Slide 1

Intro – Can you hear me?

Why should we discuss this instead of the previously uploaded slide on the role of a lawyer in ADR?

Slide 2 – Dispute

What is a Dispute?

Read Slide

Take note that there is a disagreement, a conflicting legal view between two or more persons. So, it can
be natural person v. juridical person like a corporation. State v. State or State v. a natural person.

An example of a dispute on a personal level is away mag-asawa. Kakain ba sa labas? Yung isa gusto,
yung isa hindi. Sulit bang bumili ng Automatic Washing Machine o hindi? Dispute on a point of fact.

There’s also the dispute between magkapitbahay. Dito ba yung boundary line or nag encroach kana?
Again, dispute on a point of fact.

If we think on a higher level or if we expand our example, we look at corporations that enter into a
contract. In Camp John Jay Development Corp. v. Charter Chemical, G.R. No. 198849, August 7, 2019 –
there was a dispute on law.

On 2003, Camp John Hay and Charter Chemical entered into a Contract – a Contractor’s Agreement.
Charter Chemical was to complete painting works of units in Camp John Hay Manor for a contract price
of 15,500,000.00 and two studio units in the soon to be constructed Camp John Hay Suites. The problem
was that the two studio units were never delivered to Charter Chemical because Camp John Hay Suites
was never constructed. Charter Chemical was able to complete the painting jobs and Camp John Hay
transferred the title of two units of Camp John Hay Suites. The problem however is that there is no
physical units turned over to Charter Chemical. So the dispute in law here is that with the turn over of
the titles to the two studio units of the soon to be constructed Camp John Hay Suites, was CJH Dev Co
was already able to fulfill its obligation? – That’s a dispute on a point of law.

State v. Individual, Juridical Person case – expropriation cases

Slide 3 – ADR

Read Slide

RA 9285 – Alternative Dispute Resolution Act of 2004

So here we distinguish ADR as against adjudication of a presiding judge of a court – litigation.

In our later slides we’ll be discussing that as well.

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Slide 4 – The Supreme Court has been promoting the use of Alternative Dispute Resolution Mechanisms
like Mediation, Conciliation and Arbitration to enable the parties to amicably settle their disputes. That
will be less time consuming, less tedious, less confrontational and of course more productive of good
and lasting relationships.

Here in this case of LM Power v. Capitol Industrial, the corporations entered into a contract for electrical
work for a port in Zamboanga. LM Power performed electrical works for Capitol Industrial and when
they were finished they billed them the amount of almost seven million.

Capitol Industrial contested the billing and refused to pay. LM Power sued Capitol Industrial in the RTC
of Makati and the RTC ruled in favor of LM Power. On Appeal, CA reversed the RTC saying, you should
have referred this to Arbitration because there’s an arbitral clause under Letter “K” of the contract. LM
power appealed to the Supreme Court.

SC: The instant case involves technical discrepancies that are better left to an arbitral body that
has expertise in those areas.

The arbitral clause in the Agreement is a commitment on the part of the parties to submit to
arbitration the disputes covered therein. Because that clause is binding, they are expected to abide by
it in good faith. And because it covers the dispute between the parties in the present case, either of
them may compel the other to arbitrate.

Read Slide

Slide 5 - It has been repeated in so many cases cited by the supreme court that ADRs are less expensive,
speedy and less hostile methods.

Here in Korea Technologies v. Judge Lerma, there was a contract between Korean Technologies Co., Ltd.
And Pacific General Steel Manufacturing Corp. for the supply and installation of Liquefied Petroleum Gas
(LPG) cylinder manufacturing plants in Cavite. The contract was worth USD 1,224,000 plus USD 306,000
upon the plant’s production of the 11-kg. LPG cylinder samples. Thus, the total contract price amounted
to USD 1,530,000.

Subsequently, the machineries, equipment, and facilities for the manufacture of LPG cylinders were
shipped, delivered, and installed in the Cavite plant. PGSMC paid KOGIES USD 1,224,000.

However, the initial operation could not be conducted as PGSMC encountered financial difficulties
affecting the supply of materials, thus forcing the parties to agree that KOGIES would be deemed to
have completely complied with the terms and conditions of the March 5, 1997 contract.

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For the remaining balance of USD306,000 for the installation and initial operation of the plant, PGSMC
issued two postdated checks: (1) BPI Check No. 0316412 dated January 30, 1998 for PhP 4,500,000; and
(2) BPI Check No. 0316413 dated March 30, 1998 for PhP 4,500,000.

