CHAPTER 1 “Because conflict is inburent in human society, much ef- fort has been expended by men and institutions in devising ways of resolving the same. Witt the progress of civilization, physical combat has been ruled ut and instead, more specific ‘means have been evolved, such as recourse to the good offices of « disinterested third party, whetuer this be @ court or a private individual or individuals.”* Historical Note Judicial and legislative tron‘s on dispute resolution consis tently leen towards the utilization of alternative means and meth- ods iraplemented outside the court trial system. The EMD copes ‘Act No. 386); which took effect on 30 August 1° tains provisions on com- promises and arbitrations (Chapters 1 and 2, Tithe XIV, Book 1) which encourage litigants to agree upon a fair compromise authorize arbitration as a means of concluding controversies. v, Court of Appeals, 206 SCRA 645 19221, p. 549. * Lara v. Del Rosario, G-R. No. 1/6839, 50 0.G. 1987. | Justice Flerida Ruth Romero, in Chung Fu industries Phils) Ine.sme or nnn On 19 June 1953, the Philippine Legislature enacted Republic Act No. 876, otherwise known as 876 dis instead supplemente e New Civil Code on arbitration. On 10 May 1965, another milestone in Philippine alternative dispute resolution was achieved when the Philippine Senate passed Resoluti iering to the United Nations “Conven- tion on the ition and Enforcement of Foreign Arbitral Awards” of 10 June 1958. This Convention edged international arbitration as a system of settling commercial disputes." ‘The Philippines was a signatory to Nations Com- mission on International Trade Law few York Con- vention of 21 June 1985 which adopted the “Model Law on Interne: tional Commercial Arbitration.” By suck act, the Philippines com- mitted to adhere to the Model Law. Despite the foregoing efforts of the Legislature in the prome- tion of alternative dispute resolution, the Judiciary continued to be plagued with congested dockets. The sheer number of new cases ‘of judges to man the first and secund level courts, resulted in the volume of new cases filed far outnum bering the cases actually disposed of and resolved by our courts. ‘These circumstances contribute to the perennial problem of delay in the delivery of juctice to party litigants. Judiciary’s Actio ‘The Judiciary’s responsé to the problems of delay in the deliv- ery of justice consisted of, among others, the requirement of cgn- * Chung Fu Industries (Phils.), Inc. v. Court of Appeals, id., p. 551, citing Umbao us. Yap, 100 Phil. 1008 (1957). Del Monte Corporation-USA v. Court of Appeals, 351 SCRA 373 (20011, pp. 380-381. Ixtropnevt0N, 3 ducting pre-trial conforences:” the utilization of the different modes of discuvery;* and the strict proscription against forum-shopping” Iiaee importantly, the Supreme Cosrt passed wanInECrrae aes ances encouraging the use of ternative dispute resolution through the Philippine Mediation Center or through judicial dis- pute resolution (IDR). ‘To emphasize the Judiciary’s resolve in strengthening the sys- tem of alternative dispute resolution, the Supreme Court, speaking through Mr. Justice Jose Vitug, in the case of La Naval Drug Cor- poration v. Court of Appeats,” said tha: “Ln an effort to detiog che evurts of an increasing volume of work load and, most important!s, in order to accord contend- ing parties with expeditious alte-natives for settling disputes, the law authorizes, indved encourages, out of court settlements: for adjadications. Compromises and arbitration are widely Jon and used as snch acceptable methods of resolving ad- versarial dais, Alternative dispute resolution methods like arbitration, me- diation, negotiation an conciliation, are encouraged by the Su- preme Court.” Arbitration, in particular, is regarded as the “wave af the future” in international civil and commercial disputes.” Legislative Action Special domestic legislations have been passed prescribing arbitration, mediation and concilia ion in specific types of cases to help decongest court dockets. For ‘astanee, the “Labor Code of the * Rule 18, 1997 Rules of Civil Provsdure. * Rules 23 to 29, 1997 Rules of Civil Procedure. * Section 5, Rule 7 and related provisions of the 1997 Rules of Civil Procedure. "286 SCRA 78 [19941, p. 82 “Insular Savings Bank v. Far East Bank and Trust Company, 492 SORA 14i, [2006]; Reyrs v. Baldo IT 19% SCRA 186 [2006]. LM Power Engi ‘orporation . Capital Industrial Construc- tion Groups, Ine, 20¢ sl; BF Corporation v. Court of Ap- ‘peals, 288 SCRA 267 {1995}.Aureanarve Disrure ResoLvrion Philippines” (Presidential Decree [P.D.] No. 442, as amended) man- dated the creation and constitution of the National Labor Relations Commission (NLRC) which, together with its Arbitration Branch, has been dispensing arbitration service in cases involving unfair labor practice, termination of employment, conditions of empl: ment, damages arising from employer-employee relationship, and other labor-related disputes.” Also, the “Local Government Code of 1991” (R.A. No. 7160) re- quires conciliation, mediation or arbitration in the barangay ievel 0 before the pangkat ng tagapagkasundo of would-be adverse perties in specified civil and criminal cases before resort to courts can he had." The principle of alternative dispute resolution in the baran- gay level had its roots in P.D. No. 1508 (“Estublishing a Ss Amicably Settling Disputes at the Barangay Level”) whose provi sions were re-enacted as part of the Local Government Code of 1991. Executive Branch’s Contribution The Executive Branch of Government also contributed im. mensely in the propagation of alternative dispute resolution. The Construction Industry Arbitration Commission (CIAO), created under Executive Order (E.0.) No. 1008 (“Construction Industry Arbitration Law”) dated 4 February 1985, is at the forefront in the arbitration of disputes arising from or connected with construction ‘agreements. The CIAC, in the exercise of the powers granted it by Section 21 of E.0. No. 1008, approved and promulgated on 23 Au- gust 1998 the “Rules of Procedure Governing Construction Arbitro- tion.” The said Rules has undergone various amendments and, on 19 November 2008, the CIAC passed and approved the “C/AC R vised Rules of Procedure Governing Construction Arbitretion” 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 ™ Article 217, Labor Code of the Philippines. a * Sections 408 to 419, R.A. No. 7160 (The Local Government Code of 1991). i Lyrronnetion 5 Alternative Dispute Resolution ‘ADR) for Disputes Between Na- tional Government Agencies.” Through these Rules, the Executive Branch of Governiment reiterated its adherence to the policy of the law to encourage the amicable settlement of disputes through al- ternative dispute resolution methods in lieu of adversarial judicial processes even in disputes hetween national government agencies. The Alternative Dispute Resolution Act of 2004 On 4 February 2004, Sent » Bill No, 2671 and House Bill No. consolidated and ¢ 5654 w acted as the first comprehensive alternative dispute w 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.” Jt is better known os the “Alternative Dispute Resolution Act of 2004.” It was promvlgated on 2 April 2004 and became effective on 28 April 2004 after its publication on 13 April 2004.” Itiis the gen- eral law applicable to all forms of alternative dispute resolution such as arbitration, mediation, conciliation, early neutral evalua- tion, mini-trial, or any combination thereof. It recognizes the in- ternational application of the a ternative dispute resolution sys- tom. Tt adopted the UNCITRAL Model Law on International Commercial Arbitration. It paves the way for the Philippines to be avenue for intarnational commercial arbitration, The Supreme Court, in Korca T>chnologies Co., Ltd. v. Lerma,"* enumerated and explained the salient features of RA. No, 9285 applyiag and incorporating the UNCTTRAL Model, namely: “() The RTC must refer to arbitration in proper cases disputes that are properit Tie subset of arbitration pursuant Soe arbitratiny Tans, and mvandates Uhe referral to arbitra tion in such cases x xx ® Equitable PCI Bonbing Corporation v. RCBC Capital Corporation, fy. 574 SCRA 858 [2008], p. 870. BB. 542SORA 1 (2008), pp. 25-20.Aurmrnative Diseure ResoLunion @ arbitral awards must be confirmed by the RIG" Foreign arbitral awanjs while mutually stipulated by the parties in the arbitration clause to be final and binding are not ately enforceable or Thunedi- Ga See Soot tie UNCITIG Moht ee ‘quirement for the arbitral