“Pre-Trial Negotiation: Alternative Dispute Resolution (ADR), Court-Annexed Mediation

and Arbitration”

I. Philippine Laws on Alternative Dispute Resolution, Court-Annexed Mediation and

Arbitration

Republic Act 876 (R.A. 876) also known as the “The Arbitration Law” was
patterned after the U.S. Federal Arbitration Law of 1925, because the Philippines was
under the rule of the United States when the FAA was passed in 1925. R.A. 876 and
Title XIV of the New Civil Code on Compromise and Arbitrations used to govern
consensual arbitration but they were both repealed by the governing law, Republic Act
9285 (R.A. 9285) also know as the “Alternative Dispute Resolution Act of 2004”. In the
old law, R.A. 876 it had a federal pre-emption approach that the parties had to go to
court first before arbitration but in R.A. 9285, parties may apply arbitration without
going through the courts.

In A.M. No. 01-10-5-SC-PHILJA it stated “(c) Resolution No. 01-23,

recommending the approval of the following proposed structures and guidelines for the
institutionalization of the Mediation in the Philippines”, this established the Philippine
Judicial Academy as a component unit for court-referred, court-related mediation cases,
and other forms of Alternative Dispute Resolution mechanisms. This also included the
establishment of the Philippine Mediation Center, guidelines for Implementation of
Mediation Proceedings, Code of Ethical Standards for Mediators, Standards and
Procedures for Accreditation of Mediators, Compensation Guidelines for Mediators and
Supervisors and the Memorandum of Agreement with the Philippine Mediation
Foundation, Inc.

II. Procedure in Mediation

The cases that can be referred to Mediation are:

a) All civil cases, settlement of estates, and cases covered by the Rule on
Summary Procedure, except those which by law may not be compromised;
b) Cases cognizable by the Lupong Tagapamayapa under the Katarungang
Pambarangay Law
c) The civil aspect of BP 22 cases; and
d) The civil aspect of quasi offenses under the Title 14 of the Revised Penal
Code.

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Mediation Process:

a) The trial court, after determining he possibility of an amicable settlement or of a

submission to alternative modes of dispute resolution, shall issue an Order
referring the case to the Philippine Mediation Center (PMC) Unit for Mediation
and directing the parties to proceed immediately to the PMC Unit. The order
shall be given directly to the parties during the pre-trial. Copy of the Order
together with the copy of the Complaint and Answer/s, shall be furnished the
PMC Unit within the same date.
b) The Supervisor of the PMC Unit shall assist the parties select a mutually
acceptable Mediator from the list of dully accredited Mediators and inform the
parties about the fees, if any, and the mode of payment. If the parties cannot
agree on a Mediator then the Supervisor shall assign the Mediator. The trial
court shall immediately notify of the name of the Mediator, and shall thereafter
confirm the selection/appointment of the Mediator.
c) The Mediator shall immediately commence the mediation proceedings unless
both parties agree to reset the mediation within the next five (5) working days,
without need of further notice.
d) A conference before the Mediator shall be first held with both parties present.
The Mediator shall explain the Mediation proceedings stressing the benefits of
an early settlement of the dispute and shall attempt immediate settlement. If no
settlement is reached at this conference, Mediator may, with the consent of
both parties, hold separate caucuses with each party to enable the Mediator to
determine their respective real interest in the dispute. Thereafter, another joint
conference may be held to consider various options proposed by the parties to
the Mediator to resolve the dispute.
e) The Mediator shall not record the proceedings in any manner but he may take
down personal notes to guide him.
f) The Mediator shall submit to the trial court, which referred to the case to
mediation, a status report on the progress of the proceedings at the end of the
mediation period.
g) The PMC shall not keep a file of mediation proceedings except the report of the
Mediator. All other records or documents that have been submitted by the
parties shall be returned to them.
h) At the end of the thirty-day period allowed by the trial court, if no settlement
has been reached, the case must be returned to the trial court for further
proceedings, unless the parties agree to further continue the mediation, in which
case a last extension of thirty (30) days may be granted by the trial court.

