CHAPTER 1

Because conflict is inherent in human society, much effort has been expended by men and
institutions in devising ways of resolving the same. With the progress of civilization, physical
combat has been ruled out and instead, more specific means have been evolved, such as
recourse to the good offices of a disinterested third party, whether this be a court or a private
individual or individuals

Historical Note

Judicial and legislative trends on dispute resolution consistently lean towards the utilization of
alternative means and methods implemented outside the court trial system. The Civil Code of
the-Philippines (Republic Act No. 386), which took effect on 30 August 1950, Contains-
provisions on compromises and arbitrations (Chapters 1 and 2, Title XIV, Book IV) which
encourage litigants to agree-upon a fair compromise and authorize arbitration as a means of
concluding controversies.

On 19 June 1953, the Philippine Legislature enacted Republic Act No. 876, otherwise known as
"The Arbitration Law." R.A. No. 876 did not revoke and instead supplemented the provisions of
the New Civil Code on arbitration." On 10 May 1965, another milestone in Philippine alternative
dispute resolution was achieved when the Philippine Senate passed Resolution No. 71 adhering
to the United Nations "Convention on the Recognition and Enforcement of Foreign Arbitral
Awards" of 10 June 1958. This Convention gave reciprocal recognition and allowed
enforcement of international arbitration agreements between the parties of different nationalities
within a contracting state. By such adherence, Philippine law has acknowledged international
arbitration as a system of settling commercial disputes.

The Philippines was a signatory to the United Nations Commission on International Trade Law
(UNGITRAL) New York Convention of 21 June 1985 which adopted the "Model Law on
International Commercial Arbitration." By such act, the Philippines committed to adhere to the
Model Law. Despite the foregoing efforts of the Legislature in the promotion of alternative
dispute resolution, the Judiciary continued to be plagued with congested dockets. The sheer
number of new cases filed, coupled with the dearth of judges to man the first and second level
courts, resulted in the volume of new cases filed far out numbering the cases actually disposed
of and resolved by our courts. These circumstances contribute to the perennial problem of delay
in the delivery of justice to party litigants.

Judiciary's Action

The Judiciary's response to the problems of delay in the delivery of justice consisted of, among
others, the requirement of conducting pretrial conferences;" the utilization of the different modes
of discovery;" and the strict proscription against forum-shopping. "More importantly, the
Supreme Court passed administrative issuances encouraging the use of alternative dispute
resolution through the Philippine Mediation-Center or through judicial dispute resolution (JDR).

To emphasize the Judiciary's resolve in strengthening the system of alternative dispute

resolution, the Supreme Court, speaking through Mr. Justice Jose Vitug, in the case of La Naval
Drug Corporation v. Court of Appeals," said that:

"In an effort to declog the courts of an increasing volume of work load and most importantly in
order to accord contending parties with expeditious alternatives for settling disputes, the law
authorizes, indeed encourages, out of court settlement or adjudication. Compromises and
arbitration are widely known and used as such acceptable methods of resolving adversarial
claims.

Alternative dispute resolution methods like arbitration, mediation, negotiation and conciliation,
are encouraged by the Supreme Court. Arbitration, in-particular, is regarded as the "wave of the
future" in international civil and commercial disputes.

Legislative Action

Special domestic legislations have been passed "prescribing arbitration, mediation and
conciliation in specific types of eases to help decongest court dockets. For instance, the "Labor
Code of the Philippines" (Presidential Decree [P.DJ No. 442, as amended) mandated the
creation and constitution of the National Labor Relations Commission (NLRC) which, together
with its Arbitration Branch, as peep dispensing arbitration service in cases involving unfair labor.
practice, termination of employment, conditions of employment, damages arising from
employer-employee relationship, and other labor-related disputes.

Also, the "Local Government Code of 1991" (R.A. No. 7160) requires conciliation, mediation or
arbitration in the barangay level before the pangkat ng tagapagkasundo of would-be adverse
parties in specified civil and criminal cases before resort to courts can be had. "The principle of
alternative dispute resolution in the barangay level had its roots in P.D. No. 1508 ("Establishing
a System of Amicably Settling Disputes at the Barangay Level) whose "provisions' were re-
enacted as part of the Local Government Code of 1991.

Executive Branch's Contribution

The Executive Branch of Government also contributed immensely in the propagation of

alternative dispute resolution. The Construction lndustry Arbitration Commission" (CIAC),
created under Executive Order (E.O.) No. 1008 ("Construction Industry Arbitration Law") dated
4 February 1985, is at the forefront in the arbitrations of disputes arising from or connected with
construction agreements. The CIAC, in the exercise-of the-powers granted it by Section 21 of .
0.No,1008 approved and promulgated on 23 August 1998 the "Rules of Procedure Governing
Construction Arbitration." The said Rules has undergone various amendments and, on 19
November 2005, the CIAC passed and approved the "CIAC Revised Rules of Procedure
Governing Construction Arbitration" which took effect on 15 December 2005.

On 22 March 2010, the Executive Branch of Government, through the Office of the Solicitor
General, enacted the "Rules on Alternative Dispute Resolution (ADR) for Dispute Between
National Government Agencies." Through these Rules, the Executive Branch of Government
reiterated its adherence to the policy of the law to-encourage the amicable settlement of
disputes through alternative dispute-resolution methods in lieu of adversarial judicial processes
even in disputes between national government agencies.

