Originally from Arbitration Law and Practice in Asia - Second Edition

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I.  HISTORY AND LEGISLATION ON ARBITRATION

Filipino culture has long favored the practice of out-of-court settle¬ment, which places value in the preservation of amicable relationships between parties within the same community.   While the Philippines has been described as a primarily litigious state—with courts providing for the primary venue of settlement of controversies involving legally demandable and enforceable rights,  arbitration, as an alternative mode of dispute resolution has long been part of Philippine law. There is no doubt that the Philippines is a pro-arbitration and pro-enforcement jurisdiction.

The Spanish Civil Code of 1889, introduced in the Philippines during the colonial era, recognized arbitration under the provisions on compromises made applicable to arbitrations under Articles 1820 and 1821.  These provisions were, however, later repealed by the Spanish Law on Civil procedure.  In 1903, the Supreme Court in Cordoba v. Conde,  ruled against the enforceability of an arbitration clause in a contract for the establishment of a mercantile partnership. It reversed the decision of the lower court and held:

“All of these provisions relating to the suit of friendly adjusters disappeared with the repeal of the Ley de Enjuiciamiento Civil, and it is not claimed by the appellee that there can now be any settlement in the manner pointed out by that law. There is nothing in the new code that is in any respect like it. The court below was of the opinion that, although the provisions of the procedural law had been repealed, the contract could have effect under the provisions of the Civil Code. (Arts. 1820, 1821.) The power, however, given by article 1820 is expressly limited by article 1821, which declares that not only the form of procedure but also the effect of these agreements shall be controlled by the Ley de Enjuiciamiento Civil. When that was repealed the Civil Code was left without any declaration as to what the effect of such an agreement would be. These articles, 1820 and 1821, have therefore been repealed.”

Early post-colonial jurisprudence recognizing arbitration was scarce due to the courts’ desire to guard their jurisdiction and the parties’ doubts on the enforceability of arbitral awards.