award to be recognized by a compe: tant court for enforcement x x It in now clear that foreign arbitral awerds when con- firmed 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. (8) The RTC has jurisdiction to review foreign arbitral awards ‘Sec, 42 in relation to Sec. 45 of R.A. 9285 designated and vested the RE with spose authority and juSialinan ist To} aa itral_award_on_grouns Seal the Model Law. 3% xxx xxx xxx (4) Grounds for judicial review different in domestic and foreign arbitral awards For foreign or international arbitral awards which raust bbe confirmed by the RTC, the grounds for setting aside, reject- ing or vacating the award by the RTC are provided under Art. 34(2) 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 recou- nized as final and executory decisions of the RTC, they may only be assailed before the RTC and vacated on the grounds Provided under Sec. 25 of RA 876. Inrnonuciion 7 15) RTC decision of avsailed foreign arbitral award ap- pealable Soc. 48 of RA 9236 provides ior an appeal before the CA fas the remedy of an aiggrievel porty in eases where the RTC sels aside, rejects, snodities, or eorroets an arbitral award, x x Thoreator, tie CA deciion moy further be appealed or reviewed before this Court EHFTaP Ta pEUTOR or Fetioe URder OeTSaT the Rules 0° Cu Pursuant to Section 52 of R.A. No. 9285 calling for the pas- sage of implementing rules and reg-tlations therefor, on 26 October 2009, the Implemeating Rules and Regulations of the Alternative Dispute Resolution Act of 2004 (IRR) was approved by the Seere tary 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 teok effect on 30 ‘October 2009." The Lewyer’s Role The combined efforts of the Fxecutive, Legislative and Judi- cial Branches of Government for the promotion of alternative dis- pute resolution is an eloquent recognition and acceptance of the need to declog the courts’ dockets. Lawyers, being an integral part of the judicial system, ave to {ow the line and contribute to the promotion of alternative dispute resolution. As part of their duties to the court, lawyers have to assisi the courts in encouraging the Parties to avail of alternative moans of dispute resolution. As part of their duties to their clients. lawyers have to explain the benefits of the alternative dispute resohition " Rule 26.1, Special Rules of Court on Alternative Dispute Resolu- tion ("Special ADR Rules").y Lawyers may also play the role of alternative dispute resolu- tion provider or practitioner. A lawyer, in view of his excellent communication skills, probity, and legal foresight, can be ap- pointed as an arbitrator, mediator, conciliator or neutral evaluator. When performing duties as such, lawyers are expected to exert genuine and sincere efforts ut 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 ainicable settlement of their disputes and controversies. CUAPTER 2 FUNDAMENTALS OF ALTERNATIVE DISPUTE RESOLUTION Alternative Dispute Resolution Ina broad sense5}ilfernalite dispute resolution (ADB for brev- ity) is a system, using means and-methode-alloweT by-taw and approved 1e for the purpose of resolving or facilitating ‘the ae ees controversies between them, in an expeditious und speedy manner, without resorting to court adjudi- cation: This definition covers al! forms and methods of resolving: disputes outside the court trial -ystem, This definition covers not just arbitration, mediation, conc tiation, early neutral evaluation, mini-trial, or combinations theresf, but also includes similar proc- cesses in quasi-judicial agencies such as the National Labor Rela- tions Commission, Regional Offices of the Department of Labor and Employment, Intellectual Property Office, Mines and Geo- sciences Bureau, Insurance Co umission and other similar gov- ernment, agencies. ADR, as defined in the AD. Act of 2004, means “any: process or procedure used to resolve a dispute or controversy, other than by adjudication of a presiding Judg> of a court or an 7 gov- ernitent agency x xin Which a neutral third party participates to assist in the resolution of issues x x." Under this definition, arbiral proceedings under the above- ‘mentioned administrative agencies exercising quasi-judicial power * Scction 3, ADR ActLawyers may also play the role of alternative dispute