Alternative Dispute Resolution Act of 2004

(RA No. 9285, April 2, 2004)

“AN ACT TO INSTITUTIONALIZE THE USE OF AN ALTERNATIVE DISPUTE
RESOLUTION SYSTEM IN THE PHILIPPINES AND TO ESTABLISH THE OFFICE FOR
ALTERNATIVE DISPUTE RESOLUTION, AND FOR OTHER PURPOSES”

HISTORICAL BACKGROUND
History tells us that amicable settlement of litigious cases is a highly efficient and
effective instrument in the settlements of disputes. Even the holy bible chronicled this mode
in the book of Matthew, Chapter 5:25-26 wherein our Lord Jesus Christ preached the
wisdom of going to and out of the court settlement. Our lord preached; Settle with your
opponent quickly while on the way to court with him. Otherwise, your opponent will hand
you over to the judge, and the judge will hand you over to the guard, and you will be thrown
into prison. Amen and I say to you, you will not be released until you have paid the last
penny.
Conflict is inherent in human society so much so that much effort has been expended in
devising ways of resolving it. With the progress of civilization, physical fighting has been
ruled out and instead, more pacific means have been evolved.
History dating back to the Golden age of Rome reveals that the early judges called upon
to solve private conflicts were primarily the arbiters, persons not specially trained but in
whose morality, probity and good sense the parties in conflict reposed full trust.
The view has been expressed that Filipinos seem to be a litigious people. This perception
is based on the heavy case inflow in the first and second level courts which means a high
number of cases actually filed by parties. Further, losing parties in those cases decided by
the lower courts pursue their appeals all by the Supreme Court, which accounts for heavy
caseloads even in the review courts. The problem of perennial clogged court dockets has
become a primary focus of judicial reforms currently implemented by the Supreme Court.
Alternative dispute Resolution have come about to address the perennial problem of court
delays.

CAUSES OF COURT DELAYS

• Misuse of the due process

• Abuse of legal technicalities
• Intervention of political pressure in court cases
• Sheer weight of court litigations arising from development and growth
• Dilatory tactics of lawyers
• Neglect and/or laxity on the part of some judges
• Large number of vacancies in the judiciary

LEGAL BASIS OF ALTERNATIVE DISPUTE RESOLUTION

1. Philippine Constitution
To remedy the sad state of long-drawn-out court litigation, the 1987 Constitution
mandates the Supreme Court to promulgate rules that shall provide a simplified and
inexpensive procedure for the speedy disposition of cases. Pursuant to the constitutional
 provision, the Supreme Court issued SC Circulars, Memoranda and Administrative orders
of 2001 making mediation as mandatory in certain types of civil cases. The 1997 Rules of
Civil Procedure requires the courts to consider the possibility of an amicable settlement
or of a submission to alternative modes of resolution.

2. Philippine Laws

Civil Code, Article 2028- 2046

Arbitration Law, RA No. 876

On 19 July 1953, the Philippine congress enacted RA 876 otherwise known as
Arbitration Law which is authorized the making of arbitration and submission
agreement and provided for the appointment of arbitrators and the procedure for
the arbitration in civil controversies.

Alternative Dispute Resolution Law of 2004

On 2 April 2004, congress enacted RA 9285 or the Alternative Dispute Resolution
Act (ADR Law) of 2004 which declares that it is a policy of the state to encourage and
actively promote the use of Alternative dispute resolution system as an important
means to achieve speedy and impartial justice and declog court dockets.

3. Decisions of the Supreme Court of the Philippines

4.
5. Rules and Resolutions issued by the Philippine Supreme Court
The Rules on Civil Procedure considers the possibility of a submission to
alternative modes of dispute resolution during pre-trial

6. Rules and Regulations issued by administrative agencies

DOJ Circular No. 98 implements the IRR for the ADR regulates the Office for
Alternative Dispute Resolution (an attached agency of the DOJ which is tasked to
promote, develop and expand the use of ADR in the public and private sectors.

7. International laws, treaties or international agreements

- Model Law on International Commercial Arbitration (adopted by the United
Nations Commission on International Trade Law on June 21, 1985)
- United Nations Convention on the Recognition and Enforcement of Foreign
Arbitral Awards (approved in 1958 and ratified by the Philippine Senate
under Senate Resolution No. 71)
-
8. Jurisprudence of other countries

9. Equity
In its broadest and most general signification, this term denotes the spirit and the habit
of fairness, justness, and right dealing which would regulate the intercourse of men with
men.
General Principles Governing ADR
1. Party autonomy. Parties are free to make their own arrangements to resolve
their disputes.
2. Liberal Interpretation in favor of ADR. In interpreting the ADR Act, the court
shall have due regard to the policy of the law in favor of arbitration. In situations
where no specific rule is provided under theSpecial ADR Rules, the court shall
resolve such matter summarily and be guided by the spirit and intent of the
Special ADR Rules and the ADR Laws.
3. Competence-competence principle. The special; ADR Rules recognize the
principle of competence-competence, which means that the arbitral tribunal may
initially rule on its own jurisdiction, including any objections with respect to the
existence or validity of the arbitration agreement or any condition precedent to
the filing of a request arbitration.
4. Principle of separability. The principle of separability of the arbitration clause
means that said clause shall be treated as an agreement independent of the
other terms of the contract of which it forms part.
5. Confidential nature of ADR. Information obtained through mediation is
considered privileged and confidential.

DECLARATION OF POLICY (Sec. 2, RA No. 9285)

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. This Act shall be without prejudice to the adoption by the Supreme
Court of any ADR system, such as mediation, conciliation, arbitration, or any combination
thereof as a means of achieving speedy and efficient means of resolving cases pending
before all courts in the Philippines which shall be governed by such rules as the Supreme
Court may approve from time to time.

