Short answer. The same persons who may enter into a compromise. Article 2042 ties the two together: whoever has the capacity to settle a dispute may instead submit it to one or more arbitrators. In practice that means a party who can validly dispose of the rights in question, acting personally or through someone properly authorised.
What the law says
The same persons who may enter into a compromise may submit their controversies to one or more arbitrators for decision.
Civil Code, Article 2042 — Submission to Arbitration. Read the full provision →
Capacity to arbitrate borrows from capacity to settle
Rather than write a separate rule for arbitration, the Code borrows the one it already has for settlements: The same persons who may enter into a compromise may submit their controversies to one or more arbitrators for decision. The reasoning is sound. An arbitral decision binds the parties much as a compromise does — it disposes of their rights in the dispute. So the law requires the same power to bind oneself. If you could validly settle the matter, you may agree to have it arbitrated; if you could not, you cannot hand it to an arbitrator either.
What that capacity requires
The touchstone is the ability to dispose of the rights at stake. A party of full capacity dealing with his own rights plainly qualifies. Those under a legal disability act through a guardian or representative, and only within the authority the law gives that representative. An agent is a particular trap: authority to manage or administer property does not, by itself, include authority to submit disputes over it to arbitration, any more than it includes authority to compromise. A representative who signs an arbitration agreement without power to bind the principal to a settlement may bind no one.
Only arbitrable subjects can be submitted
The link to compromise cuts in a second direction. Because only matters that may be compromised can be arbitrated, the subjects the law withholds from private settlement are equally off-limits to arbitration. Questions of a person's civil status, the validity of a marriage, the grounds for legal separation, future support, future legitime, and the jurisdiction of courts cannot be handed to an arbitrator any more than they can be settled by agreement. An arbitration clause purporting to cover such a matter is ineffective as to it, however the parties may have worded their agreement.
The modern framework built on this base
These Civil Code provisions are the foundation, but arbitration today is largely governed by the country's Alternative Dispute Resolution law and the rules issued under it, which develop the mechanics of arbitration agreements, arbitrators, and awards. The Civil Code's core requirement still holds beneath that framework: the parties must have the capacity to bind themselves. Before relying on an arbitration agreement, confirm that whoever signed had authority to commit the party — personally or by sufficient delegated power — and that the dispute is one the law actually permits to be resolved outside the courts.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Freuhauf Electronics Philippines Corporation vs. Technology and Management Pacific Corporation, G.R. No. 204197, November 23, 2016 — read the decision on LawPhil →