resolu- tion provider or practitioner. A lawyer, in view of his excellent communication skills, probity, and legal foresight, can be ap- pointed 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 In a broad sense} lvarnafive dispute resolution (ADBIor brev- ity) is a system, using meaus and-methods allowet by taw 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 manner, without resorting to court adjudi- cation: This definition covers all forms and methods of resolving disputes outside the court tvial =ystem. This definition covers not just arbitration, mediation, conciliation, early neutral evaluation, mini-trial, or combinations thereof, but also includes similar proc- esses in quasi-judicial agencies such as the National Labor Rela- tions Commission, Regional Offices of the Department of Labor and Employment, Intellectual Property Office, Mines and Geo- sciences Bureau, Insurence Covumission and other similar gov- ernment, agencies. ADR, as defined in the ADR Act of 2004, means “any process or py used to resolve a dispute or controversy, other than by adjudication of a presiding judg? of a court or an officer of @ gov- exninent agency 5 Which a HeUTr pates to tin the resolution of issues x x x.”" Under this definition, arbitral proceedings under the above- mentioned administrative agencies exereising quasi-judicial power ass * Section 3, ADR Act.— sed by the ADR Act of 2004. 4, This loes not mean, how- lies procedures-before quasi-judicial agencies are not considered formis of arbitration, mediation or conciliation. They are, except that they are not governed by the ADR Act of 2004 being specific laws aid rules governing their procedures. ‘State Policy on ADR In the ADR Act of 2004, it is declared a State policy: “x x x to actively promate party antonomy in the resolution of disputes or the freedom of the parties to make their own ar- rangements to resolve their disputes. Towards this end, the Etats shall encourage and actively promote the use of Alterna. tive Dispute Resolution (ADR) ag.an important means to achieve court docke(s. As such, ‘the State shall provide means for the use of ADR as an efficient tool and an alternative procedure for the resolution of appropri- ate cases. Likevise the State shall enlist active private sector ‘perticipation in the settlement of disputes through ADR, x x x." In the case of Insular Savings Banh v. Far Bast Bank and Trust Company,’ the Supreme Court declared the policy of the Judiciary on ADR as follows: “Alternative dispute resolution methods or ADRs ~ like arbi- tration, mediation, negotiation and conciliation ~ are encouraged by the Supreme Court. By enabling the parties to resolve their disputes amicably, they provide solutions that are less time-consuming, less tedious, less confrontational, and more productive of goodwill and lasting friendships. x x x." Similarly, in RCBC Capital Corporation v. Banco de Oro Uni- bank, Inc, the Supreme Court declared that: * Sec. 2, ADR Act. * 492 SCRA 145 [2006], p. 158; see also: LM Power Engineering Corp. . Capito! Industrial Construction Groups, Inc., 447 Phil. 705 (2003}, p. ‘107, and 399 SCRA 562, p. 563; Reyes ». Balde II, 498 SCRA 186 {2008}, pp. 196-197; and Fiesta World Mall Corporation v. Linberg Philippines, Inc., 499 SCRA 332 [2006], p. 339. “687 SCRA 583 [2012], pp. 627-628. AS uMtannN He UP PMH BINARIES ua Dispur Resouution “Alternative dispute resolution methods or ADRs ~ like arbitration, mediation, negotiation and eoneiliation ~- are en- couraged by this Court. By enabling the parties to resolve their disputes amicably, they provide solutions that are less time- consuming, less tedious, less confrontational, and more produe- tive of gondwill and lasting relationship. Institutionalization of ADR was envisioned as ‘an important means to achieve speedy and impartial justice and declog court dockets.’ The most im- portant feature of arbitration, asd indeed, the key to its suc- cess, is the public's confidence and trust in the integrity of the process. xxx." In a long line of cases, the Supreme Court has referred to al- ternative dispute resolution in gen>ral, and arbitration in particu Jar, as the “wave of the furhure in international relations.”