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CHAPTER 2

r
; FUNDAMENTALS OF ALTERNATIVE

t
t'
DISPUTE RESOLUTION

Alternative Dispute Resolution

lij broad sense, altecuatiue dispute resolution (ADR for brev-


ityl is a sl'stem, using means and methods allmfed by law ac.d
appruv_eylby the parties, for the purpose of resolving or facilitaijpg
th~ resC'l!!_tion of dis,n 1tes and caotroversies between them, in ~
e edi · nd s eed manner without resorting to court a ·udi-
caticn. This definition covers all fC'rms and met ods of resolving
· disputes outside the court trial system. This definition covers not
just arbitration, mediation, conciliation, early neutral evaluation,
mini-trial, or combinations thereof, but also includes simnar proc-
esses in quasi-judicial agencies such as the National Labor Rela-
it
.
j) tions 0ommission, Regional Offices of the Department of Labor
and Employment, Intellectual Property Office, Mines and Geo-
sciences Bureau, Insurance Commission and other similar gov-
!
t ernment agencies. r~ -Jv~ , c( q ) Ori }~
c
I ~ ' as defined in the ADR Act of 2004, means "any process
I ~r procedure yseg to tesolye a dis_pyte or..92n_tr9-versy, Qtb~r than py
.I ag,iudic:ition of a eresiding_ j.YJl,gJLQ,.f a _cEurt oz: an officer of a gov-
ernment ag<:_ncy.2LJS x in which J3__!leutr~ third part_yyarticipates to
assist in the resolution of issues xx x. "1 - -

Under this definition, arbitra1 proceedings under the above-
... ◄ mentioned administrative agencies exercisir..g quasi-judicial power

.
,.
1
Section 3, ADR Act.

9
10 At.nRNATIVR
-
D1srl1l'P. Rt.,ourr10N - --- F UNDAMENTAL.'! OP Af.TERNATIVZ
DrsPUTE R ESOLUTION
11

a re not covered by the ADR Act of 2004·. This does not mean, how- "Alternative dispute r.?solut ion methods or AD.Ra - li1te
ever, that similar procedures before quasi-judicial agf'ncies are not arbitration, mediation, negotiation and conciliation - are en-
considered forms of arbitration, mediation or conciliation. They couraged by this Court. By enabling the parties to reaolve their
are, except that they are not governed by the ADR Act of 2004 disputes amicably, they providll solutions that are le81 time-
there being specific laws and rultJs governing their p.-ocedures. consuming, less tedious, less confrontational, and more produc-
tive of goodwill and lasting relationship. Institutionalization of
ADR was envisioned as 'an important means to achieve ,peedy
State Policy on ADR and impartial justice and declog court dockets.' The m.oet im-
portant feuture of arbitration, and indeed, the key to its 1uc-
In the Al)R Act of 2004, it is declaroJd ~ State policy: cc 1s, is the public's confidence and trust in the integrity of the
p1":>ce81. X X x."
Mx x x to actively promote pa.i cy autonomy in the resolution of
disputes or the freedom of the parties to make their owr. ar- b a long line of cases, the Supreme Court has referred to al-
rangemt!n\.s to resolve their rlisputes. Towards this end, the ternative disp,ute resolution in general, and arbitration in particu-
Stnte shall encourage and actively promore the use of Alten.a- lar, as the ,Wave of the future in internat ional re)atigns."'
tive Dispute Resolution (ADR) as an imI,l')rtant means to achieve
speedy and impartial justke and declog court dockets. As such,
the State shall provide means for the use cf ADR ai; an efficient ~cipleB of ADR
tool and an alternative procedure for the resolution of appropri-
ate cases. Likewise the State shall enl:~t active private sector The following are the principles of ADR:
participation in the settlement of disputes through ADR. xx x "' rV t& JU-<v ~ fl1 0~1. ol tio,i
1. l):omotion of party autonomy and self-deterrnroor,oa ra
In the case of Insular Sac,ings Bank u. Far East Bank and the resolution of disputes. The parties are given the freedom to
Trust Company,' the Sup~emc Court dflclared the policy of the choose the form of ADR they desire to avail of. They are also given
Judiciary on ADR a s follows : t.1e discretion to prescribe the procedure to govern the ADR proc-
ess.' Party autonomy extends to the choice of ADR provideni or
Altemative dispute resolution methods or ADRs -· like arbi-
M practitioner8, t he venue of proceedings, and, in most cases, the
tration medi:1tion, negotiation and conciliation - are encouraged by terror. of th e concluding agreements.
the Su~rt!me Court. By enabling the parties to r~solve their ~isputes
ru:nicably, they provide solutions that are less t1~e-cons~mm_g, less
terlious, Jess confrontatio!1~1, anc! more productive of goodwill and
lasting friendships. x x x."
I 2. ~ ecognitio•i ofADR as gn efficient t99l and go, qlterngw:e
Qrocedure for the ceso[utinn of cases. ADR does not altogether do
away y,jfo the court trial system. ADR merely provides the parties

Similarly, in RCBC.Capital Corporation u. Banco de Oro Uni-


I with an alternative Means of settling their disputes in a manner

bank, Inc.,' the Supreme Court declared that:

' Sec 2, ADR Act. . · c


l
. '
' Maria Luisa Park Auociation, Inc ti. Almendros. 588 SCRA 663
[2009], p. 677; Korea Technologies Co., Ltd. ti. Luma, 542 SCRA 1 [2008],
p. 23; Frabelle Fishing Corporation u. Phi/1ppiM American Life ln&uronce
C,mpany, 530 SCRA 543 [2007] , p. 649: R~'f!s 11. Balde 11, id.; Fiuta World
• 492 SCRA 145 [2006), p. 158; see also: LM Power ~ngineenng orp.
Mall Corporation v. Linberg Philippines, Inc., id. ; Sea-Land Strvict, Inc ~-
u. Capitol /ndUJitrial Construction Groups, Inc., 441 Ph1~~51:~2~oti· Court of Appeal., , 327 SCRA 135 [2000]. p. 144: Gerardo lAnu.:a, Jr. 1• BP
707 and 399 SCRA 562, p. 563; Reyes u. Balde II, 498 S .. . , Corporation, G.R. No. 174938. October I, 2014.
pp.' 196-197; and Fit1sta World Mall Corporation u. Linberg Ph1l1pp1nes,
• Department of Environment and Natural ~ so1m:e& (DENRJ u. Utute.d
Inc., 499 SCRA 332 [2006], p. 339. Planners Consultants, Inc. (UCPV, G.R. No 212081 , February 23, 2015
• 687 SCRA 583 [20121, pp. 627-628.
12 ALTERNATIVE D1SJ>un. Rr.soLUTION F UNDAMENTAi..~ OF A LTERNATIVE
DISPUTE R F.SOJ, UTION
13
»l
that is different, separate and independent from the court trial the foregoing methods. Th~ di.,d not limit the
system. forms of ADR to the fa ceiaing enumeration. An;, means or method
3. §nlisting of private sector participation. The essence of aime_d_ at resolving disputes t>Utside the cou!!...0~1 ~s!!_m_may be
ADR is that 1t usually requires the participation of third perties reco@ ized as an ADR form provided it is not contrary to law mor-
who do not necessarily dispense public service. Many ADR practi- als, good customs. public order or oublic policy.
tioners or providers hail from the private sector in various fields of 3. ADR is contractual in nature.' In keeping with the pol-
endeavor. There is a growing trend towards privat~ sector in- icy of the 'law to actively promote party autonomy, the parties to a
volvement in ADR. l1' ~ (r ~t~\
'.j)HJf<OI(_. \:().""' ;I dispute are given the freedom to agree to resolve their dispute and
decide on the procerlure therefor. ADR and its procedures are,
? IOJ' 8v On (.,r,10 r '\\ ~~ I
Objectives and Benefits ofADR f
fOt &,{\),At vPOf~ e( ~ therrfore, contractual in character. As such, any form of ADR that
satisfirs the essential requisites of a contract,'0 and which is not
l~ ,r ~ W-t6r contrary to law, morals, good customs, public order or public pol-
The following are the objectives of ADR: o~ r- ~
icy," is allowable as a form of ADR.
1. Speedy and impartial iustice. ADR has been judicially Thn consent to undergo ADR may be a pre-causal consent as
recognized as a tool for the speedy, inexpensive and amicable set- w~en the parties to a r.ontract stipulate y dispute that will
tlement of disi;utes.' an se
2. Declogging of cour.t dockets. The decongestion of court s
dockets is the u:timate objective of ADR. In this sense, ADR and exis 1 •
the court trial system, one heing the alternative to the other, work tration or mediation
hand-in-hand to maximize the benefits from each other.
.4. ADR avoids court trial. In principle, ADR is conducted
outmde of the court trial system. It is in lieu of, and conducted
Features ofADR precisely to avoid, trial.

1. G' s a means used to resolve a dis ont However! more often than not, ADR is .:onducted 8ll part of
court p~oceedin~s, _as dii1tinguished from the triat stage of court
The objective o orms, methods and processes is to resolve or
pro :eedmgs. Th,s 1s the case of the "judicial disput.e resolution~ or
facilitate the @ olution of a dispute or controversy jn a soeedy,
amicable and inexpensivi3 manner.' A procedure which has for its "J~R• ~hich, although not governed by the ADR Act of 2004, re-
purpose the temporary cessation of the discussion of issues in a qmres Judges to conduct mediation between the parties as pa rt cf
controversy net leading to the final conclusion of the dispute is not
an ADR form. ADR should not be resorted to when the'm ~is. to , Aboitiz Transport System Corporation ti. Carlos A Goth u
delay or suspend the prot.:eedim,:s rather tban to put an end or Inc. , 730 SCRA 178 (2014]. ong ~

2.
- - ----
facilitate the conclusion of the controversy.
ADB utilizes means and methods allowed bx, law. ADR
- " "Art. 1318 (Civil Code of the PhilippiM.sJ There .
unless the following requisites concur. IS no contract
usually takes the form of a;:bitration, o:wiiation, conciliation, ~y (1)Consent of the contracting parties:
neutral evaluation, or mini:,trial. It may al~o be any combination of (2)Object certain which is the s ubject matter of the contract..
" (3) Cause of the obligation which is establWled •
' Reyes 'J. Balde 11, id. "Art. 1~47 (Cini/ Code of the Philapp1n.es\. xx x. .
' Reyes u. Balde II. id. . All services which arc not cc,ntmry to law . raJ
pubhc order or public policy may 1"k •· h '. mo s, good ~ -
1 ew 1se oe l e obJect of II oontnict.. •

