BANKING

ARBITRATION

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 REPORTERS

01 02 03 04

JOSELITO JANDY BONG- MIKE ALDEN EDLEN

MALIGRO CAYAT APOYA AMBROCIO
CONTENTS
01 LEGAL SOURCES & DEFINITION OF TERMS

02 PARTIES INVOLVED IN BANKING ARBITRATION

03 FEES IN BANKING ARBITRATION

04 BANKING ARBITRATION PROCEDURES

05 HEARING PROCEDURES IN BANKING ARBITRATION

LEGAL SOURCES
• RA 876 - The Arbitration Law of 1953
• RA 9285 - Alternative Dispute Resolution
Act of 2004
• Clearing House Rules and Regulations of 2012
• Administrative Matter No. 076-11-08-SC - Special
Rules of Court on ADR
 Definition of Terms
COMMERCIAL
ARBITRATION ARBITRATOR AWARD ARBITRATION COURT
means a voluntary
dispute resolution
process in which one or means the person means any partial or An arbitration is
appointed to render an final decision by an "commercial if it covers as referred to in Article
more arbitrators,
award, alone or with arbitrator in resolving matter arising from all 6 of the Model Law
appointed in accordance
with the agreement of the others, in a dispute that the issue in a relationships of a shall mean a Regional
parties, or rules is the subject of an controversy (Sec.3(f), commercial nature, Trial Court (Sec.3(k),
promulgated pursuant to arbitration agreement ADRA 2004) whether contractual or ADRA 2004)
this Act, resolve a dispute (Sec.3(e), ADRA 2004) not (Sec.3(g), ADRA
by rendering an award 2004)
(Sec.3(d), ADRA 2004)
 Definition of Terms
MODEL LAW CHRR ARP ARBICOM COMPLAINT
stands for Arbitration Rules refers to Arbitration is a written statement
of Procedure, which is part
means the Model Law Committee (Sec. 36.1, which narrates concisely
stands for Clearing of CHRR (Part 2, CHRR
on International 2012), with which to comply Part 1, CHRR 2012), the ultimate facts
House Rules and
Commercial Arbitration the submission of any which is created by the constituting the plaintiff’s
Regulations
adopted by the United dispute/ controversy PCHC Board or its duly cause or causes of action
promulgated by the between 2 or more clearing
Nations Commission on authorized officer to and shall specify the relief
Philippine Clearing participants involving any
International Trade Law investigate, hear and sought and the names
House Corporation cheque/item cleared through
on 21 June 1985 PCHC to the ARBICOM upon decide the issues; and and addresses of the
(PCHC)
(Sec.3(v), ADRA 2004) written complaint of any consists of four (4) parties (Sec.1, Part 2,
involved participant (Sec.1, members (Sec. 36.2, Part CHRR 2012).
Part 2, CHRR 2012). 1, CHRR 2012).
 PARTIES
INVOLVED IN
01 02 03
BANKING
ARBITRATION
COMPLAINANT RESPONDENT ARBITRATOR

A party who is required to Shall notify the parties of the

A person, either natural or composition of its panel or
answer the complaint filed by
juridical, who commences the name of the Sole
a plaintiff by filing it within a
an arbitral proceeding Arbitrator through Arbitration
non-extendible period of thirty
before the ARBICOM by Secretariat within a period of
(30) days from receipt of said
filing a complaint, which thirty-five (35) days from
complaint and serve copy
shall be prepared in filing/submission of the
thereof to the complainant
seven (7) copies (Sec.1, complaint (Sec.3, par. b, Part
(Sec.3, Part 2, CHRR 2012).
Part 2, CHRR 2012). 2, CHRR 2012).
 ARBICOM SOLE ARBITRATOR