DEFINITION OF TERMS (Sec. 3, RA No. 9285)

Alternative dispute Resolution means 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 and,
early neutral evaluation, mini-trial or any combination thereof.

ADR Provider means institutions or persons accredited as mediator, conciliator, arbitrator,

neutral evaluator or any person exercising similar functions in any ADR system. This is
without prejudice to the rights of the parties to choose non-accredited individuals to act as
mediator, conciliator, arbitrator, or neutral evaluator of their dispute. Whenever referred to
in this act, the term ADR practitioners shall refer to individuals acting as mediator,
conciliator, arbitrator, or neutral evaluator.

Authenticate means to sign, execute or adopt a symbol, or encrypt a record in whole or in

part, intended to identify the authenticating party and to adopt, accept or establish the
authenticity of a record or term.

Arbitration means a voluntary dispute resolution process in which one or more arbitrators,
appointed in accordance with the agreement of the parties, or rules promulgated pursuant
to this Act, resolve dispute by rendering an award.

Award means any partial or final decision by an arbitrator in resolving the issue in a
controversy.

Commercial Arbitration an arbitration covering matter arising from all relationship of a

commercial nature, whether contractual or not.

Conciliation It is a process in which a neutral third party (conciliator) conveys information

between parties and attempts to improve direct communication between them. The
conciliator often prepares a report that describes the scope of agreement and
disagreement.

Confidential Information means any information, relative to the subject of mediation or

arbitration, expressly intended by the source not to be disclosed, or obtained under
circumstances that would create a reasonable expectation on behalf of the source that the
information shall not be disclosed

Early Neutral Evaluation

An ADR process wherein parties and their lawyers are brought together early in a pre-trial
phase to present summaries of their cases and receive a non-binding assessment by an
experienced, neutral person, with expertise in the subject and the substance of the dispute.

Mediation means a voluntary process in which a mediator, selected by the disputing parties,
facilitates communication and negotiation, and assist the parties in reaching a voluntary
agreement regarding a dispute.

Mediation Party means a person who participates in a mediation and whose consent is
necessary to resolve the dispute;

Mediation-Arbitration or Med-Arb is a step dispute resolution process involving both

mediation and arbitration;

Mini-Trial means a structured dispute resolution method in which the merits of a case are
argued before a panel comprising senior decision makers with or without the presence of a

Non-Party Participant means a person, other than a party or mediator, who participates in a
mediation proceeding as a witness, resource person or expert
Roster means a list of persons qualified to provide ADR services as neutrals or to serve as
arbitrators.

ELECTRONIC SIGNATURES IN GLOBAL ECONOMY AND E-COMMERCE ACT (Sec. 4, RA No.

9285)
The provisions of the Electronic Signatures in Global E-Commerce Act, and its
implementing rules and regulations shall apply to proceeding contemplated in this Act.

LIABILITY OF ADR PROVIDER AND PRACTITIONER (Sec. 5, RA No. 9285)

The ADR providers and practitioners shall have the same civil liability for the Acts
done in the performance of the duties as that of public officers as provided in Sec 38 (1),
Chapter 9, Book of the Administrative Code of 1987 pertinently provides that:
“A public officer shall not be civilly liable for acts done in the performance of his
official duties, unless there is clear showing of bad faith, malice or gross negligence.”

Case: Dombrovski vs Sirius International Insurance Corporation

In discussing the nature and scope of arbitral immunity in situation as occurred here,
we have held, for example that arbitral immunity should extend to cases where the
authority of an arbitrator to resolve a dispute is challenged because arbitrators will be
dissuaded from serving if they be caught up in the dispute and be saddled with the burden
of defending a lawsuit.

EXCEPTION TO THE APPLICATION OF THIS ACT (Sec. 6, RA No. 9285)

The provisions of this Act shall not apply to resolution or settlement of the following:
a. Labor disputes covered by the Labor Code of the Philippines
b. Civil status of persons
c. The validity of marriage
d. Any ground for legal separation
e. The jurisdiction of courts
f. Future legitime
g. Criminal Liability
h. Those which by law can not be compromised

OFFICE FOR ALTERNATIVE DISPUTE RESOLUTION (Sec. 49, RA No. 9285)

The Office for Alternative Dispute Resolution is established as an agency attached to
the Department of Justice. It shall have a Secretariat and shall be headed by an Executive
Director, who shall be appointed by the President of the Philippines, taking into
recommendation of the Secretary of Justice.

POWERS AND FUNMCTIONS OF THE OADR (Sec. 50, RA No. 9285)

Powers of the OADR:
(a) To act as appointing authority of mediators and arbitrators when the parties agree in
writing that it shall be empowered to do so;
(b) To conduct seminars, symposia, conferences and other public for a and publish
proceedings of said activities and relevant materials that would promote, develop
and expand ADR;
(c) To establish an ADR library or resource center in the Philippines;
 (d) To establish training programs for ADR providers, both in public and private sector;
(e) To certify those who have successfully completed the regular professional training
programs provided by the OADR;
(f) To charge for services rendered such as, among others, for training and certifications
of ADR providers;
(g) To accept donations, grants and other assistance from local and foreign sources; and
(h) To exercise such other powers as may be necessary and proper to carry into effect
the provisions of the ADR Act.

