CHAPTER 2 FUNDAMENTALS OF ALTERNATIVE DISPUTE RESOLUTION

I.DEFINITION OF ALTERNATIVE DISPUTE RESOLUTION

A) BROAD SENSE: A system, using means and methods allowed by law and approved by the
parties, for the purpose of resolving or facilitating the resolution of disputes and
controversies between them, in an expeditious and speedy manner, without resorting to
court adjudication.
B) AS DEFINED IN SEC. 3 OF ADR ACT OF 2004 (RA NO. 9285): Any process or procedure
used to resolve a dispute or controversy, other than by adjudication of a presiding judge of a
court or an officer of a government agency as defined in this Act, in which a neutral third
party participates to assist in the resolution of issues, which includes arbitration, mediation,
conciliation, early neutral evaluation, mini-trial or any combination thereof.
The definition of ADR in its broad sense covers all forms and methods of resolving disputes
outside the court trial system which include arbitral processes in quasi-judicial agencies such as
in NLRC, Regional Offices of the Department of Labor and Employment, Intellectual Property
Office, Insurance Commission and other government agencies, while the definition of ADR in
RA No. 9285 do not cover arbitral proceedings done by administrative agencies exercising
quasi-judicial powers.
II.STATE POLICY ON ADR
A. Sec. 2 of ADR Act of 2004 states:
It is hereby declared the policy of the State to actively promote party autonomy in the
resolution of disputes or the freedom of the party to make their own arrangements to
resolve their disputes. Towards this end, the State shall encourage and actively promote
the use of Alternative Dispute Resolution (ADR) as an important means to achieve
speedy and impartial justice and declog court dockets. As such, the State shall provide
means for the use of ADR as an efficient tool and an alternative procedure for the
resolution of appropriate cases. Likewise, the State shall enlist active private sector
participation in the settlement of disputes through ADR xxx
B. Alternative dispute resolution methods or ADRs like arbitration, mediation, negotiation
and conciliation, - are encouraged by the Supreme Court. By enabling the parties to
resolve their disputes amicably, they provide solutions that are less time-consuming, less
tedious, less confrontational, and more productive of good will and lasting friendships
xxx (Insular Savings Bank v. Far East Bank and Trust Company, 492 SCRA 145 [2006] )
III.PRINCIPLES OF ADR
1. Promotion of Party Autonomy and Self-Determination In the Resolution of
Diputes the parties are given the freedom to choose the form of ADR they desire to
avail of and the discretion to prescribe the procedure to govern the ADR process. Party
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autonomy extends to the choice of ADR providers or practitioners, venue of

proceedings, terms of concluding agreements.
2. Recognition of ADR as an Efficient Tool and an Alternative Procedure for the
Resolution of Cases ADR provides alternative means of settling disputes of the
parties in a manner that is different, separate and independent from the court trial
system.
3. Enlisting of Private Sector Participation Essence of ADR is that it usually requires
participation of third parties who do not necessarily dispense public service. Many ADR
practitioners or providers hail from the private sector in various fields of endeavor.
IV.OBJECTIVES AND BENEFITS OF ADR
1. Speedy and Impartial Justice ADR has been judicially recognized as a tool for speedy,
inexpensive and amicable settlement of disputes. (Reyes v. Balde II)
2. Declogging of Court Dockets The decongestion of court dockets is the ultimate
objective of ADR. ADR and the court trial system, one being the alternative to the other,
work hand-in-hand to achieve an optimum performance for the providers of both system.

V.FEATURES OF ADR:
1) ADR is a means used to resolve a dispute or controversy.
- The objective of the ADR forms, methods and processes is to resolve or facilitate the
resolution of a dispute or controversy in a speedy, amicable and inexpensive manner.
- ADR should not be resorted to when the motive is to delay or suspend the proceedings rather
than to put an end or facilitate the conclusion of the controversy.
2) ADR utilizes means and methods allowed by law.
- ADR usually takes the form of arbitration, mediation, conciliation, early neutral evaluation, or
mini trial. - It may also be combination of the foregoing methods.
3) ADR is contractual in nature.
- In keeping with the policy of the law to actively promote party autonomy, the parties to a
dispute are given the freedom to agree to resolve their dispute and decide on the procedure
therefore.
- Any form of ADR that satisfies the essential requisites of contract and which is not contrary to
law, morals, good customs, public order or public policy, is allowable as a form of ADR.
4) ADR avoids court trial.
- ADR is conduct outside of the court trial system.
- The Arbitration Law (RA No. 876) recognizes the right of any party to apply with the courts to
take measure to safeguard and/or conserve any matter which is the subject of the dispute in
arbitration.
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- The Arbitration Act of 2004 (RA No. 9285) allows the filing of petitions for provisional or interim
measures with the regular courts whenever the arbitral tribunal has no power to act or to act
effectively.
5) ADR usually involves the participation of a neutral third party.
- The third party participant may whether be the arbitrator, mediator, conciliator or neutral
evaluator.
- He is required to disclose any factor that may influence the performance of his duties in
conducting the ADR.