A. Duties and Responsibilities

 Shall notify the parties of the composition of its panel or the
C. Compositions & Qualifications
name of the Sole Arbitrator through Arbitration Secretariat Any person appointed to serve as an arbitrator must be (Sec.10, RA 876):
within a period of thirty-five (35) days from filing/submission of a. Of legal age;
the complaint (Sec.3, par. b, Part 2, CHRR 2012). b. In full-enjoyment of his civil rights;
 Shall set the case for preliminary conference, which should be c. Know how to read and write; and
terminated within twenty (20) days (Sec.3, par. c, Part 2, CHRR d. Possesses non-disqualifications provided in Section 11 of RA 876, unless the
2012). parties may agree in writing.
 Shall determine whether there is a need for a formal hearing if
Four members (Sec.36.2, Part 1, CHRR 2012):
the parties failed to reach amicable settlement (Sec.6, Part 2,
e. 3 incumbent or retired Senior Officers of participating banks not involved in the
CHRR 2012).
dispute; and
 May conduct formal hearing (Sec.7, Part 2, CHRR 2012).
f. 1 law member with at least five (5) years experience as a bank lawyer without
any previous or present relation with any of the participating banks involved.
B. Powers and Jurisdiction
• To investigate, hear and decide the issues (Sec.36.2, Part 1, CHRR
2012) in any dispute or controversy between two or more clearing
D. When appointment is challenged
participants, involving any cheque/item cleared by PCHC, through Any of the parties to an arbitration may challenge an arbitrator (Rule 7.1, AM No. 076-11-08-
conference or hearing (Sec.36.1, Part 1, CHRR 2012). SC) within five (5) days from receipt of the written notice (sec.3, Part 2, CHRR 2012).
• To render judgment on the pleadings or a summary judgment as Grounds (Sec.11 in relation Sec.10, RA 876):
justice may require within thirty (30) days after such conference a. Is related by blood or marriage within the sixth degree to either party to the
(Sec.9, Part 2, CHRR 2012). controversy;
• May issue any interlocutory ruling or order (Sec.15, Part 2, CHRR b. Has or has had financial, fiduciary or other interest in the controversy or cause
2012). to be decided or in the result of the proceeding; or
• May impose such fines or penalties on any party litigant in any of c. Has any personal bias, which might prejudice the right of any party to a fair and
the arbitration proceedings before it for violation of any Arbitration impartial award.
Rules of Procedure and any of its orders or process (Sec.36.6, Part
1, CHRR 2012).
 FEES IN BANKING ARBITRATION
FILING FEES (Sec. 2 of CHRR)

The complainant shall upon filing its complaint pay to the ARBICOM a fee in accordance with the following
schedule: (a) P50,000 or less, a fee of P2,000 shall be paid; (b) any amount over P50,000, a fee of
P2,000 plus P10.00 per P1,000 or fraction thereof shall be paid. The excess over P50,000.

POSTPONEMENT OR RESETTING FEES (Sec. 8 of CHRR)

The following postponement/resetting fee schedule shall apply, without prejudice to any
changes as may be prescribed by the Board: (a) First Postponement is equal to P2,000, (b)
Second Postponement is equal to P3,000, and (c) Third Postponement is equal to P5,000.

RECONSIDERATION FEE (Sec. 10 of CHRR)

Any party filing a Motion for Reconsideration shall pay a Reconsideration

fee of P10,000 pesos regardless of the amount in dispute.
 FEES IN BANKING ARBITRATION
FINES AND PENALTIES (Sec. 36.6 of CHRR)

ARBICOM may impose fines or penalties on any party litigant in any of the arbitration proceedings before it, for
violation of any Arbitration Rules of Procedure (ARP), and any of its orders or process but such fines or penalties
may be appealed to the Board of Directors together with the appeal of the Award or Decision of the ARBICOM.

ARBITRATOR FEES (Art. 5.46 of Dep’t. Circular No. 98)

The fees of the arbitrators shall be agreed upon by the parties and the arbitrator/s in writing prior to
the arbitration. In default of agreement of the parties, the arbitrator’s fees shall be determined with
the applicable internal rules of the regular arbitration institution; or in ad hoc arbitration.