Tumalbog ang cheke. Dinemanda ng Estafa ni PGSMC si Korea Tech. Korea Tech said, “Arbitration tayo
kasi nasa contract natin na pag may dispute Arbitration sa Korea”

Ayaw making ni PGSMC, nag file ng Specific Performance and TRO si KOGIE dahil tatanggalin na raw ni
PGSMC yung mga machineries sa Cavite eh hindi pa sila full paid at the same time they prayed that the
matter be referred to Arbitration pursuant to the arbitration clause in the contract.

RTC CA said void yung arbitration clause.

SC:

The arbitration clause was mutually and voluntarily agreed upon by the parties. It has not been shown
to be contrary to any law, or against morals, good customs, public order, or public policy. There has
been no showing that the parties have not dealt with each other on equal footing. We find no reason
why the arbitration clause should not be respected and complied with by both parties. In Gonzales v.
Climax Mining Ltd.,35 we held that submission to arbitration is a contract and that a clause in a
contract providing that all matters in dispute between the parties shall be referred to arbitration is a
contract.36 Again in Del Monte Corporation-USA v. Court of Appeals, we likewise ruled that "[t]he
provision to submit to arbitration any dispute arising therefrom and the relationship of the parties is
part of that contract and is itself a contract."37

The arbitration clause which stipulates that the arbitration must be done in Seoul, Korea in
accordance with the Commercial Arbitration Rules of the KCAB, and that the arbitral award is final
and binding, is not contrary to public policy. This Court has sanctioned the validity of arbitration
clauses in a catena of cases. In the 1957 case of Eastboard Navigation Ltd. v. Juan Ysmael and Co.,
Inc.,38 this Court had occasion to rule that an arbitration clause to resolve differences and breaches of
mutually agreed contractual terms is valid. In BF Corporation v. Court of Appeals, we held that "[i]n
this jurisdiction, arbitration has been held valid and constitutional. Even before the approval on June
19, 1953 of Republic Act No. 876, this Court has countenanced the settlement of disputes through
arbitration.

Read Slide

Slide 6 – Civil Code Provisions

So if you have to review our civil code provisions on the aspects of compromise or when can parties
come up with reciprocal concessions, Art 2028 provides: ______________________. Read slide

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So the parties may agree to a fair compromise of a dispute. This has been recognized as well in the
courts now with our Philippine Mediation Center and Judicial Dispute Resolutions.

Slide 7 – Art. 2035 what cannot be compromised read

If the parties will enter into these matters, the same will be void for being contrary to law.

Side: married people having an agreement na wala ng pakialaman

Slide 8 - Conflict Resolution Spectrum – in Philippines in particular read

Slide 9 - Negotiation – read

Negotiation sa bahay sino mag-huhugas ng plato?

Negotiation sa klase – mag re recitation ba tayo ngayon o hindi?

Negotiation sa trabaho – sir, pwede bang taasan nyo yung sweldo namin? Pwede bang offset na lang
yung absent ko dahil nag positive ako ng covid sa overtime ko today?

Negotiation sa palengke – pwede bang five for 100 itong apple, hindi 4 for 100?

Negotiation as a two-way street.

Slide 10 – Mediation – read

Mediator as a facilitator. Restores past relationships. Win-win solutions. Nobody is a loser. Nobody is a
winner but both parties will benefit on the agreement

Slide 11 – Mediation pa rin - read

**Court-Annexed Mediation in the Philippine Mediation Center

- We have an administrative matter by the SC on this

- The cases before the courts in the first level and second level courts can be a subject of
mediation
- Even before the court of appeals – Court of Appeals Mediation (cases falling under the criteria of
the AM may be mediated)

** JDR – Judge as a mediator

When the parties do not agree or do not compromise – reraffle or if they agree that they want the same
person to decide the case then no more reraffle

Slide 12 - Mediation same as Conciliation read

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Slide 13 - Arbitration – read

Slide 14 – Table and Comparison - read

Slide 15 – Read

Slide 16 – Read

Slide 17 – Read

Slide 18 - SEC. 2. Declaration of Policy.  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.

SEC. 6. Exception to the Application of this Act. - The provisions of this Act shall not apply to resolution
or settlement of the following: (a) labor disputes covered by Presidential Decree No. 442, otherwise
known as the Labor Code of the Philippines, as amended and its Implementing Rules and Regulations;
(b) the civil status of persons; (c) the validity of a marriage; (d) any ground for legal separation; (e) the
jurisdiction of courts; (f) future legitime; (g) criminal liability; and (h) those which by law cannot be
compromised.

Good case on arbitration:

FRUEHAUF ELECTRONICS PHILIPPINES CORPORATION v. TECHNOLOGY ELECTRONICS ASSEMBLY AND

MANAGEMENT PACIFIC CORPORATION, G.R. No. 204197, November 23, 2016

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