The Alternative Dispute Resolution Act of 2002

On 4 February 2004, Senate Bill No. 2671 and House Bill No.5654 were consolidated and
enacted as the first comprehensive alternative dispute resolution law in the Philippines-R.A.
No.9285 entitled: "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." It is better known as the "Alternative Dispute Resolution Act of 2004." It was
promulgated on 2 April 2004 and became effective on 28 April 2004 after its publication on 13
April 2004, It is the general law applicable to all forms of alternative disputes resolution such as
arbitration, mediation, conciliation and early neutral evaluation, mini trial, or any combination
thereof. It recognizes the international application of the alternative disputes resolution system.
It adopted the UNICITRAL Model Law on international commercial Arbitration. It paved the way
for the Philippines to be a venue for international commercial arbitration.

The Supreme Court, in Korea Technologies Co., Ltd.v. Lerma," enumerated and explained the
salient features of RA No. 9285 applying and incorporating the UNCITRAL Model, namely:

1. The RTO must refer to arbitration in proper cases.

 Under Sec. 24, the RTC does not have jurisdiction over disputes that are
properly the subject of arbitration pursuant to an arbitration clause and mandates
the referral to arbitration in such cases.
2. Foreign arbitral awards mut be confirmed by the RTC
 Foreign arbitral awards while mutually stipulated by the parties in the arbitration
clause to be final and binding are not immediately enforceable or cannot be
implemented immediately. Sec 35 of the UNICITRAL Model Law stipulates the
requirement for the arbitral award to be recognized by a competent court for
enforcement.
 It is now clear that foreign arbitral awards when confirmed by the RTC are
deemed not as judgment of a foreign court but as a foreign arbitral award, and
when confirmed are enforced as final and executory decisions of our courts of
law.
3. The RTO has jurisdiction to review foreign-arbitral awards
 Sec. 42 in relation to Sec. 45 of R.A. 9285 designated and vested the, KC
with specific authority and jurisdiction to set aside, reject, or, vacate a
foreign arbitral award on grounds provided under Art. 3442 of the
UNCITRAL Model Law.
 4. Grounds for judicial review different in domestic and foreign arbitral awards
 For foreign or international arbitral awards which must be confirmed by
the RTC, the grounds for setting aside, rejecting or vacating the award by
the RTC are provided under Art. 3442 of the UNCITRAL Model Law
 For final domestic awards, which also need confirmation by the RTC
pursuant to Sec. 23 of RA 876 and shall be recognized as final and
executory decisions of RTC, they may only be assailed before the RTC
and vacated on the grounds provided under Sec. 25 of RA 876.
5. RTO decision of assailed foreign arbitral award appealable
 Sec. 46 of RA 9285 provides for an appeal before the CA as the remedy of an
aggrieved party in eases where the RTC sets aside, rejects, modifies, or corrects
an arbitral award,
 Thereafter, the CA decision may further be appealed or reviewed before this
Court through a petition for review under Rule 45 of the Rules of Court."

Pursuant to Section 52 of R.A. No. 9285 calling for the passage of implementing
rules and regulations therefor, on 26 October 2009, the lmplementing-Rules-and
Regulations of the Alternative Dispute Resolution-Act of-2004 (IRR) was approved
by the Secretary of Justice.

In order to provide the courts with the procedural rules on the prosecution of ADR
related actions and petitions, on 1 September 2009, the Supreme Court passed and
approved the "Special Rules of Court on Alternative Dispute Resolution" which took
effect on 30 October 2009.

The Lawyer's Role

The combined efforts of the Executive, Legislative and Judicial Branches of Government for the
promotion of alternative dispute resolution is an eloquent recognition and acceptance of the
need to declog the courts' dockets. Lawyers, being an integral part of the judicial system, have
to tow the line and contribute to the promotion of alternative dispute resolution. As part of their
duties to the court, lawyers have to assist the court in encouraging the parties to avail of
alternative means of dispute resolution. As part of their duties to their clients, lawyers have to
explain the benefits the alternative dispute resolution system to them.

Lawyers may also play the role of alternative dispute resolution provider or practitioner. A
lawyer, in view of his excellent communication skills, probity, and legal foresight, can be
appointed as an arbitrator, mediator, conciliator or neutral evaluator. When performing duties as
such, lawyers are expected to exert genuine and sincere efforts at bringing the parties to a
settlement within the scope of their authority. In all instances when lawyers are allowed to
participate in the dispute resolution process, they have to perform their functions in good faith,
with no other motive except that of securing for the parties a speedy, inexpensive and amicable
settlement of their disputes and controversies.
 CHAPTER 2

FUNDAMENTALS OF ALTERNATIVE DISPUTE RESOLUTION

ALTERNATIVE DISPUTE RESOLUTION

Alternative Dispute Resolution, is a system, using means and methods allowed
by law and approved by the parties, for the purpose of resolving or facilitating the
resolution of disputes and controversies between them, in an expeditious and speedy
manned, without resorting to court adjudication.
This definition covers all forms and methods 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 similar
processes in quasi-judicial agencies such as National Labor Relations Commission,
Regional Offices of the Department of Labor and Employment, Intellectual Property
Office, Mines and Geo-sciences Bureau, Insurance Commission and other similar
government agencies.
As defined in ADR Act of 2004, any process or procedure used to resolve a
dispute or controversy, other than adjudication of a presiding judge of a court or an
officer of government agency in which a neutral third party participates to assist in the
resolution of issues.