:t tft ( t:\\J.!t\ \ - .5ri0J\Ma\ 11-- rot'~llr L


'-' ff' W\l (~(£>1. vtJi 1.nrc.1IIM e.V'l. tc., it ·o ro/, c - _
14 Ai.n:RNATTVE Dt!l'IIT! RiooumoN F!JNOAMENTALS OF A LTERNATIVE 15
DISPUTE R F.SOLUTION

the pre-tria!" and prior to the start of the trial stage. This is also tionsl,ip or affiliation, or prior dealings , with the parties or t he
the case of the court -annexed mediation (CAM) conducted by the latter's relatives .
Philippine Metliation Center which, while not governed by the
ADR Act of :.004, is required to be conducted prior to pre-trial.
1, Sourcei, of ADR Rulett
..-A-DR, however is not inconsisten t with 'udicial roceedin fl
op~sc to the trial system. ,Ju diciol proreedini:s romp)eroeot AQR ' ADR rules emanate from :
procecdm1;s. \Vw:n APB is axa.ilerl of during the pen den cy of a n
ac~ionjn court, the court does not lose j urisdiction over the case. I' I. Domes/LC laws an_d rules which may either be gene ral or
The court oroce~dmg wj)l only be stayed. After t he special proceed- s ~. Ge neral ADR IRws a re th ose a pplicable to all forms of ADR
in rb · 10n has been ursued a nd com leted co ii such as Article III, Section 16 , 1987 Cons titut ion; Chapters 1 and
may cgpfinp the award ma e y the a r it rato,r . 2, 'l'itle XIV, Book IV, Civil Code of t he Philippines; the Arbitration
The pendency of arbitral proceedings does not foreclose resort L1.1w (R.A. No. 876); and the ADR Act of 2004 (R.A. No. 9285) and
it, IRR.
to courts for p,ovisional reliefs. The Arbitration Law (R.A. No. 876)
recognizes the right of any party to apply with the courts to take On the other hand, special ADR laws are thOBe that pertain to
measures to safeguard and/or conserve any matter ·Nhich is the sprcific subject matters. Exa mples of these are the Local Government
subject of the dispute in arbitration. The ADR Act of 2004 (~A. No. ~ e of 1991, the Labor Code and its Implementing Rules and Regu-
928:i) allows the filing of petitions for provisional or interim meas- lations, and other similar laws applicable to specific cl1181!e8 of dis-
ures with the regular courts w!Jel!ever the arbitral tribunal has no putes.
power t.o act C'r to act effectively."
2. ~ the Executive Branch. Examples of these are the
5. ADR usually involves the partici ation o a neutral third Rules of ADR for Disputes Between National Government Agen cies
party. Thr 1r party part1cipa n may e1 er e the ar61tram, e_nacted on 22 March 2010, and E.O. No. 1008 crea ting the Construc-
meCTiator , conciliator or neutral evaluator . It is imperat ive that th e tion Industry Arbitration Commission as well as the CIAC Revised
third party particip a nt observe neutralfu at oil times . He is re- Rules of Procedure Governing Construction Arbitration (15 Decem-
quired tC' disclose any factor that may influence the p~rformance of ber 2006).
his duties in conducting the ADR. These factors may include rela-
3. D~ions ofthe Supreme Court which form part of th!Ullw
Qf_the land."

4. ln~ernational laws such as the UNG.II._RAL "Model Law


" Chan Kent v. Micarez, 645 SCRA 1'16 (20111, p. 182; Real Bank,
Jnr. v. Sams:.ng Mabuhay Corporation, 633 SGR.\ 124 (2010I, p. 134;
onl!ltemiilmia)
R ·· Cnmmf'I.cia! 7
~ ,.."'._..- ......,• and t h c ·conven tiioo...a.n
rbitrat;nn
ecog_J}1tlon and Implemen tation of Forei!Ql Arbikfil_A~ards."
Senarlo v. Judge Paderan;:a, 617 SC'RA 247 (2010).
" Brnguet Corporation v. Department of Environment and Natural 5. Ge11eral p_rinciples of law and equity.
Resources-Mines Adjudication Board, 545 SCRA 196 [200P.l, p. 209, citing
BF Corporation v. Court of Appeal,, 288 SCRA 267 [H.♦~81, p. 285; LM
Power Engineering Corporation u. Capitol Industrial Construction Groups,
Inc., 399 scnA 562 (2003), p. 572; Rizal Commercial Banking Corporation
v. Macwin Marketing Corporation, 402 SCRA 592 (20031, p. 606.
" Korea Technologies Co., Ltd. v. Lerma, 542 SCRA _, (20081. pp. 35-
36. citinp: Transfv!ld Philippines, Inc. v. Luzon Hydro Corporation, 490 . ''. "f,rticle 8 [Civil Code of the Philippines) Judicial d . . l.y
SCRA 14 120061, pp. 20-21. mgteor intefrhpreti~g th_e laws or the Constitution ~hall form
sys m n t e Ph1hppinca.•
parteas;~:rpega1
-

-1 ~ 'ttoC:rf"f,; , , ,_ ~ rn•11\n uA·,•t ~ p-i,i,· <<, ~ IYc.h ~


'{"r ( ·'y~t,ra.\ 1\-V U" Or S avo1& c; \1'\ (\ (trlr"' I' er
{, \ Of\ Pl,\c{ h:i 0\l. c-,\rrc ~ L1 (C ,, r, I f\ 1 ld, .
16 fureRNA'MVE D1sr1m: R ESOLI/TION
f lJNOAMEN'l'AI.S OP A,, TERNATIVE 17
DrsPlTTE R ESOLUTION

