eliminating the use of paper and the need for reproduction in filing pleadings before all courts.

To aid in this transition, the Supreme Court has issued new guidelines for the submission of electronic copies of pleadings and other court submissions filed before lower courts. The guidelines provide for two modes: (i) when the primary manner of filing is through personal filing, by registered mail, or by accredited courier, with electronic transmission being secondary; and (ii) when the primary manner of filing is through electronic filing. The first mode will be phased out by 5 April 2024. 

Under the guidelines, PDF copies of pleadings may be filed electronically and sent to the official email address of the court where the case is pending. In instances where a paper copy is filed prior to electronic transmission, the PDF copies must be transmitted within 24 hours from the filing of the paper copy. In those cases, the filer is required to execute a verified declaration that the pleading or court submission and its accompanying documents, if any, submitted electronically are complete and true copies of the paper copies filed before the court.

If the primary manner of filing is through electronic transmission, the form and substance of the contents of the PDF copy, as first filed, shall be controlling. If the pleading, court submission, or any accompanying document has already been filed personally, by registered mail, or by accredited courier, the PDF copy to be transmitted should be the exact copy of the filed paper copy. If the court determines, on motion or motu proprio, and after notice and hearing, that there are material discrepancies between the paper copy and the electronic copy, it may impose an appropriate sanction or refer such finding to the proper office for disciplinary action of the lawyer, law firm, or party responsible for the filing.

Recent jurisprudence on Philippine arbitration

There have been several developments in Philippine arbitration in recent months. This section discusses: (i) the 2019 Revised Rules of Procedure Governing Construction Arbitration (the “2019 Revised Rules”), which were amended to reflect the latest pronouncements of the Philippine Supreme Court, specifically on the mode of judicial review of Construction Industry Arbitration Commission (CIAC) arbitral awards; and (ii) recent decisions involving arbitral awards tested on the grounds of public policy.

2019 Revised Rules

Previously, the governing provision was Section 18.2, which allowed a party to question a final arbitral award by filing a petition for review under Rule 43 of the Rules of Court (ROC) within 15 days from receipt of the award, on questions of fact, questions of law or questions of both fact and law. 

In 2021, the Supreme Court ruled on the issue of the proper mode of appeal from CIAC arbitral awards. In Global Medical Center of Laguna, Inc. v Ross Systems International Inc., G.R. No 230112 (11 May 2021), the Supreme Court reviewed the policy and law on construction arbitration and recognised that resort to arbitration was founded upon the “resolve to remove the disputes of the [construction] industry from the languid and problematic machinery of the courts, with the full awareness that disputes held up in the judiciary’s dockets easily translated to infrastructure projects that came to a standstill”. 

Section 19 of Executive Order No 1008 of 1985 (or the “CIAC Charter”) provides the general rule that CIAC awards are final and unappealable. As the sole exception, an appeal may be made to the Supreme Court on questions of law only.

Ten years later, Revised Administrative Circular No 1-95 was issued by the Supreme Court, which provided that CIAC awards may be appealed to the Court of Appeals on questions of either fact or law, or both, significantly departing from the original intent of the CIAC Charter on the mode of review of its awards. This procedural shift was further reiterated in Rule 43 of the ROC, which provides for the mode of appeal to the Court of Appeals within a 15-day period commencing from the notice of award. Based on Section 4 of the said rule, the issues raised on appeal must cover questions of fact or of law, or both.

Subsequently, Republic Act No 9285 or the Alternative Dispute Resolution Law of 2004 (the “ADR Law”) reverted to the restrictive rule under the CIAC Charter. This emphasised the policy of judicial restraint on reviewing CIAC arbitral awards on questions of fact, thereby limiting the review of arbitral awards to questions of law. The Special ADR Rules embodied in Administrative Matter No 7-11-08-SC was issued in 2009, further affirming this posture in Rule 19.10, which states that: “[t]he court shall not set aside or vacate the award of the arbitral tribunal merely on the ground that the arbitral tribunal committed errors of fact, or of law, or of fact and law, as the court cannot substitute its judgment for that of the arbitral tribunal”. 

While it is clear that both the statute and rules reverted to what was provided under the CIAC Charter, a 2011 amendment of the CIAC Revised Rules referenced Rule 43 yet again. Nevertheless, several decisions of the Supreme Court reflected its deference to CIAC’s determinations when awards were raised on appeal. While a few exceptional cases were subjected to the Supreme Court’s review of facts and law, Global Medical Center of Laguna, Inc., cited above, finally clarified the proper mode of appeal after a careful review of the application of law and rules in cases decided previously.