Under this definition, arbitral proceedings under the above-mentioned

administrative agencies exercising quasi-judicial power are not covered by the ADR Act
of 2004. This does not mean, however, that similar procedures before quasi-judicial
agencies are not considered forms of arbitration, mediation or conciliation. They are,
except that they are not governed by the ADR Act of 2004 there being special laws and
rules governing their procedures.

PRINCIPLES OF ADR

1. Promotion of party autonomy and self-determination in the resolution of dispute. The

Parties are given the freedom to choose the form of ADR they desire to avail of. They
are also given the discretion to prescribe the procedure to govern the ADR process.
Party autonomy extends to the choice of ADR providers or practitioners , the venue of
proceedings, and in most cases the terms of the concluding agreements.
2. Recognition of ADR as an efficient tool and an alternative procedure for the resolution
of cases. ADR does not altogether do away with Court trial system. ADR merely
provides the parties with an alternative means of settling their disputes in a manner that
is different , separate and independent from trial court system.

3. Enlisting of private sector participation. The essence of ADR is that it usually requires
the participation of third parties who do not necessarily dispense public service. Many
ADR practitioners hail from the private sector in various fields of endeavor. There is a
growing trend towards private sector involvement in ADR.

OBJECTIVES and BENEFITS of ADR

1. Speedy and Impartial Justice. ADR has been judicially recognized as a tool for the
speedy, inexpensive and amicable settlement of disputes

2. Declogging of Court Dockets. The decongestion of court dockets is the ultimate

objective of ADR. In this sense, ADR and the court trial system, one being the
alternative to the other, work hand-in hand to maximize the benefits from each other.

FEATURES of ADR

1. ADR is a means used to resolve a dispute or controversy. The objective of ADR

is to resolve or facilitate the resolution dispute or controversy in a speedy, amicable and
inexpensive manner. ADR should not be resorted to when the motive is to delay or
suspend the proceedings rather than to put an end or facilitate the conclusion of the
controversy.

2. ADR utilizes means and methodss allowed by law. ADR act did not limit the forms
of ADR. Any means or methods aim at resolving disputes outside the court trial system
may be recognized as an ADR form provided it is not contrary to law, morals, good
customs, public order or public policy.

3. ADR is contractual in nature. Parties to a dispute are given the freedom to agree to
resolve their dispute and decide on the procedure. Any form of ADR that satisfies the
essential requisites of a contract, which is not a contrary to law, morals, good customs,
public order or public policy is allowable as form of ADR.

The consent to undergo ADR may be:

a. PRE-CAUSAL CONSENT as when the parties to a contract stipulate that any dispute
that will arise from the contract shall be resolved by arbitration.
b. PRESENT-CAUSAL CONSENT as when the parties to an existing controversy
voluntarily submit themselves either to an arbitration or mediation.

3. ADR avoids court trial. Conducted outside of the court trial system. It is in lieu of
and conducted precisely to avoid trial. JDR (Judicial Dispute Resolution) although not
governed by ADR Act of 2004, requires judges to conduct mediation between the
parties as part of the pre-trial and prior to start of trial stage.

4. ADR usually involves the participation of neutral third party. Third party
participant may either be the arbitrator/s, mediator, conciliator or neutral evaluator. It is
imperative that the third party participant observe neutrality at all times.

SOURCES OF ADR
1. Domestic laws and rules which may either be general or special. General ADR laws
are those applicable to all forms of ADR such as Article 3, Section 16, 1987
Constitution; Chapter 1 and 2, Title XIV, Book 4, Civil Code of the Philippines, The
Arbitration Law and the ADR Act of 2004. On the other hand, special ADR laws are
those that pertain to specific subject matters. Examples of these are the Local
Government Code of 1991, the Labor Code and its implementing rules and regulations
and other similar laws applicable to specific classes of disputes.

2. Acts of the executive branch. Examples, Rules of ADR for Dispute Between National
Government Agencies, EO No. 1008 creating the construction industry arbitration
commission as well as CIAC Revised Rules of procedure governing construction
arbitration

3. Decisions of SC form part of the law of the land

4. International Laws such UNCITRAL “Model Law on international commercial
arbitration’ and the convention on recognition and implementation of Foreign Arbitral
Awards

5. General Principles of law and equity.

FORMS OF ADR
1. Arbitration s an arrangement for taking and abiding by the judgment of selected
persons in some disputed manner, instead of carrying it to established tribunals of
justice and is intended to avoid the formalities, the delay, the expense and vexation of
ordinary litigation. For purpose of ADR Act of 2004, it is a voluntary dispute resolution
process in which one or more arbitrators, appointed in accordance with the agreement
of the parties.

2. Mediation. A voluntary process in which a mediator, selected by the disputing

parties,
facilitates communication and negotiation and assists the parties in reaching a voluntary
agreement regarding the dispute. The basic distinction between arbitration and
mediation is that in arbitration an arbitral tribunal or arbitrator evaluates the evidence
and the merits of the case and renders an arbitral award based on his appreciation;
whereas in mediation the parties to controversy are convinced by a mediator to settle
their controversy through voluntary agreement of the parties themselves.