FormsofADR
4. Neutral and early neutral eualua/lon. Neutral evalua-
tion is an APR process •vherein the parties and their lawyers are
As enumerated under the ADR Act of 2004, the f'lllowing are
the forms of ADR: brrught togetht-r to present summaries of rbeic ca,es and reccixe a
non-binding assessment '>¥ ao experienced neutral person 'zritb
I . A rbitration. Arbitration is an "arrangement for taking ex..e_ertisg in the eubiect or in the substance of the dispute " &,c/y
and abiding by tne judgment of selected persons in some disputed neutral rualuation is eveilad ofearlJ( in the pre•trial phase .
m1;1nner, instead of carrying it to es.tablished tribunals of justice, 5. Mini-trial. Mini-trial is a structured dispute resolution
and is intended to avoid _the fo':1!1~ ities, the_de~, tJie e19?ense and method in whkh the rnerits of a case aru rgued before a panel
vexation of Cirdinary litigation."' composed pf s~nior decision makers, wjth or ~thout_Jhe wesence
-.:..L • -~ -

In itg restricted sense, for purposes of the ADR Act of 2004, of a neutral third person. after which the pa~ neg_otiated
settlement." -
arbj tcation is a voluntary dispute resolutiao pncess in which one
or more arhitrators n ointed in a d nt of 6. ~ax combination of the foregoing. Any combination of
the ties or ursuant to th!l..AD.R Act, resolve the foregomg ADR forms, approved by the parties, not contrary to
a dispute by rendering an award," !aw, morals, good ~ustoms, public order or public policy, may be
2. ~ n. Mediation is a voluntary process in which a 11:°plem~nte~. An example of a coml-,ination ADR form is !!J!!!iip-
medi11tor, selected by the disputing arties, facilitates com · t1or -arb~tratio~ or med-arb, which is a two-step dispute reso)utinn
tion- an assists chin a volun- pr~~ess _mvolVJ_n~ ~th mediation and arbitration," An2thet..~-
tB1:Y agreement regardini: a dj~ te." nation 1s a mm1-tnal conducted as a continuation of mediation
neutral O!.!,_ar)y neutral eva)ution or any other ADR proress." - '
The basic distinction between ~ andrneii"atiqn,is that
in the former, ap. arbitral tribunal or arbitrator ava)uates Pvi.den.ce 7. Any other ADR form (l,inominati: ADR Form). Any ar-
and the .merits of \.he case and renders an arbitral award based on rangeme,?t agre~d up~n by the l)arties that satisfies the requisites
his appreciation thereof; while in the laiter, the parties to the con- of AD,_R, co_mphes with the essential requisites of a valid con-
troversy are ~onvinced by a mediator to settle their controversy tract, and 1s not contrary to law, morals good custo bli
d d bl' 1· ,. , ms, pu c
:.hrough a vC!luntary agreement ~xecuted by the 'Parties themselves or er an pu 1c po icy, is an acceptable form of ADR An
called a "mediated settlement agreement." In other words, the con - m_ei.t to resolve a dispute. depending on the outcome r · · ~
0 f !l · h . - , ,2,r ms~ocP
cluding arbitrpl award in ar, arbitration prncrediog is rendei:ed..ll:i a 10.Jmg mate •JLtantamount to gamblini: which is rootraiii.,;
the. t.bir.d_party arbitral tribunal or arbitratoi:;,.y,,hile the concluoing law. ~er1fore, such arrani:eweot apart from being void t
me~d settlement agree_ment jn a rnediati..2n p.i:oceedinrr is the be conindered a form o(ADR, 1
™ 0

voluntary agreement executed by the parties themseh:es.


3. Conciliation. Conciliation is the adjustment and settle-
ment of a dj~pute in a friendly 1 -r.antagonistic m11nner "
"' Section 3(n), ADR Act.
11
Section 3(u), ADR Act.
" Uniwide Sales Realty and Resources Corporation u. Titan-Iheda n Section 3(t). ADR Act.
Corislruction and Development Corporation, 511 ~CRA 335 (2006) , p. 356. ,., Article 7.7(b), IRR.
" Section 3(d), ADR Act. 14
Section 3(a), ADR Act
" Section 3(q), ADR Act.
" Black's Law Dictionary. " Article 1318, Civil Code of the Philippines
"Article 1347, Civil Code of the Philippines:
18 At fflRNATtVI! D,.1'\J'n RuourrtoN FlmoAMENTAL8 OF ALTERNATIVE 19
D ISPUTE R ESOLL!TTON