Functions of the Office of the Alternative Dispute Resolution (OADR)

The OADR shall have the following functions:
(a) To promote, develop and expand the use of ADR in the private and public sectors
through information, education and communication;
(b) To monitor, study and evaluate the use of ADR by the private and public sectors for
purposes of, among others, policy formulation;
(c) To recommend to Congress needful statutory changes to develop, strengthen and
improve ADR practices in accordance with international professional standards;
(d) To make studies on and provide linkages for the development, implementation,
monitoring and evaluation of government and private ADR programs and secure
information about their respective administrative rules/procedures, problems
encountered and how they were resolved;
(e) To compile and publish a list or roster of ADR providers/practitioners, who have
undergone training by the OADR, or by such training providers/institutions
recognized or certified by the OADR as performing functions in any ADR system. The
list or roster shall include the addresses, contact numbers, e-mail addresses, ADR
service/s rendered (e.g. arbitration, mediation) and experience in ADR of the ADR
providers/practitioners;
(f) To compile a list or roster of foreign or international ADR providers/practitioners.
The list or roster shall include the addresses, contact numbers, e-mail addresses,
ADR service/s rendered (e.g. arbitration, mediation) and experience in ADR of the
ADR providers/practitioners; and
(g) To perform such other functions as may be assigned to it.

Philippine Mediation Center

Pursuant to Supreme Court “en banc” Resolution A.M. No. 01-10-5-SC-PHILJA, dated
October 16, 2001, and in line with the objectives of the Action Program for Judicial Reforms
(APJR) to decongest court dockets, among others, the Court prescribed guidelines in
institutionalizing and implementing the mediation program in the Philippines. The same
resolution designated the Philippine Judicial Academy as the component unit of the
Supreme Court for Court-Annexed Mediation and other Alternative Dispute Resolution
(ADR) Mechanisms, and established the Philippine Mediation Center (PMC).

Functions
The Philippine Mediation Center (PMC) shall, among others:
a. Establish, in coordination with the Office of the Court Administrator (OCA), units of
the Philippine Mediation Center (PMC) in courthouses, and in such other places as
may be necessary.
 Each unit, manned by Mediators and Supervisors, shall render mediation services to
parties in court-referred, court-related mediation cases;
b. Recruit, screen, train and recommend Mediators for accreditation to this Court;
c. Require prospective Mediators to undergo four-week internship programs;
d. Provide training in mediation to judges, court personnel, educators, trainors,
lawyers, and officials and personnel of quasi-judicial agencies;
e. Oversee and evaluate the performance of Mediators and Supervisors who are
assigned cases by the courts;
f. Prepare a Code of Ethical Standards for Mediators for approval by the PHILJA Board
of Trustees and this Court;
g. Implement the procedures in the assignment by the PMC Units of court-referred,
court0related mediation cases to particular Mediators;
h. Propose to the Supreme Court (a) Guidelines on Mediation and (b) Compensation
Guidelines for Mediators and Supervisors; and
i. Perform other related functions.

CHAPTER 2 – MEDIATION

Mediation is a constructive and effective way to resolve disputes between people.

The premise in empowering the parties is that they know their problems better than anyone
else and can decide best what will work for them.
Negotiation and possibly conciliation come to the picture to patch up disagreements.
Things have to be readjusted, or ironed out to come to agreement. When all these steps
stalled, differences continue to linger. Both parties may be planning for a new course of
action in court. But very recently the old concept of tribal mediation is reinvented, using the
power of the third side. The third side, in this set-up is an unbiased neutral person called the
Mediator. But unlike the old one, this new concept is now systematized under the auspices
of the Philippine Judicial Academy of the Philippine Supreme Court.

WHEN IS MEDIATION USEFUL

 the issue is complicated by a strong emotional element
 the parties know each other
 maintaining a relationship with other party is important
 one feels uncomfortable confronting the other, unless with a neutral third party
 the parties work/live together or for some reason cannot afford a conflict
 a decision must be reached soon
 the parties doubt their ability to work out the problem
 many people are directly or indirectly affected
 one or both parties want to avoid a formal proceeding
 when confidentiality of the problem is important

“Mediation” means a voluntary process in which a mediator, selected by the

disputing parties, facilitates communication and negotiation, and assist the parties in
reaching a voluntary agreement regarding a dispute.
Generally, mediation falls into 2 categories:
 Traditional or classic mediation – attorneys are not generally involved. The
mediator meets directly with the parties to facilitate negotiation. The classic
mediator is passive, expressing no judgment or opinion on the merits of either
position.
 Voluntary Settlement Conferences – attorneys are present and the mediator
takes a more active role, often expressing an opinion on the merits but without
authority to render a decision.

WHO SHOULD BE MEDIATORS

1. The mediator shall be a neutral third person.
2. He has no personal bias regarding the disputants or the subject matter of the case in
dispute.
3. An individual is not neutral if he or she has a financial interest in the subject matter
of the dispute or a financial relationship with any party to the dispute subject of the
resolution proceedings.
4. If before or during the dispute resolution proceedings, a neutral person has acquired
an actual or apparent conflict of interest the mediator shall inform all the disputants,
and shall disqualify him or herself unless all the disputants consent in writing to
continue.

HOW DOES ONE BECOME A MEDIATOR

Basic Qualifications of Prospective Mediators
1. Bachelor’s degree
2. At least 30 years of age
3. Good moral character
4. Willingness to learn new skills and render public service
5. Proficiency in oral and written communication in English and Pilipino

THE ROLE OF MEDIATOR

The mediator is a neutral third person representing the third side, who acts as coach,
referee, equalizer, and facilitator.
Mediation may be conducted by private institution or court annexed mediation. In
either case, a set of rules and ethics are in place. For private mediation services, they are
guided by the law, while court annexed mediation are governed by a set of circulars and
guidelines issued by the court in compliance with the law.
The mediator is the central figure in the mediation process. An effective mediator is
highly credible, non-judgmental, patient and persuasive. He has the ability to infuse humor
into the discussions which could become severely strained at times. It is important that the
mediator knows the essence of the controversy by his fingertips.
Mediation will be more attractive than litigation once the parties are convinced that
elevating their conflict to court will be far more expensive and will further escalate their
hostilities. Even if litigation has commenced, the parties could still avail of mediation
especially at the conclusion of discovery proceedings in which parties are finished
responding to each interrogatories, requests for admissions and requests for production and
inspection of documents. Some mediation have been conducted even after the court has
rendered judgment. At this stage, the purpose of mediation is to minimize the risk and
exposure of an appeal and to remove potential roadblocks to the execution of judgment
that could hinder the swift resolution of the case. An appeal or a motion to vacate may be
taken by the losing party to undermine the winning side. Mediation could provide a safe
haven for relief even after the trial.