3. Conciliation. The adjustment and settlement of a dispute in a friendly, unantagonistic

manner.

4. Neutral and early neutral evaluation. An ADR process wherein the parties and their
lawyers are brought together to present summaries of their cases and receive a non-
binding assessment by an experienced neutral person with expertise in the subject.

5. Mini-trial Is a structured dispute resolution method in which the merits of a case are
argued before a panel of composed of senior decision makers, with or without the
presence of a neutral third person, after which the parties seek a negotiated settlement.
6. Any combination of the foregoing. Any combination of the foregoing ADR forms,
approved by the parties, not contrary to law, good customs, morals, public order or
public policy, may be implemented.

7. Any other ADR form. Any arrangement agreed upon by the parties that satisfies the
requisites of ADR, complies with the essential requisites of a valid contract and is not
contrary to law, morals, good customs, public order or public policy is an acceptable
form of ADR.

CLASSIFICATION OF FORMS OF ADR

1. As to the number of parties. May be bilateral or bi-party, or multilateral or multi-

party.

2. As to the number of issues involved. Simple when only a single issue is involved,
or complex if there are two or more issues involved.

3. As to the extent of conclusion. Complete when all issues involved are resolved or
partial if only one or some but not all issues are resolved.

4. As to the role of evidence in the proceedings. Evidentiary or merit-based when

the resolution of the dispute involved requires the presentation of evidence and
evaluation of the merits of the case; and it is non-evidentiary or non-merit based if the
merits of the case is not indispensable in the resolution of the dispute as in the case of
mediation.

5. As to the pendency of a court case. ADR is case-related if conducted in connection

with or as a pre-requisite to trial as in the case of court annexed mediation or court-
referred mediation; and it is independent if conducted irrespective of any pending court
case involving the issue.

6. As to the applicable law. Domestic if the parties’ places of business, place of

arbitration and place of performance of the obligation involved or subject matter of the
dispute are located in the Philippines; international if the parties’ places of business are
in different states or the place of arbitration is outside the Philippines.

7. As to the permanence of the ADR provider. Either ad hoc if the existence of the
ADR provider is only temporary for purpose of particular dispute; institutional if the ADR
provider’s existence is permanent in character and is not dependent on any dispute.

COMPONENTS OF ADR
1. Contending parties who are involved in a dispute.
2. Dispute, which is susceptible of being subjected to ADR.
3. Form of ADR, which may either, be arbitration, mediation, conciliation, early neutral
evaluation, mini-trial or any combination of the foregoing.
4. ADR provider is an institution of person accredited as mediator, conciliator, arbitrator,
neutral party evaluator or any person exercising similar functions; or practitioner is an
individual acting as mediator, conciliator, arbitrator etc.

SUBJECT MATTERS OF ADR

In line with the policy to encourage the use of ADR, in general all adversarial
disputes can be subject matter of ADR, except those, which by law or reasons of public
policy are declared not capable of being subjected to ADR. The following issues are not
susceptible of ADR:
a. Civil status of persons – matter determined by law and is not subject
to the discretion of the parties.
b. Validity of Marriage or any ground for legal separation – matters over which the
State has a keen interest to protect.
c. Jurisdiction of the courts – jurisdiction over the subject matter of a case is
determined by law and is not dependent upon the allegations of parties except in the
case of jurisdiction by estoppel.
d. Future legitime – future legitime is inexistent and cannot be waived.
e. Criminal Liability – not susceptible of ADR.
f. In general, those, which, by law, cannot be compromised – examples of law,
which cannot be, compromised article 2035 of New Civil Code; it is against public policy
to waive or enter into compromise regarding future support.
SEAT AND VENUE OF ADR
The seat of ADR is the jurisdiction under those law the proceding is belong
conducted. The venue or place of ADR, on the other hand, the actual site where the
arbitration to be in a country different from the country where the arbitration has its seat.

BASIC CONCEPTS
1. Concluding Acts or Agreements
ADR is completed upon the execution of concluding act or agreement.
a. Mediated Settlement agreement – a contract executed by the mediating parties with
the assistance of their respective counsel, certified by the mediator, evidencing a
successful mediation.
b. Compromise agreement – a contract whereby the parties making reciprocal
concessions, avoid litigation or put an end to one already existing.
c. Arbitral award – partial or final decision by an arbitrator in resolving the issue in a
controversy.
d. Waiver or quitclaim – a statement renouncing any right or claim involved in a
controversy by one party in favor of the other.
2. ADR Providers and Practitioners
- Acts in a quasi-judicial capacity.
- Decisions or awards are generally reviewable in a special civil action for certiorari
under rule65 of the civil procedure.
- In a domestic arbitration, if the arbitral tribunal in the exercise of its authority to resolve
or defer the resolution of the preliminary issue on its jurisdiction over the arbitration
agreement.
- Motions for reconsideration, appeals and petitions for certiorari are not available to
challenge the decision of the arbitral tribunal to defer the resolution of preliminary
jurisdictional issue.
- The remedy of an aggrieved party is to proceed with the arbitration and petition the
court for the settling aside of the arbitral award on the ground that the arbitral tribunal
exceeded its powers.
3. Preference for ADR
- There is a clear preference for the use of ADR methods over court trial system even
before the advent of ADR Act of 2004, article 2030 of the civil code of the Philippines
already instructs the court to suspend proceedings if the possibility of settlement
through the different modes of ADR.