Classitfoation of FormtJ of AJ).d. ippines; or t tter of the


_1.!!Eute r ela~es t~ mor! than one country." International commer-
1. As to the number of parties, ADR may be bilateral or bi- cial a rSi"trabon 1s governed by £fie provisions of the ADR Act on
party when on\ two (2) contending parties Rre involved, 01 multi- International Commercial Arbitration. And, ADR is foreign if it is
latera or multi-party if the1e are morP. an wo contending conducted outside the Philippines." It is submitted, however that
p~ es involved. it is more accurate to define a foreign arbitration as one who~ seat
2. As to the number of issues involved, ADR may be simul,e is outside the Philippines. Foreign ADR is also governed by the
when only a single issue is involved, or complex if foere are two or provisions of the ADR Act of 2004 on International Commercial
rr,ore issues involved. Arbitration. Based on these classifications, an international com-
mercial arbitration conducted pursuant to the provisions of R.A.
3. As to the extent of the conclusion, ADR is either complete Ko. 9285 is domestic and international in character. On the other
when all the issues involved are resolved, or partiqL if only one or hand, an international commerci11l arbitr ation whose seat is other
some but not all the issues are resolved. In either cas(\ the obiec- tl- a.1 the Philippines is foreign a nd international in character.
tiv~ of the .t\I)R form must be t\l reso~ d.i:mute fµlly oL_E!!r-
tiul.!Y...mfueuhan merely susiwud..~defeL.tbe..tesolµtion of the 7. As to the pP.rmanence of the ADR provider or practitioM.r
ADR is eitht!r CJii...}wJ;.. 1f the existence of the ADR practitioner is
di~ only t e~p~rary ~or purpose of a particular dis pute or controversy,
4. As to the role of evidence in the proceedings, ADR j s evi- or institut10nal 1f the ADR provider's existence is permanent in
dentw.ry or merit-b · · - character and is not dependent on any dispute or controversy.
roversy involved :!''fill.!ill~!!l~~~~~!l..Q,J&Yi5:leD:te.~.!UOOllWI
tion of the merits o rbitratio ; and it is
non-evidentiary or non-merit based if tlu1..m erits of t e caseisnot Componen ts of ADR
indispensable in the resolution of the dis~ as jn t~e case of me-
The cc,mponents of ADR are the followin g:
d~ation , -
5 . As to the pendency of n court case, ADR is case-related if 1. Contending parties who are involved in a dispute or con-
c~ucted jn cnonectioo with or as a 11re·tf1llll/3i~ o trial as in the tt oversy.
case of court-annexed mediatio~-referred me~ ~ it . 2. Dispute or controversv which is susceptible of being sub-
is in"deesncknJ if.con.ducted..in:espective of aJ!Y_pendin g court case Jected to ADR.
invol~ ~h ej s~ue.
-~· _Form of ADR which may either be arbitration, wedietien ,
6. A:: to the applicable law , ADR is domestic if the parties'
r~nobahon, Parl~ llt'1ltral evaluation, mjni-trial or <\l)~ mrobitill·
places of busine~, place giarbi•cation,J:W.d place of performance of t10J of the fore~omg.
the ohligution involved or subject matter of the dispute, are located
in the Philippines. D omestic arbit ration is governed by R.A. No. . ~- ADB orooi.dec ar pmrtition~r. An <'.WR providu is an in-
876 ("The Arbitration Law"). ADR is international, if the parties' stitution or person accredited as mediator, conciliator. arbitrator.
places of bnsiness are in different states; or the place of arbitrati~n neutral party evaluator, or any person exercising similar functions
is outside tl1e Philippines; or the place where a subrtantial part.of
the obligation is to be performed or the place wher.e the subject
matter of the dispute is most closely connected is outside the Phil- " Article 1.6, B{B), Implementing Rules and Ju,gulati0n9 of the ADR
Act of 2004 (IRR).
" Rule l . ll(d), Special ADR Rulu.

I
• ll.S.T. LIBRARV
1r tr ff'
2()
rr tt ft'·ft tt R-- H FL'NDAM!:.VTAUI o, Al:rn.v~'l'IVI 21
D~Plm R r<!OLl'Tll'l'l