Through a constitutional lens, the first question the Supreme Court resolved was whether a CIAC arbitral award may be directly appealed to the Supreme Court, considering that Article VI, Section 30 of the 1987 Constitution of the Philippines requires the advice and concurrence of the Supreme Court before its appellate jurisdiction may be increased by law. On this issue, the Supreme Court ruled that its advice and concurrence was not needed back in 1985 when the CIAC Charter conferred appellate jurisdiction over CIAC arbitral awards on questions of law.

From this determination arose the next issue as to which mode of appeal is proper. Since an appeal via Rule 43 is no longer an option, the Supreme Court looked to Rule 45 of the ROC, which governs appeals by certiorari. While Rule 45 expressly limits the filing of a petition for review on certiorari from a judgment, order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts as provided by law, Global Medical Center of Laguna, Inc., cited above, carved out an exception for arbitral awards rendered by the CIAC to give life to substantive law over procedural rules. More particularly, the Supreme Court held that as between the ADR Law and Batas Pambansa Blg. 129 (BP 129), which provides for the jurisdiction of the Court of Appeals, it is the ADR Law that shall take precedence, since the ADR Law was enacted after BP 129 with more specificity in its provisions. In this regard, a petition for review on certiorari to the Supreme Court under Rule 45 remains an available recourse against CIAC arbitral awards as an exception.

Finally, the Supreme Court stated that to require prior recourse to the Court of Appeals under Rule 43 of the ROC from CIAC arbitral awards effectively “diminished substantive rights” of the parties who had initially resorted to arbitration to expedite conflict resolution. In correcting what was an admitted overstepping of the bounds of its rule-making powers, the Supreme Court ruled against retaining Rule 43 of the ROC as a remedy to aggrieved parties. 

This leaves the matter of factual review of a CIAC arbitral award, which the Supreme Court allowed on the limited grounds of: (i) challenging the integrity of the arbitral tribunal and its decision; or (ii) alleging that the arbitral tribunal violated the Constitution or positive law in its arbitral process. In such cases, the proper recourse would be a petition for certiorari under Rule 65 of the ROC to be filed with the Court of Appeals.

It must be emphasised that Global Medical Center of Laguna, Inc., cited above, shall be prospectively applied. To align with these jurisprudential pronouncements, Section 18.2 of the 2019 Revised Rules was amended in 2023 and now expressly provides as follows:

“Recourse against a final award may only be taken through either of the following modes:

1.       Where a party seeks to raise pure questions of law, by appeal to the Supreme Court through a petition for review under Rule 45 of the Rules of Court; or

2.       Where a party seeks to appeal factual issues but only on the limited grounds that pertain to either a challenge on the integrity of the CIAC arbitral tribunal (ie, allegations of corruption, fraud, misconduct, evident partiality, incapacity or excess of powers within the Tribunal) or an allegation that the arbitral tribunal violated the Constitution or positive law in the conduct of the arbitral process, by a petition for certiorari in accordance with the provisions of Rule 65 of the Rules of Court, on grounds of grave abuse of discretion amounting to lack or excess in jurisdiction.

3.       An appeal to the Supreme Court shall be filed within fifteen (15) days, and a petition for certiorari to the Court of Appeals within sixty (60 days, from notice of the final award.”

Arbitral awards vis-à-vis public policy considerations

The recently decided case of Republic v Pascual, G.R. No 244214-15 (29 March 2023) involved the award of two government construction projects to SCP Construction, with one project in Bukidnon and the other in Misamis Oriental. SCP Construction completed the projects but the reports showed poor quality of output and a number of defects in the allegedly finished projects. The Department of Public Works and Highways (DPWH) directed SCP Construction to rectify the defects, and thereafter sent separate Notices to Terminate in 2013 after noncompliance with its directives. 

SCP Construction countered that termination could not be resorted to considering that it had already complied with its obligation in completing the projects. To no avail, the DPWH then suspended SCP Construction from participating in government bidding for one year and included the company in its blacklist. SCP Construction then initiated arbitration proceedings in 2015, arguing among others that its action was not prescribed, citing Article 1144 of the Civil Code as the basis for the ten-year period from the termination of the contracts. The Office of the Solicitor General, on behalf of the Republic, countered that the action was time-barred because SCP Construction failed to comply with the 14-day period from notice of the decision to terminate within which it should have referred the matter to arbitration.

On this issue, the CIAC issued an Order in favour of SCP Construction, finding that the said 14-day period for referral did not operate as a prescriptive period. The Republic appealed the Order to the Court of Appeals via Rule 65 and prayed that the proceedings before the CIAC be suspended. While the petition was pending, the CIAC rendered an award directing the DPWH to pay the balance due to SCP Construction, as well as the attorney’s fees and arbitration costs. The final award was likewise raised to the Court of Appeals on a petition for review under Rule 45. 