OFFICE OF ADR

The Office for Alternative Dispute Resolution (OADR), which is attached to the
Department of Justice, is headed by an Executive Director appointed by the President
upon recommendation of the Secretary of Justice.

Among the principal objectives, powers and functions of the OADR are the
following;

1. To promote, develop and expand the use of ADR in the private and public sectors
through information, education and communication

2. To assist the government to monitor, study and evaluate the use by the public and
private sectors of ADR and recommend to Congress needful statutory changes to
develop and strengthen and improve ADR practices in accordance with world
standards.

3. To act as appointing authority of mediators when the parties agree in writing that it
shall be empowered to do so

4. To compile and publish a list or roster of ADR providers or practitioners and to

compile a list or roster of foreign or international ADR providers or practitioners
 CHAPTER 3
MEDIATION UNDER THE ADR ACT OF 2004
Mediation in General
(Sections 7 and 8, ADR Act)

Among the forms of alternative dispute resolution, mediation and arbitrationa re

the most common and popular.
Mediation as defined under the ADR Act of 2004 is “a voluntary process in which
a mediator, selected by the disputing parties, facilitates communication and negotiation,
and assists the parties in reaching a voluntary agreement regarding a dispute.” The
same definition is carried over to the Implementing Rules and Regulations of the ADR
Act of 2004 (IRR).
Excluded from the coverage of the ADR Act are the court-annexed mediation,
which is a “mediation process conducted under the auspices of the court,” and court-
referred mediation, which is a “mediation ordered by a court to be conducted in
accordance with the agreement of the parties when an action is prematurely
commenced in violation of such agreement. Specifically, court-annexed mediation
(CAM) is that conducted prior to the pre-trial “where the judge refers the parties to the
Philippine Mediation Center (PMC) for the mediation of their dispute by trained and
accredited mediators.
Likewise, excluded from the coverage of the ADR Act is the conciliation
conducted by the lupong tagapamayapa and pangkat ng tagapagkasundo under
Chapter 7, Book III of R.A. No. 7160 (The Local Government Code of 19991), and the
judicial dispute resolution (JDR) which is the mediation, conciliation and early neutral
evaluation process conducted by the judge of a pending case after a failed court-
annexed mediation and before the pre-trial stage.
This circumstance does not, however, exclude court-annexed mediation, court-
referred mediation and judicial dispute resolution as methods of ADR, except that, they
are not governed by the ADR Act of 2004.
The persons who conducts the mediation is called the mediator, and the parties
thereto are the mediation parties. All other parties who take part in the process are
called non-party participants who can either be witnesses, resource persons or experts.

Classification of Mediation
As a form of ADR, mediation is non-evidentiary or non-merit based. Compared
with arbitration which takes into account the merits of the case in the rendition of the
arbitral award, mediation focuses on the facilitation of communication and negotiation
between the parties in order to encourage them to voluntarily settle their dispute.
Indeed, a mediator must refrain from giving legal or technical advise or otherwise
engaging in counseling advocacy, and must abstain from expressing his personal
opinion on the rights and duties of the parties and the merits of any proposal made.
On the basis of the structure of the ADR provider, mediation is either institutional
when administered by, and conducted under the rules of a mediation institution, and ad
hoc if it is other than institutional.
An agreement to submit a dispute to mediation by an institution shall include an
agreement:
1. To be bound by the internal mediation and administrative policies of such
institution; and
2. To have such rules govern the mediation of dispute and for the mediator, the
parties and their respective counsels and non-party participants to abide by
such rules.
Place of Mediation
In order to promote self- determination and party autonomy of the mediation
parties, they are given the freedom to agree on the place of mediation. In the absence
of such agreement, the place of mediation shall be any place convenient and
appropriate to all parties. This is the default venue of mediation.
Stages in Mediation
In general, the mediation process consists of the following stages:
1. Opening statement of the mediator;
2. Individual narration by the parties;
3. Exchange by the parties;
4. Summary of issues;
5. Generalization and evaluation of options; and
6. Closure.
The foregoing process, however, is not obligatory and the parties, under the
principles of self-determination and party autonomy, many choose the procedure that
will govern their mediation.
The mediation process shall be held in private unless the parties consent to the
presence of persons other than themselves, their representatives and the mediator.
The mediation shall be closed and concluded (i) by the execution of a settlement
agreement by the parties; (ii) by the withdrawal of any party from mediation; or (iii) by
the written declaration of the mediator that any further effort at mediation would not be
helpful.
 Advantages of Mediation
In order to maintain the confidence of the mediation parties in the mediation process,
and encourage them to avail of mediation as a mode of settling their disputes, Section 8
of the ADR Act of 2004 gave the following assurances:
1. Confidentiality in the mediation process:
2. Prompt, economical and amicable resolution of disputes;
3. The decision-making authority rests in the parties.