in any ADR S)'l!tem." On the uther hand, on ADR practitioner is an


lrioution and disposition of the IIJ!set-, of the conJugal pa.nMnh:Jp
individual acting as mediat.ir . conciliator, arbitrator or neutral
of gains or the ahMlutc community, cu8tody of minor ch,ldnn
ernluntor• who is not necessarily a<;eredited as an ADR provider.
suhject to rourt approval, and support fNndt!nlt l,u may, howner,
be tho s llbject of ADR.
Subject Matters of ADR • C. The jurisdictwn qf the CQUJj/1 Junsd1ct1on ""~ the rol>-
Ject matter of a ca~e is determined by law 11nd 19 not dependent
In line with the policy to encourage the use of ADR, in gen-
upon tlie allegations of the parties .• except ,n the ca_se of jun.ad1c•
eral. nil adversarial disputes and controversie, can be t he subject tion by estoppel."'
matter of ADR. except those which by law or reasons of public
policy !'.Ire drcl ared not capahle of being subjected to ADR. Under d. Future legitime. Future leg,t1me rs ineiustent Md. hel'ICI'
Section 6(b ) to (h ), R.A. No. 9285 , the following issues are not sus- cannot be waived. This principle is con~istcnt wit.h Articles 77'1" and
ceptible of ADR: 905" of the Civil Code cf the Philippines.
e. Criminal hab1l,ty Crimi nal liabilrty rs not s usceptible of
a. The civil status of person s. A person's :itatus, whether AOR, although the crvrl l1obd1ty arising from t.ho offense and the
mn..'Tied or capable of marriage, emancipated or not, legally capaci- separate civil liability for quasi-dclict based on the act or omtMtoo
tat ed or incompetent, is 11 matter determined by law and is not constituting the ofTense, arc proper s ubject& of ADR "
suhject to the discretion of the parties.
f Tn ge11rrc/1 those which, b_y lou, cannot ~ rol"lpror,uMYJ
b. The validity of marriage or any grq11nd fo r legal ,cpara- Article 2035 of the CIVIi Code of Phrhpprnl's 1a an example? a
UQL! These are matters over which the St.ate hBB a keen interest pr ,vision of low prohibiting compromise. It statca that:
to protect. Thu!!, in proceedings for the declaration of nullity of
marriage, or for legal separation, the public prosecutor is in•
structed to conduct a summary proceeding in order to ensure that " l'eoplt u. Vanzuela. 559 SCRA 234 120051. Saimonn • Zold.,ror
there is no collusion between the parties." During the proceedings 55!l SCRA 564 120081.
for the declaration of nullity of marriage or the dissolution of the • Tijam, el al. v. Sibonghanoy. el al , 13 1 Phil 556 (1968). p 364 Z3
conjugal partnership of gains or the absolute community, the dis- SCRA 29, pp. 35-36.
. '' "Art 772 )Civil Code of the Ph1lipp1neal Only thOH who at lb.
time of t he donor's death have n right to the legiume and th<!lr be,r, ■:id
" Section ~ l. ADR Act. aucceuora in interes t may osk fo r the reduction of inoffioow, donac,o,u
• Id. Thoac referred to in the preceding porograph cannot ttnounce the,r
" "Art. 48 [Frunily Code of the Philippine1J . In all caaea of annul• right during the lifotime of the donor , either by expttas d@Cla.nl!•oo. or t,,,
ment or ded n ation of absolute nullity of marriage, the Court aha!! order consenting to the dor ation.•
the proe~ tiog attorney OT fi8ull a~sigoed to it to appehl' on behalf of the • ?rt, 905 lid. ). Every renuncinllon or compronu-. u ,.,._..,. • r...
State to taA.e steps to prevent collusion between the partiea and to take ture legibmc between the pcnon ow,ng It and h,~ rom ~ b,-i ~
care that th e evidence is not fubricated OT auppre~. .
In the ca9e!I refem-d to in the preceding panlf1'8ph, no Judgmmt
anu the fatter may claim the Mme upon the dealh of the fN1Der. "ii:
1hr.
must b~n.g to collotion whatever they may have l'Ket'rod bT ,....;_ cl &lwo
ahall be based upon a stipulation of facts or coofeuioo of j·Jdgment.• . renunc,at1on or compromise.· -
• Ar... 60 No decree of legal separation shall be baaed upon a stipu- • Articles 29-35, 2176, 2177. C1v,l Code oftha Ph.w~ a:iid A-u,.
lation of f.acta or a confession ofj udgment. • de 100, Rev1•t!d Pena l Code. Al80, Article 2<'34 oftht- Cml Coda......,._,,
l o any ca.ee. th'? Court shall c.nler the prc.ecuting attorney or fiscal 'There may be o compromi~ upon lb@ cml hllhtlitY •JVJ.DC l'n::m clw
~go=
· -~ to it to uue atepa to preve nt collus ion between the parties and to
· ·-~ or 1up1~ -~·
offens~•. but 1uch comprom,u shall not e ttingu,•h w public attroa lllir Ill.
t.0ke care that the cVldeoce is not fabnca.en ,.~~- uopoa1t:ion of lhP lcg:,I penalty -

I
, , _,
• 'I
,. ~ · - ~ • i., ,. ..Jl _ Iii • l(.:l • '1. I i
ifl{({tt!
22 ALTE1u1.1.-rm D1srUTE R ES0Lu -r10N F UNDAMENTALS OF ALTERNATIVE 23
11 DISPUTE R ESOLUTION
.1
I
I I~

~ . 203~. No compromise upon the following qu<!s- Basic Concepts


tions shall be vahd: I
i. Concluding Acts or Agreements
(1) The civil status of persons; 11
(2) The validity of a marriage or a legal separation; \
ADR proceedings are completed upon the execution of aSQTI-
(3) Any ground for legal separation; I' cludinir act or agreement, These concluding acts or agreements
(4) Future support; may take the form of a mediated settlement agreement (or simply
(6) The jurisdiction of c1>urts; "settlement agreement") or a comprom~e_Qgreement in the case ~ f
(6) Future legitime."
~ediati~&.,tl~Lbaeed on compromise in the case oLa 1:irnrt
annexed mediation, or a waiver or quitclaim jn ~~ase Q,f co.w:illii.-
It is against public policy to waive or enter int~ a compr~- tion.In the case of arbitration, they may take the forms of an arbi-
mise regarding future support. In principle, support is the basis tral award, award on .:zgreed terms, consent award or award based
for life and sustenance which no one can contract away. ~o"".ev~r, on compromise.
support pendente lite and accrued slll)port. no longer ~em g in_d1:-
- bl for the life and sustenan.:e of the person-entitl~gJ ;her -
* An a_rbitral award is the p0rtial or final decision by an arbi-
trator in resolving the i&sue in a controversy."
%:~~__y~ t~ ~ bjf ct of a compromise and, henc~,_!llaY...£!! e
th
~ A mediated settlement agreement is a contract execuY!d ID' the
subj.e,!:t of ADR. ·. . . meniating parties, with the assistance o( their reSl).e.ctix.a.counsel,
38
. 6 RA No 9285 also mentions labor msputes m the cerJ ified bl_ the medjator, evidencjng a successful medjaJion,
S ect 1011 , · ·
t'
· . b b' ted to ADR under the
f · ssues which cannot e su ~ec
~;~:~ ~~;~O~. This-does not mean that labor dispute; ~~derdt;:
* A compromise or compromise agreement is a contract whereby
the _p~rn e_s~ makin_g rec~ al concessions, avoid litigation or
4 put ao. end....to. Q.n.e already existing.39 Jf the controversy subject
Labor ·Code of the Philippir,cs i~ti~~::r: :~t:u::;ib;e o~n~R.
matter of the compromise agreement is also the subject of litiga-
l mp\_e menti;g:u~es a9;~f~rely e~umerates the disputes ove:
0 tion, the compromise agreement can be submitted to the court or
Section 6 , · · : ence while E,A._.No. 9285 is not. appli-
which it is not a~phcable. H ' t'll be the subject matters_ of tribunal for approval, and s11.ch..approval is us ually contained in a
_\.. t l bar. n,.,putes they ma.Y s 1- t' 'j. judg!!.!E.!:!J_ased on compr:.£mise.
C©J1e _ o l L . ' f th Labor Code and its Imp1emen m g
ADR under the ausm ces O e d RA N 9285. J 'k-A 1~.9,_aj~cj~~m is_a__statement renouncing any righ t or
Rules and Regulations, but not un er . . o. . claim in.Yolved in ,fl..C.Ontx:o_ver_syjaone party in favor of the other. If
1 th~ .}Yaiv~_g__r:ight _or <;!aim is also the subject of litigation, the
waiV!!_!!nd q1~itclaim ca11 be submitted to the court or tribunal and
Seat and Venue of ADR 1 become the basi~fJ'l}e dismissal of!he action or proceeding.
. . i .OJl und .,r whuse law the pro- I
I
The seat of ADR is the uns :J.! lac; of ADR on tlie other The ~luding acts or agreements are not forms of AQ,R.
ceeding is ;!!lj.. cun ~cted~Th: ~~:u:rb~t~ationJ.s_b'ei~g...,1:oJ1du~ed- Rather, they constitute the part of the ADR proceedioir that i:ow-
h and;ls t he ac:tu'ii1 site~ er or place-of arbitration to.Q~ m _a P~
H ence,it"i's possible for t e uenue here the arbitration h as ~ts 1~-
country _different from the country w
seat . " Section 3(1), R.A. No. 9285.
" Section 17, id.
" Article 2028, Civil Code of the Philippines
24 Ai.n:1u1ATMt D mvrc R zso1.11T10N
F'uNoAMENTALS OF ALTERNATIVE 25
DISPUTE R ESOLUTION