All records shall be kept strictly confidential, unless otherwise specifically

provided by law, and all admission or statements made therein shall be inadmissible
for any purpose in any proceedings. Parties are highly encouraged appear in the
proceedings but in case that they are unable to attend, their representative must be
fully authorized to appear, negotiating and enter into a compromised agreement. In

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 mediation proceedings, lawyers are allowed to make an appearance and shall
cooperate with the Mediator towards the amicable settlement of the dispute
between the parties.

III. Observation in the Philippine Mediation Center in Makati City Hall

Fig. 1 Mediation Flow Chart in PMC Makati City Hall Branch

Judge Lucia Violago-Isnani is the Head and Supervisor of the Philippine

Mediation Center in Makati City; she is also the only accredited Judge who can conduct
mediation proceedings under the ADR law of 2004. The ADR law covers cases, which are
not covered by the courts, and where the parties can execute an agreement, this is
voluntary mediation. According to Judge Violago- Isnani, mediation is more
advantageous compared to going to trial. She said that mediation is fast, less expensive,
durable and can restore the relationship of he parties, as compared to trial, which is a
slow and expensive process. She emphasized on the confidential character of the
mediation proceedings, wherein no one is allowed to talk about what had transpired in
during the process. The compromise agreement between parties shall be final and no
appeal shall be allowed. She also discussed about Judicial Dispute Resolution (JDR) that
is conducted by Judges. This is the neutral evaluation conducted by the Judge by looking
through the documents, pleadings and other circumstances of the case, and suggesting
a compromise agreement based on the facts.

In the first case, it was an action for Replevin against Mr. Ramos for the recovery
of a car that was mortgaged to a bank. Mr. Ramos and his wife are separated, during the

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mediation his wife wanted to use the car but debt was already defaulted. At the start of
the mediation proceeding, Judge Violago-Isnani immediately asked for the receipt of
payment of the filing fees and a copy of the Special Power of Attorney from the lawyer
representing the bank, under the service of the Madrid Law Office. Defendant Ramos
was two choices to return the car and to pay the remaining balance. In the said letter of
demand to Mr. Ramos the amount of one million five hundred thousand (Php
1,500,000.00) was being asked by the bank, that was double its original amount. The
Judge then intervened by ordering the lawyer and the bank representative to remove
the “penalty” from the amount stated. Mr. Ramos then asked if he could get an
extension in order to contact his wife and ask he if she would be willing to surrender the
vehicle. On the other hand, the lawyer suggested to the Judge and Mr. Ramos that they
would create a proposal on how the payments maybe made in case the wife would
decide to keep the vehicle. For extension of the case being submitted back to the court,
there should be an allowance of seven (7) days before the set hearing in court. In the
end, the mediation ended with a reset o f 27 th October. In the hearing at the 27 th, Mr.
Ramos would decide whether they would surrender the vehicle or pay the remaining
balance this would be executed through a compromise agreement.

In the second case, it was a BP22 complaint also known as the “Act of Penalizing
the Making or Drawing and Issuance of check without Sufficient Funds or Credit and for
Other Purposes. According to the defendant Blessinda M. Cariajo, a fruit vendor in San
Pedro Laguna, she defaulted because his husband was in an accident that led them to
incur unwanted hospital expenses. JTim Lending Corporation now known as Megamint
Lending Corporation was asking for the total amount of one hundred ninety-five
thousand pesos (Php195, 000,000.00) with interest. The original amount of the debt was
one hundred fifty thousand pesos (Php150, 000,000.00) payable in six (6) months. In the
course of the mediation proceedings, the Judge again asked the filing fee and the
Special Power of Attorney from the representative of the lending company. In this case
the representative of the lending company was not a lawyer. The Judge during the
proceedings heard all the facts concerning the current situation of the parties and asks
all possible ways of an easier payment scheme so that both parties can result to an
agreement. In the end, the lending company waived the payment of interest as
requested by the Judge and finally the defendants were asked to pay the amount of fifty
one thousand pesos (Php51, 000.00) in twenty-six (26) weeks. The Judge executed a
compromise agreement form between the parties and an affidavit of desistance was to
be filed by the lending company, to signify the withdrawal of the case in court.