Confidentiality and Privileged Nature of Mediation Communication

(Sections 9, 10, 11, and 12, ADR Act)
The ADR Act of 2004 maintains the confidentiality of the mediation process by
declaring that all information obtained through mediation proceedings are privileged and
confidential in character.
“A privilege is a rule of law that, to protect a particular relationship or interest,
either permits a witness to refrain from giving testimony he otherwise could be expected
to give, or permits someone, usually one of the parties, to prevent the witnesses from
revealing certain information. One way by which the ADR Act of 2004 is enforcing and
guaranteeing this privilege is by declaring certain information as confidential and,
therefore, not capable of being disclosed. Another way of ensuring the privilege is by
declaring the privileged information inadmissible in evidence.
Under the ADR Act of 2004, confidential information is “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. Confidential
information is, therefore, either expressly confidential or impliedly confidential. It is
expressly confidential if the intention not to be disclosed is expressed by its source, and
it is impliedly confidential if obtained under circumstances that would create a
reasonable expectation on behalf of the source that the information shall not be
disclosed.
Confidential information includes:
1. Communication, oral or written, made in dispute resolution proceeding, including
any memorandum, note or work product of the neutral party or non-party
participant;
2. An oral or written statement made or which occurs during the mediation or for
purposes of considering, conducting, participating, initiating, continuing or
reconvening mediation or retaining a mediator; and
 3. Pleadings, motions, manifestations, written statements and reports filed or
submitted in arbitration or for expert evaluation.
The foregoing list of confidential information is not exclusive and may include others
as long as they satisfy the requirements of expressed confidentiality or implied
confidentiality.
Legal Effects of Confidential and Privileged Nature
The legal effects of the confidential and privileged nature of information obtained
during mediation are the following:
1. A party, mediator or non- party participant may refuse to disclose and may
prevent any other person from disclosing confidential information.
2. Confidential information shall not be subject to discovery and shall be
inadmissible in any adversarial proceeding, whether judicial or quasi- judicial.
However, evidence or information that is otherwise admissible or subject to
discovery does not become inadmissible or protected from discovery solely by
reason of its use in mediation.
3. In an adversarial proceeding, the following persons involved or previously
involved in mediation may not be compelled to disclose confidential information
obtained during mediation:
a. Parties to the dispute;
b. Mediator or mediators;
c. Counsel for the parties;
d. Non-party participants;
e. Any person hired or engaged in connection with mediation as secretary,
stenographer, clerk or assistant; and
f. Any person who obtains or possesses confidential information by reason of
his profession.

In other words, practically all of the parties, mediator, and non- party
participants are bound by the prohibition to disclose confidential information.

4. The protection under the ADR Act shall continue to apply even if a mediator is
found to have failed to act impartially.
5. A mediator may not be called to testify to provide information gathered in
mediation.

Exceptions Based on Agreement, Nature of Proceedings, Crime or Social Justice

The privilege does not attach to or exist in the following communication:
 1. Those contained in an agreement evidenced by a record authenticated by all
parties to the agreement. This kind of information is not confidential in the first
place because the parties, by reducing their agreement into writing, have
impliedly manifested their intention to make use of the written agreement for
some future legal purpose.

2. Those available to the public or made during a session of mediation which is

open, or is required by law to be open, to the public. The fact that the mediation
process was made or required to be open to the public is an indication that the
parties do not intend or should not expect the proceedings to be confidential.

3. A threat or statement of a plan to inflict bodily injury or commit a crime of

violence. The State has a greater interest to prevent acts of violence than to
protect the confidentiality of information obtained in mediation.

4. Communication intentionally used to plan, attempt to commit, or commit, a crime,

or conceal an on-going crime or criminal activity. As in the immediately preceding
exception, the State has a greater interest to prevent the commission of crimes
than to protect the confidentiality of information obtained in mediation.

5. Communication sought or offered to prove or disprove abuse, neglect,

abandonment, or exploitation in a proceeding in which a public agency is
protected by law. The violator cannot conceal the abuse he has committed
against a protected individual by using the benefit of the ADR Act. However, this
exception does not apply where a child protection matter is referred to mediation
by a court or a public agency which participates in the child protection mediation.

6. Communication sought or offered to prove or disprove a claim or complaint of

professional misconduct or malpractice filed against a mediator in a proceeding.
The mediator cannot be allowed to hide under the protective mantel or
confidentiality for his own misconduct or malpractice during the mediation.