SELECTION OF MEDIATOR
Freedom to select mediator
The parties have the freedom to select mediator. The parties may request the OADR
to provide them with a list or roster or the resumes of its certified mediators. The OADR
may be requested to inform the mediator of his/her selection.
Replacement of Mediator
If the mediator selected is unable to act as such for any reason, the parties may,
upon being informed of such fact, select another mediator.

TYPES OF MEDIATION
There are many types of Mediation, such as: Court-Annexed Mediation, Court-
Referred Mediation, Private Mediation, Peer Mediation, Corporate Mediation and many
others.

Take note that what the law (ADR Act) excludes is court-annexed mediation which is
different from a court referred mediation.

“Court-Referred Mediation” means mediation ordered by a court to be conducted in

accordance with the Agreement of the Parties when as action is prematurely commenced in
violation of such agreement;
The fact that the court orders the parties to mediate their dispute does not make the
mediation less voluntary. That is clear from Section 3(m) is that there is a binding agreement
of the parties to mediate their dispute. This normally arises where the parties in their
contract included as part of their dispute resolution clause a prior resort to mediation
before the dispute may be brought to arbitration or filed in court. Thus, while Section 7 of
the ADR act expressly excludes court-annexed mediation, it does not similarly exclude court
referred mediation. Otherwise, to exclude court referred mediation from the scope of the
ADR Act is either to treat it as a floating dispute resolution process or to consider it as if it
were a court-annexed mediation in the latter case, the distinction made between the two in
the definition of terms would be rendered meaningless. The court cannot compel the
parties to comply with their mediation agreement and at the same time flout that
agreement by requiring them to follow a mediation procedure other than that agreed upon
by them.

CONFIDENTIALITY OF INFORMATION (Sec. 9, RA No. 9285)

Section 9-13 of the ADR Act contain comprehensive provisions on the nature and
scope of the confidentiality rule in mediation and the effect of violation of such rule.
As confidential information, the source of the information, whether a party, a
mediator, or a non-party participant may refuse to disclose the information in any other
proceeding or prevent any person acquiring possession of such information from disclosing
it. Its disclosure cannot be compelled by judicial process.
 Thus, it is not subject to discovery or if offered as evidence in another proceeding,
the ADR Act declares it to be inadmissible. The persons involved in mediation cannot be
required to produce confidential information by sub poena duces tecum or to testify on
confidential information obtained in mediation. These persons enjoying the privilege of not
being compelled to make a disclosure of confidential information are the parties, their
respective counsel, the mediator or mediators, the non-party participants, and any person
hired or engaged in connection with the mediation as secretary, stenographer, clerk or
assistant.
This rule is subject to the exception that evidence otherwise admissible does not
become inadmissible simply through the expedient of offering it as part of the information
provided by a party in a mediation proceeding.
The general rule is that any info shall be privileged and confidential if obtained
through mediation. This means that privileged and confidential information cannot be used
in a subsequent judicial or quasi-judicial proceeding.
The confidentiality of the communication arises only if it is made in mediation.

Philip M. Saeta vs. The Superior Court of LA County,

The petitioner Saeta, retired judge, sought to vacate an order of a trial court granting
a motion to compel his deposition testimony. He argued among others that he acted as
mediator of a dispute and that statements made during a hearing he conducted are
privileged.
It appeared that one Kathleen Dent, entered into an agreement with the Farmers
group of Insurance companies to sell insurance for Farmers. She was fired less than two
years later. Under the agreement, Dent was entitled to a review of a discharge decision by a
termination review board. The board as constituted was composed of three members, one
chosen by Dent, one chosen by the Farmers, and a third chosen by the first two. This third
person was Saeta. The board after hearing, upheld the discharge of Dent as justified.
Thereafter, Dent filed a lawsuit against Farmers among others for breach of the agreement.
Dent sought to depose Saeta. The issue thus presented before the Court of Appeal was
whether the proceeding conducted before the review board was a mediation or an
arbitration. The court said it was neither. According to the court, as contractually
constituted, the review board here is not designated to facilitate or assist the parties to
voluntarily and independently reach a mutually acceptable agreement. Far from the
remaining passive and silent about the merits and solutions to a dispute in an effort to allow
the parties to independently reach a settlement, the review board is directed to take
evidence and make and transmit recommendations. No negotiation was involved. There was
nothing voluntary or bilateral or mutually accepted about the result.
As designed, the review board does not fall within the definition of arbitration or
mediation with the result that the privileges do not come into play. Statements before the
review board are not subject to the privilege.