ADMINISTRATIVE FEES (Art. 5.46 par. (b) of D.C. No. 98)

Any party filing a Motion for Reconsideration shall pay a Reconsideration

fee of P10,000 pesos regardless of the amount in dispute.
SECTION 4 par. 3 of CHRR

Cases involving a
principal amount of
one million pesos
(P1,000,000) or less
shall be heard by a
SOLE ARBITRATOR.
 Any dispute or controversy between two or more clearing
participants involving any cheque or item cleared thru
PCHC shall be submitted to the Arbitration Committee
(ARBICOM) through a written complaint of the involved
participants serving the same upon the other party(ies) or
respondent(s). (Section 36.1 of CHRR)

The fact that a bank participates in the clearing operation

of PCHC shall be deemed its written and subscribed

Banking Disputes subject to

Banking Arbitration
 ARBITRATION PROCEDURES
Sec. 1 - Any dispute or
controversy between two
or more clearing
participants involving any
cheque or item cleared
thru PCHC shall be
submitted to the
Arbitration Committee
(ARBICOM for short) upon
written complaint of any
involved participant.
 Preliminary Conference

Sec. 5 … the parties and/or their

attorneys shall submit affidavits
and/or counter-affidavits (refer to
Annex “B” and “C”) as well as
other documents they deem
necessary to support their
respective allegations in their
pleadings.
 Preliminary Conference
Sec.3 xxx
A. the possibility of an amicable settlement;
Within a period of fifteen
B. the simplification of the issues;
(15) days after the
selection/appointment of C. the necessity or desirability of
amendments to the pleadings;
the arbitrator/s has been
finally agreed upon, the D. the possibility of obtaining stipulations or
admissions of facts and documents to avoid
ARBICOM must set the unnecessary proof;
case for preliminary
E. the limitation of the number of witnesses;
conference, which should
be terminated within F. such other matters as may aid in the
prompt disposition of the case.
twenty (20) days, to
consider the following: PRELIM
 Within 35 days upon filing,
ARBICOM shall:
Notify the parties of the
composition of the panel or
Section 3 the sole arbitrator
provides… Failure to give
objection/challenge,
construed as an acceptance of
the qualifications and
appointment of the arbitrator/s
Section 4
xxx
• Cases involving a principal amount of ONE MILLION
(Php1,000,000.00) PESOS or less shall be heard by a Sole
arbitrator. In cases where the principal amount is more than
ONE MILLION PESOS, the Committee shall consist of four (4)
members as provided in Section 36.2 of the CHRR and
presence of at least the Chairman or any other member of the
ARBICOM shall be sufficient to constitute a quorum for
purposes of conducting conferences and hearings/trials, but
the vote of any two members of the Committee shall be
necessary to render and promulgate any order, resolution,
award, or decision of the case presented for arbitration.
 Question: What if any of the parties object
the selection of any or all of the arbitrators?
Modern Portfolio Designed

Sec. 4 provides …
“…replacement/s shall be chosen by
We theCreate
President Qualityof the PCHC within five
Professional
(5) days… from PPT Presentation
a list of active or
retired Presidents and Vice Presidents
of participating banks not otherwise
disqualified and such changes shall
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 Question:
Who shall represent the parties in the Arbitration?

Sec. 3:
xxx
the parties must be represented by any of its
senior officers with a rank of at least Vice
President and/or their respective lawyers, in both
cases duly authorized in writing for the purpose.
Sec. 3 - The respondent/s
shall, within a non-
Exchange of
extendible period of thirty
(30) days from receipt of
Information of
the complaint, file its/their
answer and serve copy Parties
thereof to the complainant.
xxx
• The failure of the
defendant to serve and
file its Answer to the
complaint within the
period herein prescribed
shall be a ground for the
defendant to be declared
in default.
Sec. 7 - Should the Sole Arbitrator or
the ARBICOM find it necessary to
conduct formal hearing, he/it may call
such affiants of the affidavits
Formal Hearing
submitted by the parties or such other
witnesses.

In such event, the Sole

Arbitrator/Arbitration Committee shall
ask clarificatory questions of such
witnesses who executed the affidavits
and/or counter-affidavits, but the
parties may likewise introduce/submit
supplemental affidavits and other
documents and/or expert testimony in
support of their respective positions.
TIME of Hearing: (Sec. 7)
The hearings should not
last more than thirty (30)
days and the Sole Arbitrator
or the ARBICOM shall grant
the litigants an additional
non-extendible thirty (30)
days within which to file
their respective memoranda
before rendering its
decision within forty-five
(45) days thereafter.
Postponement, Resetting,
Extension of Time
The requesting party shall be charged:
Question:
What if one party is does not conform
to the judgement of the ARBICOM or
sole arbitrator?
Sec. 10: …any party to the controversy
not conformable thereto may file a
Motion for Reconsideration with the
PCHC Board of Directors furnishing a
copy thereof to the opposing party ….
such motion shall be resolved by
majority vote of the PCHC Board of
Directors excluding any member who is
an officer of any of the parties to the
controversy.
If said motion is denied the decision of the
ARBICOM or sole arbitrator or the order of the
Board of Directors, shall then be considered
executory and shall be sufficient basis for the
automatic debit of the amount awarded in said
decision from the clearing account of the losing
party and the crediting thereof to the clearing
account of the prevailing party