7. Communication sought or offered to prove or disprove a claim or complaint of

professional misconduct or malpractice filed against a party, non-party
participant, or representative of a party based on conduct occurring during
mediation. Like in the case of mediator, the parties, their representatives, or non-
party participants cannot be allowed to hide under the protective mantel of
confidentiality for their own misconduct or malpractice during the mediation.
Exceptions Based on Public Policy
For reasons of public policy, the privilege cannot be invoked for evidence that is
shown, before a court or administrative agency, after a hearing in camera, to be not
otherwise available, and there is a need for that 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;
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 mediation.
As in the case of the exceptions based on agreement, nature of proceedings,
crimes or social justice, evidence admissible by reason of exceptions based on public
policy have the same limited extent of use.
Limited Use of Exempted Evidence
Notwithstanding the inapplicability of the privilege and the confidential nature of
mediation communication in the foregoing instances, only such portion of the
communication necessary for the application of the exception can be admitted in
evidence. And the admission of the evidence for the limited purpose of the exception
does not render the evidence admissible for any other purpose.
Privilege of the Mediator
The mediator himself is bound by the confidential and privileged nature of
mediation communication. He is required to keep in utmost confidence all confidential
information obtained in the course of the mediation process, and to discuss issues of
confidentiality with the mediation parties before beginning the mediation process.
A mediator may not be compelled to provide evidence of mediation
communication or testify in such proceeding. He may not make a report, assessment,
evaluation, recommendation, finding or other communication regarding a mediation to a
court or agency or other authority that will make a ruling on a dispute that is the subject
of mediation, except:
1. Where the mediation occurred or has terminated, or where settlement was
reached; or
2. As permitted to be disclosed under Section 13 of the ADR Act, i.e., the disclosure
of known facts that a reasonable individual would consider likely to affect the
impartiality of the mediator, including financial or personal interest in the outcome
of the mediation and existing or past relationship with a party or foreseeable
participant in the mediation.
Waiver of Confidentiality
The protection of confidentiality and privileged nature of mediation
communication prescribed under Section9 of the ADR Act is susceptible of waiver.
The waiver can either be expressed as such as when it is contained in a record,
or made orally during a proceeding by the mediator and the mediation parties, or
implied (i) by failing to timely object to an objectionable question propounded during a
trial, or to a document being offered in evidence, or (ii) by testifying or presenting a
witness to testify on confidential and privileged information. Objections to the
admissibility of evidence, including objections by reason of Section 9 of the ADR Act,
must be raised at the earliest opportunity; otherwise, they will be deemed waived.
Waiver can also come by way of estoppel such as when a non-party participant
himself discloses the erstwhile confidential information. Also, a person who discloses
confidential information is barred from invoking the privilege as to the remainder of the
information necessary to a complete understanding of the previously disclosed
information. Similarly, a person who discloses or makes a representation about
mediation is precluded from asserting the privilege to the extent that the communication
prejudices another in the proceeding and it is necessary for the person prejudiced to
respond to the representation of disclosure.
These principles are rooted on fair play and equity such that a person who
benefits from a disclosure ought not to prevent another from disclosing or securing the
disclosure of the rest of the erstwhile confidential information as may be necessary to
overcome the prejudice caused by the disclosure.

The Mediator
(Section 13, ADR Act)
In consonance with the ADR policies of the party autonomy and self-
determination, the mediation parties are given the freedom to select their mediator and
they may request the Office for Alternative Dispute Resolution (OADR) to provide them
with a list or roster of its certified mediators, and their resumes. The OADR is an agency
attached to the Department of Justice which principally acts as the appointing authority
of mediators and arbitrators.
The role of the mediator is very crucial that his presence and competence must
be ensured. If the mediator selected by the parties in unable to act for any reason, the
parties may, upon being informed of such fact, select another mediator. A mediator who
refuses to act as such may withdraw or may be compelled to withdraw from the
mediation proceedings under any of the following circumstance:
1. If any of the parties requests the mediator to withdraw. This promotes and
strengthens party autonomy and self- determination in the selection of the
mediator.
2. The mediator does not have the qualifications, training and experience to
enable him to meet the reasonable expectations of the parties. No special
qualification by background or profession is required of mediators. However,
is a mediator is selected by the parties on account of his special qualifications
which turn out to be false or inaccurate, the mediation parties may ask for his
 withdrawal. For this purpose, the mediator may be requested by a mediation
party to disclose his qualifications to mediate a dispute.
3. The mediator’s impartiality is in question. An impartial settlement of the
dispute is one of the objectives of the ADR Act of 2004.
4. The continuation of the process will violate an ethical standard.
5. The safety of any one of the parties will be jeopardized.
6. The mediator is unable to provide effective services.
7. In case of conflict of interest.
8. Other instances provided for under the IRR.

A mediator is generally precluded from making a report, assessment, evaluation,

recommendation, finding or other communication regarding a mediation. Unlike an
arbitrator, he cannot rule upon the merits of a claim and render an award thereon
except in a mediation-arbitration where the mediator, upon an agreement of the parties
in writing, is appointed as the arbitrator for the arbitration phase of the proceedings.
Duties and Functions of Mediators
Apart from the general duty of mediators to conduct a mediation, mediators, are
required to perfume the following:
1. Prior to mediation—
a. On competence. A mediator should maintain and continually upgrade his
professional competence in mediation skills; ensure that his qualifications,
training and experience are known to and accepted by the parties; serve
only when his qualifications, training and experience enable him to meet
the reasonable expectations of the parties and not to hold himself out or
give the impression that he has qualifications, training and experience that
he does not have; and upon the request of a mediation party, disclose his
qualifications to mediate a dispute.
b. On impartiality. Before accepting a mediation, the mediator should 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 his impartiality; and disclose any such fact known or learned
as soon as practicable. These disclosures may include 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.
2. During the mediation—
a. Confidentiality as above discussed.
b. On consent and self-determination. A mediator shall exert reasonable
efforts to ensure that each party understands the nature and character of
the mediation proceedings, and that each party is free and able to make
 whatever choices he desires regarding his participation in the mediation
as well as his specific settlement options.
c. On promotion of respect and control of abuse of process. The mediator
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.