Waiver of Confidentiality
In Section 10, a privilege arising from the confidentiality of information may be
waived in a record or orally during a proceeding by the mediator and the mediation parties.
A privilege arising from the confidentiality of information may likewise be waived by
a non-party participant if the information is provided by such non-party participant.
 Case of Eisendrath vs. Superior Court of LA County, May 2002, illustrates the
application of the confidentiality rule. The plaintiff and private respondent, Kathly Rogers
were married and had two children. They filed a petition for dissolution of marriage after 6
years of marriage. Mediation was commenced two years later to settle issues of support and
custody of children. Before commencing mediation, they executed a mediation agreement
that expressly states that the mediation was governed by Evidence Code. In addition, the
mediation agreement provides: “We agree reform or avoid liability on a contract. Even in
this proceeding, the mediator may not be compelled to provide evidence or to testify in
such proceeding.
He may however disclose that mediation occurred, or it has terminated or a
settlement was reached.
It will be noted that bad faith conduct of one of the parties participating in a
mediation proceeding is not an exception to the application of the confidentiality rule.

Foxgate Homeowners Assn vs. Bramalea California, Inc.

This was a case initiated by the homeowners association against Bramalea Corp.
which was the developer of a residential condominium complex for damages for numerous
construction defect in the condominium units constructed by the defendant. Pursuant to the
California Code of Civil Procedure, the superior court judge appointed a retired judge to act
as mediator and a special master. The judge issued a case management order which
comprehensively defined the nature and extent of the responsibility of the mediator. The
mediator called the parties to a 5-day mediation session and directed the parties, their
representatives, attorneys and experts to attend the session. The defendant’s representative
who was also its attorney was late and brought no defense experts. When asked why he said
“This is your mediation. You can handle it any way you want. I’m here you can talk to me.”
Other incidents occurred thereafter which led the mediator to accuse him of obstructive bad
faith tactics. The mediator submitted a comprehensive report to the court detailing the acts
or utterances of the defendant’s representative. He accordingly recommended to the court
that the defendant be sanctioned and among others to be required to reimburse plaintiff’s
expenses in attending the aborted mediation session. The plaintiff thereafter files a motion
for sanctions using as evidence the report of the mediator. The defendant objected to the
use of the report and cited the rule on confidentiality of the proceedings and that the report
or finding of a mediator cannot be used as evidence in court. Motion for sanction was
granted.
The SC of California stressed that the purpose of the confidentiality is to promote a
candid and informal exchange regarding events in the past. This frank exchange is achieved
only if the participants know that what is said in the mediation will not be used to their
detriment through later court proceedings and other adjudicatory process. Confidentiality is
essential to effective mediation, to carry out the purpose of encouraging mediation by
ensuring confidentiality. The Court acknowledged that the mediator and the CA were
troubled by what they perceived to be a failure of the defendant to participate in good faith
in the mediation process. Whether a mediator in addition to the participants should be
allowed to report a conduct during mediation that the mediator believes is taken in bad
faith and therefore might be sanctionable under the law is a policy question to be resolved
by the Legislation. The Legislature has decided that the policy of encouraging mediation by
ensuring confidentiality is promoted by avoiding the threat that frank expression of
viewpoints by the parties in mediation may subject the participant to a motion for
imposition of sanctions.

ADR Act does not require that a mediator shall have special qualifications by
background or profession unless the special qualifications of a mediator are required in the
mediation agreement or by the mediation parties.
The mediator is not only required to be neutral and impartial but that the parties
should have no occasion to doubt the neutrality and impartiality.
Before accepting an appointment as a mediator, a person is required to make an
inquiry that is reasonable under the circumstances to determine whether there are any
known facts that a reasonable individual would consider likely to affect the impartiality of
the mediator including a financial or personal interest in the outcome of the mediation and
any existing or past relationship with a party or foreseeable participant in the mediation.
In making a judgment whether or not a mediator made a proper disclosure of
relationship or interest, the mediator is subject to the test of a reasonable individual.
Whether or not as a reasonable individual, a disclosure should have been made by
him of certain matters, will eventually depend upon the circumstances of the case and the
parameters of this duty of disclosure eventually will have to be determined and developed
by jurisprudence.

EXCEPTIONS TO PRIVILEGE (Sec. 11, RA No. 9285)

(a) There is no privilege against disclosure under Section 9 if mediation

communication is:

(1) in an agreement evidenced by a record authenticated by all parties

to the agreement;

(2) available to the public or that is made during a session of a

mediation which is open, or is required by law to be open, to the
public;

(3) a threat or statement of a plan to inflict bodily injury or commit a

crime of violence;

(4) internationally used to plan a crime, attempt to commit, or

commit a crime, or conceal an ongoing crime or criminal activity;

(5) sought or offered to prove or disprove abuse, neglect,

abandonment, or exploitation in a proceeding in which a public
agency is protecting the interest of an individual protected by law; but
this exception does not apply where a child protection matter is
referred to mediation by a court or a public agency participates in the
child protection mediation;
 (6) sought or offered to prove or disprove a claim or complaint of
professional misconduct or malpractice filed against mediator in a
proceeding; or

(7) sought or offered to prove or disprove a claim of complaint of

professional misconduct of malpractice filed against a party, nonparty
participant, or representative of a party based on conduct occurring
during a mediation.

(b) There is no privilege under Section 9 if a court or administrative agency,

finds, after a hearing in camera, that the party seeking discovery of the
proponent of the evidence has shown that the evidence is not otherwise
available, that there is a need for the evidence that substantially outweighs
the interest in protecting confidentiality, and the mediation communication is
sought or offered in:

(1) a court proceeding involving a crime or felony; or

(2) a proceeding to prove a claim or defense that under the law is

sufficient to reform or avoid a liability on a contract arising out of the
mediation.

(c) A mediator may not be compelled to provide evidence of a mediation

communication or testify in such proceeding.

(d) If a mediation communication is not privileged under an exception in

subsection (a) or (b), only the portion of the communication necessary for the
application of the exception for nondisclosure may be admitted. The
admission of particular evidence for the limited purpose of an exception does
not render that evidence, or any other mediation communication, admissible
for any other purpose.