VI. SOURCES OF ALTERNATIVE DISPUTE RESOLUTION

1. Domestic laws and rule
a. General ADR law those that are applicable to all forms of ADR.
e.g. Article III, sec. 16, 1987 Constitution, Chapters 1 and 2, Title XIV, Book IV, Civil Code of the
Philippines, The Arbitration Law
b. Special - those that pertain to special subject matter.
e.g. The Local Government Code of the Philippines, the Labor Code and its implementing rules
and regulations.
2. Acts of the Executive Branch
e.g. Rules of ADR for Disputes Between National Government Agencies, E.O. No. 1008
3. Decisions of the Supreme Court
4. International Laws
e.g. UNCITRAL, Convention on Recognition and Implementation of Foreign Arbitral Awards.
5. General Principles of Law and Equity

VII. FORMS OF ADR

1. Arbitration
- It is an arrangement for taking and abiding by the judgement of selected persons in some
disputed manner, instead of carrying it to established tribunals of justice and is intended to avoid
formalities, the delay, the expense and vexation of ordinary litigation.
- ADR Act of 2004 defined ADR as a voluntary dispute resolution process in which one or more
arbitrators, appointed in accordance with the agreement of parties or rules promulgated
pursuant to the ADR Act, resolve dispute rendering and award.
2. Mediation

- A voluntary process in which a mediator, selected by the parties, facilitates communication and
negotiation and assists the parties in reaching a voluntary agreement regarding a dispute.
3. Conciliation
- Adjustment of dispute in a friendly, antagonistic manner.
4. Neutral and Early Neutral Evaluation
Neutral Evaluation - It is a process wherein the parties and their lawyers are brought together
to present summaries of their case and received a non-binding assessment by an experienced
neutral person with expertise in the subject or in substance of the dispute.
Early Neutral Evaluation
5. Mini Trial
- A structured dispute resolution method in which the merits of a case are argued before a panel
composed of senior decision makers with or without the presence of neutral third person, after
which a party seek a negotiated settlement.
6. Any combination of the foregoing
7. Any other ADR form.

VIII. Classification of forms of ADR

1) Number of parties
A. Bilateral/Bi-party- when only 2 contending parties are involved.
B. Multilateral/multi party- if there are more than 2 contending parties involved.
2) Number of issues involved
A. Simple- single issue involved.
B. Complex- two or more issues involved.
3) Extent of conclusion
A. Complete- when all the issues involved are resolved.
B. Partial- it only one or some but not all the issues are resolved Goal is to resolve
dispute fully or partially rather than merely suspend or delay the resolution of dispute.
4) Role of evidence in proceedings
A. Evidentiary/merit-based- when the resolution of the dispute or controversy Involved
requires the presentation of evidence & evaluation of the merits of the case as in a
case or arbitration.
B. Non-evidentiary/non merit based- merits of the case is not indispensable in the
resolution of the dispute as in the case of mediation.
5) Pendency of a court case
A. Case-related - conducted in connection w/ or as a pre-requisite to trial as in the case
of court -annexed mediation / court referred mediation.
B. Independent - conducted irrespective of any pending court case involving the issue.
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6) As to applicable law
A. Domestic - parties places of business , place arbitration & place of Performance of
the obligation involved or subject matter of Dispute , are located in the Phil
( governed by RA #876 the arbitration law) .
B. Internal- parties place of business are in state/ or the place where a Substantial of
the obligation is to be performed or the place where the subject matter of the dispute
is most closely connected outside the Phil / parties have agreed that the subject
matter of the dispute Relates to more than one country Intl. commercial arbitration is
governed by the provisions of ADR act On intl. commercial arbitration.
C. Foreign - conducted outside the Phil Governed by provisions of ADR act of 2004 on
intl. commercial Arbitration.
D. Provisions of RA 9285- both domestic & intl. in character
7) Permanence of ADR provider
A. Ad hoc- existence of ADR provides only temporary for purpose of a Particular
dispute/ controversy
B. Institutional- if ADR providers existence is permanent in character and is not
dependent on any dispute or controversy

IX. Components of ADR

1) Contending parties - involved in a dispute or controversy
2) Dispute / controversy- susceptible of being subjected to ADR
3) Forms: Arbitration, Mediation, Conciliation, Early neutral evaluation, Mini trial Combination.
ADR provider- institution or person exercising similar functions in any ADR system.
ADR practitional- individual acting as mediator, conciliator, arbitrator or neutral e evaluator who
is not necessarily accredited as an ADR provider.