Mediator’s Costs and Fees

A mediator is allowed to charge costs, reasonable fees and charges against the
parties but he is under obligation to fully disclose and explain the basis thereof.
In an ad hoc mediation, the parties are free to make their own arrangements as
to mediation costs and fees. In an institutional mediation, mediation costs shall include
the administrative charges of the mediation institution, mediator’s fees and associated
expenses.
If the mediator withdraws from the mediation, he shall return any unearned fee
and unused deposit. He shall not enter into a fee arrangement contingent upon the
results of the mediation of the amount of the settlement because by doing so, he
acquires financial and personal interest in the outcome of the mediation which
compromises his impartiality. He, or any member of his immediate family or his agent,
shall not request, solicit, receive, or accept any gift or any type of compensation other
than the agreed fee and the reimbursement of the expenses in connection with any
matter before him.

Mediated Settlement Agreements

The concluding document in a successful mediation is called the mediated
settlement agreement or settlement agreement. It may also take the form of a
compromise agreement.
In whatever form it may be, the concluding agreement has the effect of res
judicata and, therefore, binding upon the parties whether or not it has been submitted to
the court for approval. However, there can be no execution of the concluding agreement
unless it has first been judicially approved. The parties, by motion, have to present the
concluding agreement to the proper court for approval and the rendition of judgment
based thereon. The court is called upon to approve the concluding agreement provided
it is not contrary to law, morals, good customs, public order, and public policy. Once
judicially approved, the concluding agreement may be enforced through a writ of
execution.
“Being a by-product of mutual concessions and god faith of the parties, an
amicable settlement has the force and effect of res judicata even If not
 judicially approved. It transcends being a mere contract binding only upon the
parties thereto, and is akin to a judgment that is subject of execution in
accordance with the Rules. x x x”
The following principles apply to these concluding agreements:
1. A settlement agreement following a successful mediation shall be prepared by
the parties with the assistance of their respective counsels, if any, and by the
mediator.
2. The parties and their respective counsels, if any, shall sign the settlement
agreement, and the mediator shall certify that he has explained the contents
thereof to the parties in a language known to them.
3. If the parties agree, the settlement agreement may be jointly deposited by the
parties or deposited by one party with prior notice to the other party or parties,
with the Clerk of Court of Regional Trial Court (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 reside; or (c) in the National
Capital Judicial Region.
4. Where there is a need to enforce the settlement agreement, a petition may be
filed by any of the parties in the same court, in which case, the court shall
summarily proceed to hear the petition, in accordance with the Special ADR
Rules.
5. The parties may agree in the settlement agreement that the mediator shall
become a sole arbitrator for the dispute and shall treat the settlement agreement
as an arbitral award which shall be subject to enforcement under R.A. No. 876
(The Arbitration Law).

The deposit of the settlement agreement with the Regional Trial Court is not
indispensable for the validity thereof. The deposit is purely voluntary on the part of the
parties who may jointly or singly cause the deposit with the Regional Trial Court. The
deposit is required for the enforceability of the agreement. Unless deposited, the petition
to enforce the settlement agreement is premature and can be dismissed on the ground
that a condition precedent for filing the claim has not been complied with. The Regional
Trial Court whereat the deposit is made will be the venue of the petition to enforce the
deposited settlement agreement,

Role of Counsel in Mediation

(Section 14, ADR Act)
Except as otherwise provided in the ADR Act or IRR, a party may designate a
lawyer or any other person to provide assistance in the mediation. This right may be
waived but the waiver must be in writing and can be rescinded at any time.
 The lawyer or counsel so designated shall have the following roles:
1. Collaborate with the other lawyer in working together towards the common goal
of helping their clients resolve their differences to their mutual advantage.
2. Encourage and assist the client to actively participate in positive discussions and
cooperate in crafting an agreement to resolve their dispute.
3. Assist the client to comprehend and appreciate the mediation process and its
benefits, as well as the client’s greater and personal responsibility for the
success of mediation in resolving dispute.
4. Confer and discuss with the client the mediation process and substance.

In the Consolidated and Revised Guidelines to Implement the Expanded Coverage

of Court-Annexed Mediation (CAM) and Judicial Dispute Resolution (JDR), approved
by the Supreme Court in the Resolution dated 11 January 2011 (A.M. No. 11-1-SC-
PHILJA), albeit concerning CAM and JDR, the Supreme Court defined the role of
lawyers in mediation as follows:
“Lawyers may attend mediation proceedings in the role of adviser and
consultant to their clients, dropping their combative role in judicial trials. They must
accept a less directive rolled in order to allow the parties more opportunities to craft
their own agreement.
In particular, they shall perform the following functions:
1. Help the clients comprehend the mediation process and its benefits and allow
them to assume greater personal responsibility in making decisions for the
success of mediation in resolving dispute
2. Discuss with their clients the following:
 The substantive issues involved in the dispute
 Prioritization of resolution in terms of importance to client
 Understanding the position of the other side and the underlying fears,
concerns, and needs underneath that position.
 Need for more information or facts to be gathered or exchanged with the
other side for informed decision-making.
 Possible bargaining options but stressing the need to be open-minded
about other possibilities.
 The best, worst, and most likely alternatives to a negotiated agreement.
3. Assist in preparing a compromise agreement that is not contrary to law, morals,
good customs, public order, or public policy so that the same may be approved
by the court, paying particular attention to the issues of voluntary compliance of
what have been agreed upon, or otherwise to issues of enforcement in case of
breach.
4. Assist, wherever applicable, in the preparation of a manifestation of satisfaction
of claims and mutual withdrawal of complaint and counterclaim as basis for the
court to issue an order of dismissal.