PROHIBITED MEDIATOR REPORTS (Sec. 1, RA No. 9285)

A mediator may not make a report, assessment, evaluation, recommendation,

finding, or other communication regarding a mediation to a court or agency or other
authority that make a ruling on a dispute that is the subject of a mediation, except:

(a) Where the mediation occurred or has terminated, or where a settlement

was reached.

(b) As permitted to be disclosed under Section 13 of this Chapter.

MEDIATORS DISCLOSURE AND CONFLICT OF INTEREST (Sec. 13, RA No. 9285)

The mediation shall be guided by the following operative principles:

 (a) Before accepting a mediation, an individual who is requested to serve as a
mediator shall:

(1) make an inquiry that is reasonable under the circumstances to

determinate whether there are any known facts that a reasonable
individual would consider likely to affect the impartiality of the
mediator, including a financial or personal interest in the outcome of
the mediation and any existing or past relationship with a party or
foreseeable participant in the mediation; and

(2) disclosure to the mediation parties any such fact known or learned
as soon as is practical before accepting a mediation.

(b) If a mediation learns any fact described in paragraph (a) (1) of this section
after accepting a mediation, the mediator shall disclose it as soon as
practicable.

At the request of a mediation party, an individual who is requested to serve as mediator

shall disclose his/her qualifications to mediate a dispute.

This Act does not require that a mediator shall have special qualifications by background or
profession unless the special qualifications of a mediator are required in the mediation
agreement or by the mediation parties.

Refusal or Withdrawal of Mediator

A mediator may refuse from acting as such, withdraw or may be compelled to
withdraw from mediator proceedings under the following circumstances:
(a) If any of the parties so requests the mediator to withdraw
(b) The mediator does not have the qualifications, training and experience to enable
him/her to meet the reasonable expectations of the parties
(c) Where the mediator's impartially is in question
(d) If continuation of the process would violate any ethical standards
(e) If the safety of any of the parties would be jeopardized
(f) If the mediator is unable to provide effective services
(g) In case of conflict of interest
(h) In any of the following instances, if the mediator is satisfied that:
(i) one or more of the parties is/are not acting in good faith;
(ii) the parties' agreement would be illegal or involve the commission of a
crime;
(iii) continuing the dispute resolution would give rise to an appearance of
impropriety;
(iv) continuing with the process would cause significant harm to a non-
participating person or to the public; or
(v) continuing discussion would not be in the best interest of the parties, their
minor children or the dispute resolution process.
(g) In case of conflict of interest; and
(h) In any of the following instances, if the mediator is satisfied that;
(i) one or more of the parties is/are not acting in good faith;
(j) the parties’ agreement would be illegal or involve the commission of a crime;
(k) continuing the dispute resolution would give rise to an appearance of impropriety;
(l) continuing with the process would cause significant harm to a non-participating person or
to the public; or
(m) continuing discussion would not be in the best interest of the parties, their minor
children or the dispute resolution process.
Ethical Conduct of a Mediator
Competence
It is not required that a mediator shall have special qualifications by background or
profession unless the special qualifications of a mediator shall:
a. Continually upgrade his/her professional competence in mediation skills;
b. Ensure that his/her qualifications, training and experience are known to and
accepted by the parties; and
c. Serve only when his/her qualifications, training and experience enable him/her to
meet the reasonable expectations of the parties and shall not hold himself/herself
out or give the impression that he/she does not have.
Impartially
A mediator shall maintain impartiality.
a. Before accepting a mediation, an individual who is requested to serve as a mediator
shall:
i. Make an inquiry that is reasonable under the circumstances to determine
whether there are known facts that a reasonable individual would consider
likely to affect the impartiality of the mediator, including a financial or
personal interest in the outcome of the mediation and any existing or past
relationship with a party of foreseeable participant in the mediation; and
ii. Disclose to the mediation parties any such fact known or learned as soon as
practicable before accepting a mediation.
b. If a mediator learns any fact described in paragraph (a) of this Article after accepting
a mediation, the mediator shall disclose it as soon as practicable to the mediation
parties.
Confidentiality
A mediator shall keep in utmost confidence all confidential information obtained in the
course of the mediation process. A mediator shall discuss issues of confidentiality and the
extent of confidentiality provided in any private sessions or caucuses that the mediator
holds with a party.

Consent and Self-Determination

a. A mediator shall make reasonable efforts to ensure that each party understands the
nature and character of the mediation proceeding including private caucuses, the
issues, the available options, the alternatives to non-settlement, and that each party
is free and able to make whatever choices he/she desires regarding participation in
mediation generally and regarding specific settlement options.
If a mediator believes that a party, who is not represented by counsel, is unable to
understand, or fully participate, the mediation proceedings for any reason, a
mediator may either:
 i. limit the scope of the mediation proceedings in a manner consistent
with the party's ability to participate, and/or recommend that the
party obtain appropriate assistance in order to continue with the
process; or
ii. terminate the mediation proceedings.
b. A mediator shall recognize and put in mind that the primary responsibility of
resolving a dispute and the shaping of a voluntary and uncoerced settlement rests
with the parties.

Separation of Mediation from Counselling and Legal Advice

a. Except in evaluative mediation or when the parties so request, a mediator shall:

i. refrain from giving legal or technical advice and otherwise engaging in

counselling or advocacy; and
ii. abstain from expressing his/her personal opinion on the rights and duties of
the parties and the merits of any proposal made.
b. Where appropriate and where either or both parties are not represented by counsel,
a mediator shall;
i. recommend that the parties seek outside professional advice to help them
make informed decision and to understand the implication of any proposal;
and
ii. suggest that the parties seek independent legal and/or technical advice
before a settlement agreement is signed.
c. without the consent of all parties, and for a reasonable time under the particular
circumstance, a mediator who also practices another profession shall not establish a
professional relationship in that other profession with one of the parties, or any
person or entity, in a substantially and factually related matter.