X. Subject Matter of ADR

In line with the policy to encourage the use of ADR, in general, all adversarial disputes and
controversies can be the subject matter of ADR, except those which by law or reasons of public
policy are declared not capable of being subjected to ADR. Under Section 6(b) to (h), R.A. No.
9285, the following issues are not susceptible of ADR:
a). The civil status of persons. A persons status, whether married or capable of marriage,
emancipated or not, legally capacitated or incompetent, is a matter determined by law and is not
subject to the discretion of the parties.
b). The validity of marriage or any ground for legal separation. These are matters over
which the State has a keen interest to protect. Thus, in proceedings for the declaration of nullity
of marriage, or for legal separation, the public prosecutor is instructed to conduct a summary
proceeding in order to ensure that there is no collusion between the parties. During the
proceedings for the declaration of nullity of marriage or the dissolution of the conjugal
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partnership of gains or the absolute community, the distribution and disposition of the assets of
the conjugal partnership of gains or the absolute community, custody of minor children, and
support pendente lite may, however, be the subject of ADR.
c). The jurisdiction of the courts. Jurisdiction over the subject matter of a case is determined
by law and is not dependent upon the allegations of the parties, except in the case of jurisdiction
by estoppel.
d). Future legitime. Future legitime is inexistent and, hence, cannot be waived. This principle is
consistent with Articles 772 and 905 of the Civil Code of the Philippines.
e). Criminal liability. Criminal liability is not susceptible of ADR, although the civil liability arising
from the offense and the separate civil liability for quasi-delict based on the act or omission
constituting the offense, is proper subjects of ADR.
f. In general, those which, by law, cannot be compromised. Article 2035 of the Civil Code of
the Philippines is an example of a provision of law prohibiting compromise. It states that:
ART. 2035. No compromise upon the following questions shall be valid:
(1) The civil status of persons;
(2) The validity of a marriage or a legal separations;
(3) Any ground for legal separation;
(4) Future support;
(5) The jurisdiction of courts;
(6) Future legitime.
A.M. No. 07-11-08-SC SPECIAL RULES OF COURT ON ALTERNATIVE DISPUTE
RESOLUTION Rule 1.1 provides that:
Rule 1.1. Subject matter and governing rules.-The Special Rules of Court on Alternative
Dispute Resolution (the "Special ADR Rules") shall apply to and govern the following cases:
a. Relief on the issue of Existence, Validity, or Enforceability of the Arbitration Agreement;
b. Referral to Alternative Dispute Resolution ("ADR");
c. Interim Measures of Protection;
d. Appointment of Arbitrator;
e. Challenge to Appointment of Arbitrator;
f. Termination of Mandate of Arbitrator;
g. Assistance in Taking Evidence;
h. Confirmation, Correction or Vacation of Award in Domestic Arbitration;
i. Recognition and Enforcement or Setting Aside of an Award in International Commercial
Arbitration;
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j. Recognition and Enforcement of a Foreign Arbitral Award;

k. Confidentiality/Protective Orders; and
l. Deposit and Enforcement of Mediated Settlement Agreements.

XI. SEAT AND VENUE OF ADR

Seat the jurisdiction under whose law the proceeding is being conducted
Venue the actual place where the arbitration is being held

XII. BASIC CONCEPTS

1. Concluding Acts or Agreements
- Execution of which concludes the ADR proceedings.
- It completes the ADR proceeding.
a. Arbitral Award partial or final decision by arbitrator.
b. Mediated Settlement Agreement contract made by the parties,
with assistance of their respective counsel, and certified by the
mediator.
c. Compromise/Compromise Agreement contract where the
parties make reciprocal concessions to resolve an issue or
controversy. If a case is already pending in court, the compromise
may be submitted to the court or tribunal for approval and a
judgement based on compromise will be issued.
d. Waiver or Quitclaim statement renouncing any right or claim by
one party in favour of the other. If subject of litigation, it may also
be submitted to the court or tribunal for approval and for dismissal
of the action or proceeding.
2. ADR Providers and Practitioners
Arbitrator authorized to render a binding resolution of the dispute.
Mediator cannot render a binding assessment of the dispute.

Other Neutral Third Persons authorized to render a binding resolution of a

dispute:
1. Arbitrator
2. Mediator-arbitrator; and
3. Neutral Third Person in mini-trial

ADR providers/practitioners act in a quasi-judicial capacity, and therefore, their

decisions are generally subject to a remedy of special civil action for certiorari
under Rule 65 of the 1997 Rules of Civil Procedure.

3. Preference for ADR

Even before the ADR Act of 2004 (RA 9285), Art. 2030 of the Civil Code of
the Philippines instructs the courts to suspend proceedings if the possibility of
settlement through the different modes of ADR is present.

XIII. OFFICE FOR ALTENATIVE DISPUTE RESOLUTION (OADR)

(Section 49 and 50, RA 9285; Art.2.1 to 2.3, IRR)
Created under RA 9285, the OADR is attached to the Department of Justice,
headed by an Executive Director, appointed by the President upon
recommendation by the Secretary of justice.
Objectives, Powers and Functions of the OADR:
1. Promote, develop and expand use of ADR
2. Assist the government to monitor, study and evaluate the use of ADR in public
and private sectors. Recommend needed statutory changes.
3. Act as appointing authority of mediators when parties agree in writing
empowering them to do so; and
4. Compile and publish a list or roster of local and foreign/international ADR
providers/practitioners.