PHILIPPINES' Country report on arbitration

Achievements and Perspectives
23 – 24 April 2015
Rosario Elena A. Laborte-Cuevas
Senior State Counsel
Department of Justice
 In
ASEAN, only Singapore ratified CISG;
 9/10
of ASEAN Member States have not
signed or ratified the UN Convention on CISG.
 Philippines
is not yet a signatory to CISG.
 Discussion
on possible accession to CISG is
in preliminary stage.
 Various
informal initiatives and consultations
have taken place over the years.
 No
specific law on contracts for
international sale of goods.
 Civil
Code of the Philippines, Book IV,
generally applies to international sale of
goods transactions, and similar
 The
Bulk Sales Law (Act No. 3953, 1972)
Consumer Act of the Philippines (RA 7394,
 Price
Act (RA 7581, 1992)
Retail Trade Liberalization Act (RA 8762,
Electronic Commerce Act (RA 8792, 2000)
Laws on Products Liability
Philippine laws
the CISG :
Comparative Analysis
 Formation
of Contract :
PH : Acceptance of the
offer binds the offeror
“from the time that it
came to his
knowledge”. (Art. 1319,
Civil Code)
CISG : Acceptance of
the offer binds the
offeror “at the moment
the indication of
assent reaches the
offeror”. (Art. 18 (2), CISG)
== CISG provides more comprehensive provision how an
acceptance would bind the offer, taking into account
different systems of contract formation.
 Revocation
of Offer :
PH : Offeror can revoke CISG : For the offeror
his offer anytime
to revoke his offer,
before his knowledge
revocation must
of the acceptance, by
“reach” the offeree
“communicating” his
before the offeree has
withdrawal or
dispatched his
revocation. (Art. 1324, Civil acceptance. (Art. 16, CISG)
== There is similarity with regard to revocability of an
 On
Interpretation of Contract :
PH : If the words of
the contract appear to
be contrary to the
evident intention of
the parties, the latter
shall prevail over the
former. (Art. 1370-1371, Civil
CISG : Statements or
conduct of a party are
to be interpreted
according to his
intent where the other
party knew or could
not have been
unaware what the
intent was. (Art. 8, CISG)
 Form
of Contract :
PH : Contracts are obligatory CISG : A contract of
on the parties, in whatever
sale need not be
form they may have been
concluded in or
entered into, provided all
essential requisites for validity evidenced by writing
are present. However, when
and is not subject to
law requires that a contract be
any other requirement
in some form to be valid or
enforceable, that requirement as to form. (Art. 10, CISG)
is absolute and indispensable.
(Art. 1356, Civil Code)
== Conflict on this point.
 Price
PH : Contract of sale
is null and void and
no effect if it is
without cause or
consideration. (Art. 1318
and 1352, Civil Code)
== Conflict on this point.
CISG : Where a contract
has been validly concluded
but does not expressly or
implicitly fix or make a
provision for determining
the price, parties are
considered to have
impliedly made reference
to the price generally
charged at the time of the
conclusion of the contract.
55, CISG)
 Rescission
and Fundamental Breach :
PH : Obligation to pay the
price by buyer is correlative
to the obligation of the
seller to deliver the thing
sold. Non-performance by
one party authorizes the
other to exercise the right
to demand performance or
its rescission. (Art. 1191, Civil
CISG : Both seller and
buyer have the option to
rescind the contract, if
the failure of the other
party to perform his
obligations under the
contract or the
Convention amounts to a
fundamental breach. (Art.
49 and 64, CISG)
== Both in agreement that rescission is permitted only for
breaches, substantial or fundamental in nature.
 Specific
Performance :
PH : Injured party, in case
of breach of reciprocal
obligations, may choose,
as a matter of right,
between specific
performance and
rescission of contract,
with payment of damages
in either case. (Art. 1191,
Civil Code)
== Both in agreement.