In my observation in the proceedings done in the Philippine Mediation Center

(PMC), it is informal compared to the proceedings done in court. In the court, there are
different stages before the issue could be resolved but in the PMC, the judge would act
as a referee between the parties. The Judge in the PMC has an inquisitorial character,
that would not only concern herself with the basic facts of the case but would also
inquire with the current status of parties economically and socially which I think is
important in order to make the parties know that the mediation is a fair proceeding for

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them. On the other hand, the lawyer’s role in the proceedings that I have observed is
very minimal. The lawyer is even strictly required a Special Power of Attorney before it
could act in behalf of it’s client. Unlike in the courtroom, the lawyer has more power
over the presentation of evidence and the motions to be filed.

IV. Observation in the National Labor Arbiter

We observed seven (7) cases of arbitration proceedings in the different stages, in

the National Labor Relations Commission at the office of Arbiter Atty. Augustos L.
Villanueva. The first case that we observed was already in its execution stage, the check
was presented by the company to the employee. The employee on the other hand,
agreed that upon receiving the check there would be no reinstatement. This was
executed through a compromise agreement signed by both parties.

In the second case, it was between Rendel and Marvin against Decor
Construction, a single proprietorship. In March 2017, Rendel and Marvin were hired by
the plaintiff with the compensation of five hundred (Php500.00) pesos but was later
dismissed without due cause. The company representative argued that according to the
records they resigned from their post. Their prayer is for the payment of the unpaid
salary and also the computation of their 13 th month pay. After hearing the facts from
both parties, the arbiter asked if the representative of the company had a Special Power
of Attorney but all he had was a letter. The arbiter then asked if he would have the
records of the employees so that they could compute the unpaid salaries and the 13 th
month pay but unfortunately the representative did not know about anything the said
payments. The Arbiter set another hearing and he asked that the representative would
present the records of unpaid salaries and wages. According the Arbiter Villanueva “If
there is a willingness to pay the unpaid salaries it is the indicator that the they are
willing to settle”. He also said that there is a strict rule applied for parties representing
corporations that they should present a Board Resolution or a Secretary Certificate
indicating that they are vested with power to enter into agreements in behalf of the
corporations.

The third case was between Maximum Enterprise Solutions and Ms. Richie,
employee of the company. In this case she was give her separation pay and salary but
she was dismissed without complying with the notice rule. The prayer of Ms. Richie was
for the company to give her six (6) months of assistance. Unfortunately, Maximum
enterprise Solutions did not send a representative and the arbiter had to reset the case
to give the party another chance.

The fourth case was between Food Basket and Maria Cristina that was under
preventive suspension by Food Basket. At the onset, the arbiter asked the authority of
the representatives from Food Basket but they were not unable to produce any
document to evidence their authority to represent. The arbiter in order to resolve the
situation asked for the Identifications Cards of the representative to show that they are

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employees of the said company. Cristina would like to recover the unpaid portion of her
salary and 13th month pay. The hearing was again by the arbiter wherein Food Basket
would present the computations of the unpaid amounts.

The fifth case is about an agency issue that the employee Rachel Biancan was
passed around by different agencies, namely East World, Purity Manpower services and
Champion. Atty. Rojo is the representative for Ms. Rachel Bianca that filed his position
paper to the Arbiter. In the meantime, the agents of Champion were asked if they had
the authority to transact but were again unable to give the proper documents. The
agent, Ms. Irma Penarand for Champion alleged that they could no longer be impleaded
into the case because the contract between Purity Manpower Services and East world
was terminated a long time ago. All of the parties were asked to pass their own position
papers simultaneously at the next arbitration hearing. The last two cases were both
terminated because of the non-appearance of the parties. According to Arbiter
Villanueve that the complaint shall be dismissed if they are unable to attend for two (2)
consecutive hearings. The respondent will not be able to file their position paper if they
are not able to attend for two (2) consecutive meetings.

In the arbitration proceedings, lawyers are given more importance because

according to the Arbiter only the parties and their counsel are allowed in the arbitration
proceedings. The representatives of companies are imposed upon a strict rule on
complying with the required Board Resolution or Secretary Certificate, unlike lawyers
who may easily pass their position papers without being questioned about their
authority.

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Annex:
Different Documents from the Different Agencies

Mediation Procedure in PMC

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Information Sheet in PMC

Compromise Agreement Sheet

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Motion for Extension Sheet