If no Motion for Reconsideration is filed, the

Decision of the ARBICOM or the Sole Arbitrator
shall become final and executory.
R.A. 876 Sec. 18 - Proceeding in lieu of hearing

Question: May oral hearing be dispensed with?

Answer:
Yes, because, according to Sec. 19, it
may be waived provided that the parties, by
written agreement, submitted their
differences to arbitration.
Hence, the parties to a submission or
contract to arbitrate may, by written
agreement, submit their dispute to
arbitration by other than oral hearing.
Sec. 19 - Time for
Rendering Award
The general rule is that the written award of the
arbitrators shall be rendered within 30 days after the
closing of the hearings or if the oral hearings shall have
been waived, within thirty days after the arbitrators shall
have declared such proceedings in lieu of hearing
closed. Take note that the period may be extended by
mutual consent of the parties.
Exception: When the parties shall have stipulated by
written agreement the time within which the arbitrators
must render their award.
 Section 20
Form and contents of award
Question:
How shall the award be made?
Answer:
The award must be made in
writing and signed and
acknowledged by a majority of
the arbitrators, if more than one;
and by the sole arbitrator, if
there is only one.
Question:
If during the course of arbitration, the parties have
settled their differences, what may the parties do?

Answer:
They may request of the arbitrators that such settlement be
embodied in an award which shall be signed by the
arbitrators.

Take note:
No arbitrator shall act as a mediator in any proceeding in
which he is acting as arbitrator; and all negotiations towards
settlement of the dispute must take place without the
presence of the arbitrators.
 Section 21
Fees of Arbitration

The fees of the arbitrators shall be

fifty pesos per day unless the parties
agree otherwise in writing prior to the
arbitration.
Section 22 - Arbitration deemed a Special Proceeding
Arbitration under a contract or submission shall be deemed a
special proceeding.

Question: What is a special proceeding?

Answer:
Under Rule 1. Sec. 3(c), a special proceeding is a remedy
by which a party seeks to establish a status, a right, or a
particular fact. Being a special proceeding, jurisdiction over
petitions and motions for enforcement and arbitration or for
settling the award is lodged with the RTC in the place where
the arbitration was held; in the place where the attached
property is located; the residence of any of the parties, or the
regular place of business; or in the NCR at the option of the
applicant.
 Section 23 -Confirmation of Award
Question: After the award is made, what may the party do?
Answer: Any party to the controversy which was arbitrated
may apply to the court having jurisdiction, as provided in
section twenty-eight, for an order confirming the award.
Question: When?
Answer: At any time within one month after the award is
made. Take note that the award of arbitrators is not
immediately executory. The award must be confirmed by
the court having jurisdiction.
Question: How is it made?
Answer: By filing a motion for confirmation and securing a
judgment.
Section 24
Grounds for vacating award
In any one of the following cases, the court must make an order vacating
the award upon the petition of any party to the controversy:
(a) The award was procured by corruption, fraud, or other undue means; or
(b) That there was evident partiality or corruption in the arbitrators or any of
them; or
(c) That the arbitrators were guilty of misconduct in refusing to postpone the
hearing upon sufficient cause shown, or in refusing to hear evidence
pertinent and material to the controversy; that one or more of the arbitrators
was disqualified to act as such under section nine hereof, and willfully
refrained from disclosing such disqualifications or of any other misbehavior
by which the rights of any party have been materially prejudiced; or
(d) That the arbitrators exceeded their powers, or so imperfectly executed
them, that a mutual, final and definite award upon the subject matter
submitted to them was not made.
QUESTION: WHAT IF THE PARTY WISHES TO
HAVE THE AWARD VACATED ON VALID
GROUNDS AND HE IS FACED WITH AN
UNACCOMMODATING COURT, WHAT IS HIS
REMEDY? STATED OTHERWISE, WHAT IF THE
JUDGE WOULD NOT ALLOW IT, WHAT IS THE
REMEDY THEN?
Answer: If you are faced with an unaccommodating court, the
proper remedy would be certiorari under Rule 65. It must be
borne in mind, however, that this action will only lie when
there is grave abuse of discretion amounting to lack or in
excess of jurisdiction on the part of the voluntary arbitrator.
 Question: Answer:

PCHC means Philippine

What is meant by PCHC Clearing House Corporation,
and its functions? among its function to settle
banking dispute amicably or
to clear a defective check in
question, before going to the
proper courts.
 PHILIPPINE
CLEARING
HOUSE
CORPORATION
Question:
How is jurisdiction acquired by the PCHC?
Answer:
Under the rules and regulations of the Philippine Clearing
House Corporation (PCHC), the mere act of participation of the
parties concerned in its operations in effect amounts to a
manifestation of agreement by the parties to abide by its rules and
regulations.
As a consequence of such participation, a party cannot invoke
the jurisdiction of the courts over disputes and controversies
which fall under the PCHC Rules and Regulations without first
going through the arbitration processes laid out by the body."
Relevant
CASES
GR No. 107918
Associated Bank vs. CA et al.
FACTS:
A third-party compliant was filed before the
RTC against the several Banks for being the
collecting banks of the subject checks and by virtue
of their bank guarantee for all checks sent for
clearing to the Philippine Clearing House
Corporation (PCHC), as provided for in Section 17,
PCHC Clearing House Rules and Regulations.

However, the case was dismissed by the trial

court for not first under going the arbitration
processes under the PCHC. Said discussion was
assailed that the PCHC has no jurisdiction because
it is mere a third-party complaint.
GR No. 107918
Associated Bank vs. CA et al.
ISSUES:
Whether or not the PCHC has
jurisdiction of the instant case?

RULING:
Yes, PCHC has jurisdiction of the instant case,
because, under the rules and regulations of the
Philippine Clearing House Corporation (PCHC), the
mere act of participation of the parties concerned in
its operations in effect amounts to a manifestation of
agreement by the parties to abide by its rules and
regulations. 
GR No. 107918
Associated Bank vs. CA et al.
RULING:
In the case at bar, the Associated Bank’s third-party
complaint in the trial court was one for reimbursement,
contribution and indemnity against the Philippine
Commercial and Industrial Bank (PCIB), the Far East
Bank and Trust, Co. (FEBTC), Security Bank and Trust
Co. (SBTC), and the CityTrust Banking Corporation
(CTBC), in connection with petitioner’s having honored
sixteen checks which said respondent banks supposedly
endorsed to the former for collection in 1989.
As a consequence of such participation, a party
cannot invoke the jurisdiction of the courts over disputes
and controversies which fall under the PCHC Rules and
Regulations without first going through the arbitration
processes laid out by the body.
 GR No. 107918
BDO vs Equitable Banking Corp.
PCHC and RTC Quezon City
Banco de Oro drew checks payable to member
establishments. Subsequently, the checks were deposited
FACTS: in Trencio’s account with Equitable Banking Corporation.
The checks were sent for clearing and was thereafter
cleared.
Afterwards, BDO discovered that the indorsements in the
back of the checks were forged. It then demanded that
Equitable credit its account but the latter refused to do so.
This prompted BDO to file a complaint against Equitable
and Philippine Clearing House Corporation (PCHC). The
trial court and RTC held in favor of the Equitable and
Philippine Clearing House Corporation (PCHC).
ISSUE: Whether or not PCHC has jurisdiction?

RULING
: Yes, PCHC has jurisdiction over the case in question.
The articles of incorporation of PCHC extended its operation
to clearing checks and other clearing items. No doubt
transactions on non-negotiable checks are within the ambit
of its jurisdiction. Further, the participation of the two banks
in the clearing operations is submission to the jurisdiction of
the PCHC.
Thank you.