The Court of Appeals dismissed the petition for certiorari and then denied the petition for review; hence, the Republic’s recourse to the Supreme Court. As to the 14-day period within which referral to arbitration should have been made as argued by the Republic, the Supreme Court ruled that the limited period, which was even less than the period to perfect an appeal, is contrary to public policy:

“Such a short period of fourteen (14) days within which a contractor may refer a procuring entity’s decision (specifically, to terminate a construction contract) to a designated arbiter is too unreasonable and contrary to public policy. Said period is surely not enough time for an aggrieved contractor to prepare adequately for a request for arbitration with the CIAC, which is effectively akin to filing an ordinary collection case in the regular courts. Said period is even one (1) day less than the period for perfecting an ordinary appeal, ie, fifteen (15) days from notice. The Court is also at a loss in terms of determining the statutory or even the practical basis for the fourteen-day period as stated in the PBDPIP, since there appears to be none that can be enough justification or basis for the stipulation.”

The Supreme Court applied the ten-year period provided in Article 1144 of the Civil Code as the operative period from accrual of the cause of action, ie, termination of the contracts, within which SCP Construction may assail the termination. 

While Republic v Pascual, cited above, resolved a question of law on the merits of public policy, among other issues, it echoes the trend of rulings in favour of public policy considerations in arbitral proceedings, even those outside the scope of the CIAC’s jurisdiction. 

In the earlier case of Lone Congressional District of Benguet Province v Lepanto Consolidated Mining Co., G.R. Nos 244063 and 244216 (21 June 2022), the Supreme Court likewise found that public policy outweighed the rule on autonomy of arbitral awards and overturned the arbitral award in favour of Lepanto Consolidated Mining Co. (Lepanto). This case involved a 1990 mineral production sharing agreement (MPSA) between Lepanto and the Department of Environment and Natural Resources (DENR) over land in the province of Benguet, and which was set to expire in 2015. While the Mines and Geosciences Bureau (MGB) found that Lepanto substantially complied with the requirements for renewal of the MPSA, it had to refer the application to the National Commission on Indigenous Peoples (NCIP) to meet the requirements of: (i) free, prior and informed consent (FPIC); and (ii) Certification Precondition under the Indigenous Peoples’ Rights Act (IPRA). Lepanto countered that imposing these new requirements impaired their vested right to renewal and argued that their MPSA renewal is exempted from the new requirements under the IPRA.

Lepanto initiated arbitration proceedings to resolve the matter and a final award was rendered, finding, among others, that the said IPRA requirements may not be imposed upon Lepanto. The Republic disagreed and filed a petition to vacate the arbitral award. The trial court ruled in favour of the Republic, but on appeal, the Court of Appeals affirmed the arbitral award in favour of Lepanto. 

One of the issues to be determined was whether the arbitral award should be vacated. Lepanto argued on the basis of the rule on autonomy of arbitral awards, ie, the parties shall be bound by the substantive merits of the award. On the other hand, the Republic cited public policy as an exception to the rule.

In ruling for the Republic, the Supreme Court vacated the arbitral award based on the public policy consideration underlying the IPRA, which is to protect the rights of indigenous peoples and their cultural communities. Lepanto’s mere contractual right to renew the MPSA cannot override the rights and protection of indigenous peoples, which come into effect by the requirements under the IPRA. Nevertheless, the ruling was without prejudice to Lepanto’s compliance with IPRA requirements, which meant that due process dictated that mining companies should still be allowed to comply with IPRA requirements in the renewal of their MPSA.

These are welcome developments that shed light and address some procedural and substantive issues that have plagued Philippine arbitration. Decisions of the Supreme Court on the interpretation of arbitration laws, rules and regulations contribute to the ever-evolving arbitration practice in the country and further solidify this mechanism for effective and efficient conflict resolution in various industries. 

Simplified Philippine domestic adoption law

It is the policy of the Philippines to ensure that every child remains under the care and custody of their parents and is provided with love, care, understanding and security for the full and harmonious development of the child’s personality. The best interest of the child shall be the paramount consideration in the enactment of alternative care, custody and adoption policies. Only when such efforts prove insufficient, and no appropriate placement or adoption within a child’s extended family is available, shall adoption by an unrelated person be considered. Accordingly, the Philippines enacted Republic Act No 11642 otherwise known as the “Domestic Administrative Adoption and Alternative Childcare Act”.