ADR Providers and Practitioners


Judicial power includes the duty of courts of jus-
Among the ADR providers and practitioners, the 1rbitrator is tice to settle actual controversies involving righta which are
unque3tionably authorized to render a bindmg resolution of the legally demnndable and euforcc~ble, nnd to determine
whether or not there has been grave abuse of discretion
di~ute between the partie8 and, as such, is bound to consideuhe amounting to lack or excess of Jurisdiction on the part
merits of the controversy. On the other hand, the mediator is m:e- of any branch or instrumontality of the Government."
cl'\!ded fr.om.._discussing the meritLQf th e controversy and cannot (Emphasis supplied)
render a binding assessment of th" dispute. •
The following neutral third pP.rsons are authorized to consider !n a domestic arbitration, however, if the arbitral tribunal, in
the merits of the controversy and required to render a binding the exercise of its authority to resolve or defer the resolution of the
resolution of the dispute: preliminary issue on its jurisdiction over the arbitration agree-
ment, opts to defer the resolution of the jurisdictional issue until
1. Arbitrator; the final rendition of the arbitral award, none of the parties can
2. Mediator-arbitrator in a mediation-arbitration proceeding; seeg judicial relief from the deferment. Motions for reconsidera-
and ·· tion, appeals and petitions for certiorari are not available to chal-
lenge the decision of the arbitral trihunal to defer the resolution of
3. The neutral third person in a mini-trial, neutrrl evalua- the pr~lirninary juris~ictional issue.";J'he remedy of an a_ggrieved
tion (neutral evaluator), combination of ADR forms, or in- partv 1a to prgceed with the arbitration and petition the court for
nominate ADR form, who, upor. agreement of the parties, tne .seWng aside of the arbiti:al award on the ground that the arbi-
is directed to render a binding assessmen+.. tr!tl. trih Llnnl exceeded its powers.''
By the nature of their functions'. ADR pro·~ders an~. pr~~i- Similarly, a petition for reuiew under~ection 43 of the 1997
tioners incluciing arbitrators and mediators, act m a quasi-Judicial
1 RuJ_es of Ciyj! ~oceduce is geoecall.Y.,an available rem.eh_" Jor_j_he
capacity.'0 They are quasi-judicial agencies or mstrumentalities.41

re':!ew of dee1s1ons and awards of APR Pf<ll'.iders and.practitioners
As such, their decisions or awards are generally reviewable in because said remedv is applicable fat the following,.j~exua or
final orders:
a !!pecial civil action for certiorari under Rule 65 oft.he 1997 Ru~es
of Civil Procedure as amended." Basis for this principle is Sect,on
1, Article V!II of the 1987 Constitution, which provides that: MSECTION 1. Scope.-This rule shall apply to appeals
from judgments or final orders of the x x x voluntary arbitra-
MSECTION 1. The judicial power shall be vested in one tors authorized by law." (Rule 43, 1997 Rules of Civil Proce-
dure; emphasis supplied)
Supreme Court and in such lower courts as may be established
bylaw.
.. So also, in vie,~ of their quasi-judicial character, the civil li-