Promotion of Respect and Control of Abuse of Process. The mediatorcle 3.12 Promotion of
Respect and Control of Abuse of Process. of the settle mentcost ablish a professional
relationship I shall encourage mutual respect between the parties, and shall take reasonable
steps, subject to the principle of self-determination, to limit abuses of the mediation
process.

Participation in Mediation
The issue of legal representation in mediation is sometimes questioned by those who
believe that the presence of lawyers obstructs rather than facilitates mediation. The Act
leaves it to the judgment of each party to decide whether or not he needs assistance by
another person and whether or not such assistance may be or may not be provided by a
lawyer. In some cases, a party may in fact insist upon such legal representation in mediation
as a condition precedent to his participation therein.

In one case, the parties, both of whom were non-lawyers participated in a mediation
without legal representation. The parties agreed that there was an amount due the claimant
from the respondent. It was agreed that this amount shall be paid in cash and in kind. The
settlement agreement merely provided that: “Now Therefore, respondent agrees to pay
claimant the amount of P130,090.61 in cash and P293,945.61 in a lot value.” Because
nothing was said about how and when the balance will be paid or when the lot referred to
will be sold so that the unpaid balance will be paid to the claimant, a controversy eventually
developed which resulted in another case being filed by the claimant. If the parties had
been represented by counsel, or the mediator had been a lawyer, it is possible that a
settlement agreement would have been drawn up with more or less complete terms and
providing more certainty of performance. (United Resources Realty & Devt v. Quitalan, 10
Feb 2003)

Role of Parties and their Counsels (IRR)

Role of Counsel
a. The lawyer shall view his/her role in the mediation as a collaborator with the other
lawyer in working together toward the common goal of helping their clients resolve
their differences to their mutual advantage.
b. The lawyer shall encourage and assist his/her client to actively participate in positive
discussions and cooperate in crafting an agreement to resolve their dispute.
c. The lawyer must assist his/her client to comprehend and appreciate the mediation
process and its benefits, as well as the client’s greater personal responsibility for the
success of mediation in resolving the dispute.
d. In preparing for participation in mediation, the lawyer shall confer and discuss with
his/her client the following:
i. The mediation process as essentially a negotiation between the parties
assisted by their respective lawyers, and facilitated by a mediator, stressing it
its difference from litigation, its advantages and benefits, the clients
heightened role in mediation and responsibility for its success and explaining
the role of the lawyer in mediation proceedings,
ii. The substance of the upcoming mediation such as;
aa. The substantive issues involved in the dispute and their prioritization in
terms of importance to his/her client’s real interests and needs.
bb. The study of other party’s position in relation to the issues with a view to
understanding the underlying interests, fears, concerns and needs;
cc. The information or facts to be gathered or sought from the other side or
to be exchanged that are necessary for informed decision-making;
dd. The possible options for settlement but stressing the need to be open-
minded about other possibilities; and
ee. The best, worst and most likely alternative to a non-negotiated
settlement.

Other Matters which the Counsel shall do to Assist Mediation. The lawyer;
a. shall give support to the mediator so that his/her client will fully understand the
rules and processes of mediation;
b. shall impress upon his/her client the importance of speaking for himself/herself and
taking responsibility for making decisions during the negotiations within the
mediation process.;
c. may ask for a recess in order to give advice or suggestions to his/her client in private,
if he/she perceives that his/her client is unable to bargain effectively;
 d. shall assist his/her client and the mediator put in writing the terms of the settlement
agreement that the parties have entered into. That lawyers shall see to it that the
terms of the settlement agreement are not contrary to law, morals, good customs,
public order or public policy.
Your lawyer remains valuable counsel and partner in mediation proceedings. They can
attend mediation sessions with you. They will be expected to provide legal assistance to you
and the mediator in drafting the necessary papers. Your lawyer must help you fully
understand and appreciate the rules and process of mediation. Ask them to explain the
difference of litigation from mediation, the advantages of the procedure, possible
bargaining options, your role in the process and likely alternatives to a negotiated
agreement. Your lawyer may take a little less active role in a mediation session than in a
courtroom. In mediation, you will take responsibility for making decisions. But when matters
in the discussion put you at a disadvantage and if the mediator does not seem to be doing
enough to settle the imbalance, you will want your lawyer to participate more actively.
When necessary, your lawyer may even call a recess to give you advice or suggestion in
private. Lawyers in mediation will also assist the mediator in putting into writing the terms
of the compromise agreement or a withdrawal of a complaint or a satisfaction of claim so
that it may be approved by the trial court for judgment.

PLACE OF MEDIATION (Sec. 15, RA No. 9285)

The parties are free to agree on the place of mediation. Failing such agreement, the
place of mediation shall be any place convenient and appropriate to all parties.