Under Republic Act No 11642, the adoption process becomes purely administrative, as opposed to both administrative and judicial before its passage. It provides for and allows simpler and inexpensive domestic administrative adoption proceedings and streamlines services for alternative childcare. Pursuant to this, it created the National Authority for Childcare (NACC), which shall exercise all powers and functions relating to alternative childcare including, declaring a child legally available for both domestic administrative adoption, inter-country adoption, foster care, kinship care, family-like care or residential care. Below are the simplified steps of domestic adoption in the Philippines.

First, no Petition for Adoption (the “Petition”) shall be processed by the NACC unless an adoption social worker of the NACC, the social service office of the Local Government Unit, or any child-placing or child-caring agency, has made a case study of the adoptee, the biological parents as well as the adopters, and has submitted the report and recommendations on the matter to the respective Regional Alternative Child Care Office (RACCO), as among the supporting documents of the Petition, and to the NACC for the issuance of the Certificate of Adoption.

Second, there shall be a matching process for cases of legally available children 30 calendar days after the issuance of the Certificate Declaring a Child Legally Available for Adoption or the next matching conference, whichever is applicable. The matching of the child to approved prospective adoptive parents shall be carried out during the regular matching conference by the Matching Committee at the regional level. 

Third, to further ascertain the fitness, qualifications, good intentions and sincerity of approved prospective adoptive parents, the handling RACCO shall require approved prospective adoptive parents to personally appear before it at least twice during the application period and on specific dates to be determined by the RACCO. 

Fourth, once a child is matched to approved prospective adoptive parents and subsequently accepted, the NACC through the RACCO shall authorise the pre-adoption placement of the child to the prospective adoptive parents:

• if recommended by the appropriate social worker that there is a need for supervised trial custody prior to the filing of the Petition for Adoption; or
• in cases when there is no decision on the Petition for Adoption within 60 calendar days from the receipt of the Deputy Director for Services of the positive recommendation of the RACCO on the Petition, through no fault or negligence on the part of the prospective adoptive parents. 

Fifth, upon the recommendation of the adoption social worker of the need for Supervised Trial Custody, and after the matching process and issuance of the Issuance of Pre-Adoption Placement Authority, the NACC through the RACCO shall give the adopters a Supervised Trial Custody over the adoptee for a period of not more than six months within which the parties are expected to adjust psychologically and emotionally to each other and establish a bonding relationship. The Supervised Trial Custody shall be supervised and monitored on a monthly basis by the adoption social worker who prepared the child case study and home study report, and who shall submit a report regarding the placement. 

Sixth, the thriving parent-child relationship during the Supervised Trial Custody, if recommended, as substantiated by the monthly monitoring report of the adoption social worker, shall give rise to the filing of a Petition for Adoption. In all cases, the Petition for Adoption shall be prepared and signed by the petitioner. The Petition shall state the facts necessary to establish the merits of the Petition. The petitioners must specifically allege that they are at least 25 years of age; in possession of full civil capacity and legal rights; of good moral character; have not been convicted of any crime involving moral turpitude; are emotionally and psychologically capable of caring for children; are at least 16 years older than the adoptee, unless the adopter is the biological parent of the adoptee or is the spouse of the adoptee’s parent; and are in a position to support and care for their children in keeping with the means of the family and have undergone pre-adoption services. The Petition should also indicate the new name the petitioner wishes the child to have, if any. The Petition shall be in the form of an affidavit and shall be subscribed to and sworn to by the petitioners before any person authorised by law to administer affirmation and oaths.

Seventh, in all proceedings for adoption, the NACC shall decide based on all the documents presented to it, as well as the evidence gathered during the personal interviews conducted by the RACCO with the adoption social worker, prospective adoptive parents and the adoptee. There shall be no adversarial proceedings and all domestic adoption cases shall be decided within 60 calendar days from the receipt of the Deputy Director for Services of the recommendation of the RACCO on the Petition. Any person who has personal knowledge of any information, that by ordinary diligence could not be discovered, and which when introduced and admitted, would result in the denial of the Petition and protect the child from possible harm or abuse may, at any time during the Supervised Trial Custody or before the issuance of the Order of Adoption, interpose an objection to the Petition and file a complaint supported by evidence to that effect, with the NACC, through the RACCO where the Petition was filed. 

Eight, if the Supervised Trial Custody, as may be applicable, is satisfactory to the parties and the NACC is convinced that, from the trial custody report, the Petition and its supporting documents, including the Supervised Trial Custody report, if applicable, the adoption shall be in the best interest of the child or prospective adoptee, the NACC through the Executive Director, shall issue an Order of Adoption, which is a registrable civil registry document.

Lastly, Orders of Adoption may be appealed to the Court of Appeals within ten days from receipt of the Order by the interested party, or from the denial of the motion for reconsideration; otherwise, the same shall be final and executory.