- - .. Phil~ock, Inc. v. Construction Industry Arbitration Commi~sion,


ab1hty of ADR providers and practitioners for acts done in th
performance of their duties is the same as that for public officers a:
359 SCRA 632 [20011. Asian Cons!ruction and D,welopment Corporation v. '' Rule 3.20, Special ADR Rules.
Sumitomo Corporation, 704 SCRA 332 [2013], pp. 346-~46 :; Article 5.34, IR~; Section 24, Arbitration Law.
" Me:ro Construction, Inc. v. Chatham Properties, Inc. , 366 SCRA
Ruic 3.20, S~ccml ADR Rules; sec also Airia11 Co~truct,on and ~-
697 12001I. . m ld I t' . N twork uel~p'7lent Corporation v. Sumitomo Corporation, id. , pp. 345-346, citin
" ABS-CBN Broadcasting Corporation v. "or nterac ite e Phi/rock, Inc. 11. Construction Industry Arbitration Com · · d. g
SystPms (WINS) Japan Cc,., Ltd.• 544 SCRA 308 [20081, pp. 318-320. 643-644. mi331on, , . pp.
'Ir III
26 Ai.n:R.~AT!VZ D1sPIJ'I"£ R ESOL\!MON F UNDAMENTAL$ OF ALTERNATIVE
D ISPUTE R ESOLUTION

provided for under Section 38(1), Chapter 9 , Book I of the Adminis- ration that judicial proceedings disregarding arbitration agree-
ments, beyond the point when the parties should have been re-
trative Code of 1987," which provides:
ferred to arbitration, are null and void, and the decisions ren-
".3ec. 38. Liability of Superior O(ficers.-{l) A public of- dered therein shall be revet'sed and set. aside in order to allow the
ficer shall not be civilly liable for acts done in the performance remt.nd of the case to the trial court and the referral of the dis-
of his official Juties, unless there is e clear showing of bad pute to nrbitration in accordance with the arbitration agreement.
faith, malice or groH negligence." (En,phasis supplied)
If : he alternative dispute resolution efforts materialize and
result in a settlement agreement, either party may submit the ag-
Preference for ADR reement to the court before which the action is pending" and move
for the approval thereof. If the court finds that the settlement
There is a clear preference for the use of alternative dispute
agreement is not contrary to Jaw, morals, public policy or public
resolution methods over thi, court tri11l system. Even tefore the order, it shall approve the same and render judgment based
advent of the ADR Act of 2004, Article 2030 of the Civil Code_of th_e
thereon. Once so approved, either party may ask for the execution
Philippines already instructs the courts to _suspend proceedings ~f of the agreement in the same manner that a judgment is executed"
the possibi:ity of settlement through the different ~odes of ~ltc1- if necessary to compel the other party to comply therewith.
nJ1tive dispute resolution i& present;>i;:1ce, even 1f a_casli 1s al-
ready pendin~ in cour!, either..11.artl'..,IllEi...J,efore o_r dunnE-, t e P; e•
trial, file a motion for the court to refer.. the..p~ ~ t9· alY:rnatiYe Office /'or Alternative Di11pute Re11olution
dispute resolution. And!._.even after_the_pre-t11al,_the_ parties may (Section11 49 and 50, ADR Act; Articles 2.1 to 2.3, IRR)
jointly-JllC've for the sus_ru!nsion.,QI...dismissal of the action to allow a
In order to maximize the benefits of ADR and to ensure the
comi,,rom1se agreement. Thus: smooth and effective implementation of the provisions of the ADR
•Article 2030. Every civil action or proceeding shall be Act of 2004 and its IRR, as well as R.A. No. 876, the ADR Act of
susp,,nded: 2004 created the Office for Alternative Dispute Resolution (OADR)
( 1) If willingness to discuss a possible compromise is
which is attached to the Department of Justice. It is headed by a~
Executive Director appointed by the President upon the recom-
expressed by one or both parties; or
mendation of the Secretary of Justice.'°
(2) If it appear11 that one of the parties, before t_
he com-
mencament of the action or proceeding, offered to discuss a Among the principal objectives, powers and functions of the
poscible compromise but the other party refused th~ offer. OADR are the following:
The duration and termH of the suspension of the civil ac-
tion or proceeding and similar matter11 shall b11 governed by
h rovisions of the rules of court as the Supreme Court
..-J 1. To promote, develop and expand the use of ADR in the
private and public sectors through information education
and communication;" '
:~:ll ~romulgate. Said rules of court shall likewise pi:ivide for
the a;>pointment and duties of amicable compoundors.

The Supreme Court, in the case of Koppel, Inc. u. ~a~a~i ~o-


i.. 2. To assist the government to monitor, study and evaluate
the use by the public and private sectors of ADR, and rec-

tary Club Foundation, Inc.," made a clear and categonca ec a- " Article 7.5, IRR.
"Rule 39, 1997 Rules of Civil Procedure
~ Section 49, ADR Act of 2004; Article 2.'i, IRR
- --:;ection 5, ADR Act; Articl~ 1. 5 , IRR. Section 49(a), ADR Act of 2004; Article 2.3, IRR.
" 705 SCRA 142 (2013], pp. 167-169.
II ll I.II II II II (l;J

28 Ai: tT.RNATM D,~ron: R ~oLL'TJos

ommend to Congres~ needful stututory changes to de-


velop, strengthen and improve ADR practices in accor-
dance with world standards;52
3. To act as appointing authority of mediators when the par-
ties agree in writing that it Rhall be empowered to do so;11.t
and
4. To compile and publish a list or roster of ADR provid-
ers/practitioners, and to compile a list or roRter of foreign
or international ADR prov1ders/practitioners.~

0
Section 49(a ), ADR Act nf 2004; Article 2.3(b) and (c), IRR.
u Article 2.2(a,, IRR.
' ' Article 2.3(f) and (g), IRR.