CISG : Injured party may
also file a case for specific
performance, however, a
court isnot bound to enter a
judgment for specific
performance unless it may
do so under its own law in
respect of similar contracts
of sale not governed by the
Convention. (Art. 28, CISG)
 Anticipatory
Breach :
CISG : Party may
suspend performance
of his obligations if it
becomes apparent that
the other party will not
perform substantial
part of his obligations.
71, CISG)
PH : There can be
suspension of payment by
buyer on account of
anticipatory breach of the
seller of his obligations.
However, there is no
corresponding remedy on
the part of the seller. (Art.
1590, Civil Code)
 Stoppage
in Transit by Seller :
PH : In case of
insolvency of buyer,
unpaid seller has the
right of stopping the
goods in transitu after
he has parted with the
possession of them. (Art.
1526 & 1534, Civil Code)
CISG : In case of
serious deficiency in a
buyer’s ability to
perform or in his
creditworthiness, or his
conduct in preparing to
perform the contract.
(Art. 71 (2), CISG)
= PH allows only in case of insolvency. CISG provides a more
comprehensive enumeration of grounds for stoppage in
Limitations for Warranty Claims :
PH : In breach of warranty of
conformity of the goods,
buyer may withdraw from
the contract or demand a
proportionate reduction of
the price, with damages in
either case. Appropriate
action must be filed within 6
months from the delivery of
the thing sold. (Art. 1571 &
1567, Civil Code)
CISG : Buyer has remedy of
specific performance or
rescission in case of breach
of warranty of conformity of
goods by seller. Prescriptive
period is 2 years from date
goods were actually handed
to buyer, unless time-limit
is inconsistent with
contractual period of
guarantee. (Art. 39 (2), CISG)
== Conflict with CISG; PH statute of limitation is shorter.
Passing of risk :
CISG : allocation of risk
does not depend on
ownership over the
goods. Risk of loss
transfers to the buyer
when the goods
effectively leave the
control of the seller.
(Articles 67, 68, 69, CISG)
PH : Determination of who
bears the risk of loss
depends on who owns the
goods (res perit domino).
Before perfection, it is the
seller. After delivery, it is
the buyer. In case of
“after perfection and
before delivery”: buyer
(Art. 1480 / 1538); seller (Art.
== CISG provides simpler uniform rule.
 Similarities
and differences exist between
CISG and PH laws;
 Differences
do not represent clash between
the solutions offered by each one to legal
problems in the sale of goods;
leaves domestic relations on the sale of
goods totally preserved;
 Uniform
rules of CISG, appropriate for sale of
goods between parties in different countries
with different legal traditions;
 Nothing
in rules of CISG that would offend
fundamental principles of PH contract law;
 Nothing
accession to the Convention;
Considering that :
efforts on ASEAN to harmonize trade laws, including
accession to CISG. . .
largest trading partners of the PH are parties to
CISG . . .
CISG is the uniform sales law of countries over
three-quarters of world trade . . .
It is to the advantage of PH to take steps to
accede to CISG before it finds itself left behind
by its neighbors and other countries aiming to
promote international trade.
 Policy
decision is required;
 Consultation with relevant agencies and
secure concurrence;
 Accession package to be prepared;
 DFA to secure CTC of the Convention and
Summary of Benefits;
 DFA will prepare Accession/Ratification
Package for the Office of the President;
* Department of Foreign Affairs
 Determination
if CISG is treaty;
 Deposit of Instrument of Accession to the
UN Secretary General;
 DFA to inform agencies of entry into force
of the Convention for the Philippines;
 If determined to be a treaty, after
presidential ratification, Convention to be
transmitted to Senate for its concurrence
(PH Constitution requires 2/3 concurrence
of Members of the Senate to ratify.
* Department of Foreign Affairs
Maraming salamat po…
Thank you..
Rosario Elena A. Laborte-Cuevas
Senior State Counsel
Department of Justice