Conduct of Mediation (IRR)

Articles to be Considered in the Conduct of Mediation.
a. The mediator shall not make untruthful or exaggerated claims about the dispute
resolution process, its costs and benefits, its outcome or the mediator’s
qualifications and abilities during the entire mediation process.
b. The mediator shall held the parties reach a satisfactory resolution to their dispute
but has no authority to impose a settlement on the parties.
c. The parties shall personally appear for mediation and may be assisted by a lawyer. A
party maybe represented by an agent who must have full authority to negotiate and
settle the dispute.
d. The mediation process shall, in general, consists of the following stages:
i. opening statement of the mediator
ii. individual narration by the parties;
iii. exchange by the parties;
iv. summary of issues;
v. generation and evaluation of options; and
vi. closure
e. The mediation proceeding shall be held in private. Person, other than the parties,
their representatives and mediator, may attend only with the consent of all the
parties,
f. the mediation shall be closed:
i. by the execution of a settlement agreement by the parties;
ii. by the withdrawal of any party from mediation; and
 iii. by the written declaration of the mediator that any further effort at
mediation would not be helpful
Effect of Agreement to Submit Dispute to Mediation Under Institutional Rules
An agreement to submit a dispute to mediation by an institution shall include an
agreement to be bound by the internal mediation and administrative policies of such
institution. Further, an agreement to submit a dispute to mediation under institutional
mediation rules shall be deemed to include an agreement to have such rules govern the
mediation of the dispute and for the mediator, the parties, their respective counsels and
non-party participants to abide by such rules.
In case of conflict between the institutional mediation rules and the provisions of this Act,
the latter shall prevail.
ENFORCEMENT OF MEDIATED SETTLEMENT AGREEMENT (Sec. 17, RA No. 9285)
As a means of encouraging a recourse to mediation, Sec. 17 provides for a means of
enforcing mediated settlement agreements. The conditions precedent are:
a. The settlement agreement shall be prepared by the parties with the assistance of
their respective counsel, if any, and by the mediator.
b. The parties and their respective counsel, if any, shall sign the settlement agreement;
c. The mediator shall certify in writing that he explained the contents of the settlement
agreement to the parties in a language known to them.

Moreover, Sec 17c provides that the parties, if they so desire, may deposit the
settlement agreement with the appropriate clerk of court of the Regional Trial Court where
one of the parties resides, and where there is a need to enforce it, a petition may be filed by
any co-parties with the same court, in which case, the court shall summarily hear the
petition.
The Act requires merely the deposit of the settlement agreement only for the obvious
reason of establishing the fact that such an agreement was entered into.
That the mediator does not have a role to apply in the matter is obvious from the fact
that once the settlement agreement is duly executed, he becomes a functus officio (office
now becomes void or dead having performed his duty).
The clerk of the RTC has the ministerial duty to accept the settlement agreement for
deposit. The manner by which the deposit shall be made, whether or not there shall be due
notice to the other party, and what is needed for the clerk of court to do in such a situation
needs to be COVERED BY A RULE OF COURT. (Special Rules of Court on ADR)

DEPOSIT AND ENFORCEMENT OF MEDIATED SETTLEMENT AGREEMENTS

Who makes a deposit
Any party may deposit with the court the written settlement agreement
When made
At any time after an agreement is reached
Venue
With the Clerk of Court of the RTC (a) where the principal place of business in the
Philippines of any of the parties is located; (b) if any of the parties is an individual, where
any of those individuals resides; or (c) in the National Capital Judicial Region.
May be jointly deposited by the parties or deposited by one party with prior notice
to the other party/ies
Enforcement of mediated settlement agreements
 Any of the parties to a mediated settlement agreement, which was deposited with
the Clerk of Court of the Regional Trial Court, may, upon breach thereof, file a verified
petition with the same court to enforce said agreement.
Opposition
The adverse party may file an opposition, within fifteen (15) days from receipt of
notice or service of the petition, by submitting written proof of compliance with the
mediated settlement agreement or such other affirmative or negative defences it may have.
Court action
After a summary hearing, if the court finds that the agreement is a valid mediated
settlement agreement, that there is no merit in any of the affirmative or negative defences
raised, and the respondent has breached that agreement, in whole or in part, the court shall
order the enforcement thereof; otherwise, it shall dismiss the petition.
A second mode of enforcing the settlement agreement is for the parties to agree
that the mediator shall become sole arbitrator for the dispute, the mediator cum arbitrator
shall not conduct any hearing to receive any evidence. The agreement between the parties
to appoint the mediator as sole arbitrator comes after the settlement agreement or at least
while they are in the process of negotiating a settlement.
The Act seems to suggest that the settlement agreement and the arbitral award shall
be two separate documents. It is of course, desirable that it should be so.
At least if, if for any reason one party should seek to vacate the award, it can be
shown that the award embodies the settlement agreement.
The award shall be subject to enforcement under the Arbitration Law. It is also
subject to defences under this law as a basis for rejecting the award.
In a case decided by the Court of Appeals, the parties, unassisted by counsel
submitted their dispute to mediation by a mediator who was an engineer. They agreed to
settle their dispute and the settlement agreement provided that payment of the amount
due the claimant shall be paid by the respondent as follows:
“50% cash and 50% lot.”
The settlement agreement concluded with these words:
“Now therefore, respondent agrees to pay claimant the amount of P120,090.61 in cash and
P239,945.61 in lot value.”
Three months later, the claimant reported that the respondents had failed to pay the
balance of P239,945.61. It appeared that the lot had not been sold. The settlement
agreement was undoubtedly ambiguous in failing to indicate among other things, when the
balance was to be paid or whether the unspecified lot (which should have been described as
to location, size, ownership, evidence of title, etc.) was to be delivered to claimant to sell it
in payment of the balance. Since the claimant was not paid the balance, he initiated
arbitration of his claim. The mediation agreement provided that “Should
conciliation/mediation fail, we both agree to elevate the dispute to arbitration.”
The claimant initiated arbitration and insisted upon its original demand. The
respondent raised the defense of res judicata which the arbitrator brushed aside holding
that the settlement agreement had no binding effect. The CA vacated the award and held
that the settlement had the effect and authority of res judicata.
And in so doing, it appeared not to have considered the provisions Art 2041 of the
Civil Code of the Philippines, that if one of the parties fails or refuses to abide by the
compromise, the other party may either enforce the compromise or regard it as rescinded
and insist upon his original demand.