* Principles of ADR ‘The following are the principles of ADR: 1. Promotion of party autoromy and self-determination in the resolution of disputes. ‘The purties are given the freedom to choose the-form-ofADR.they desire to avail of. They are also given the discretion scribe the procedure to govern the ADR proc- ess." Party autonomy extends to the choice of ADR_providers or practitioners, the venue of proceedings, and, in most cases, the terms of the concluding agreement. 2. Recognition of ADR as ar: efficient tool and an alternative procedure for the resolution of cases. ADR does not altogether do away with the court trial system. ADR s the with an alternative means of settling their disputes in a manner * Maria Luisa Park Associaton. Inc. v. Almendras, 588 SCRA 683 2009}, p. 877; Korea Technologies Co.. Ltd. v. Lerma, 542 SCRA 1 [2008}, p. 23; Frabelle Fishing Corporation v. Philippine American Life Insurance Company, 530 SCRA 543 [2007], p. 54; Reves v, Balde I, id; Fiesta World Mall Corporation v. Linberg Philippirss, Inc, id; Sea-Land Service, Ine. v Court of Appeals. 327 SCRA 138 {20001, p. 144; Gerardo Lanuza, Jr. v. BF fj, Conperation, GR. No, 174998, October 1, 2044 * Department of Environment ond Natural Resources (DENR) v. United12 Ausemarive Diseurs Resouion that is different, separate and independent from the court trial system, 3. Enlisting of private sector participation. The essence of ADR is that it usually requires the participation of third panties lo not necessarily dispense public service. Many ADR practi: tioners or providers hail from the private sector in various fields of endeavor. There is a growing trend towards private sector in- volvement in ADR. . Objectives and Benefits of ADR ‘The following are the objectives of ADR: 1. Speedy and impartial justice. ADR has been judicially recognized as toabter the spoody, inexpensive and amicabie ec tlement 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 aystem, 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 forms, methods and processes is to resolve or facilitate the resolution of a dispute or controversy in a speedy, amicable and inexpensive manner. A procedure which has for its purpose the temporary cessation of the discussion of issues in a controversy not leading to the final conclusion of the dispute is not an ADR form. 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 methods allowed by law. AD! usually takes the form of arbitration, mediation, conciliation, early neutral eveluation, or mini-trial. It may also be any combination of * Reyes v. Balde II, id. * Reyes v. Bale I, id. Fucan Dis? "TALS OF ALTERNATIVE, 13 were. RRSOLUTION the foregoing methods. The ADR Act of 2004 did not limit the forms of ADR to the foregoing snumeration. Any means or method aimod at resolving disputes outside the court trial system may be recognized as an ADR form provided it is not contrary to law, mor- als, good customs, public crder cr publie policy 3. ADR is contractual in nature? In keeping with the pol- icy of the law to actively promcte party autonomy, the parties to a dispute are given the trecdom °a agree to resolve their dispute and decide on the procedure therafor, ADR , therefore, contractual in character. As such, any form of ADR that Salisties tho essential requisites of is not contrary to Taw, morals, good ~ustoms, public order or public pol- Tye attowatte ara Tor oF ‘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, The con- sent may also be a present-crusal consent as when the parties to an existing controversy voluntarily submit themselves either to arbi- tration or mediation. 4. ADR avoids court trial. In principle, ADR is conducted le of the court trial systum. It is in heuof, and conducted precisely to avon, trial However, more ofign shar not, ADR is conducted as part of court proceedings: Ge tisingse om the trial stage of court “proceadings, This is he Gace ofithe ‘judicial dispute resolution” or “IDR” which, although not quires judges to conduct med! ‘eed by the ADR Act of 2004, re- ition between the parties as part of © Aboitie Transport System Corporation v. Carlos A. Gothong Lines, Ine., 730 SCRA 178 [29141 “Art 1318 (Civil Code nf the Philippines). There is no contract unless the following requisites corr: (1) Consent of the contracting parties; (2) Object vertain which is the subject matter of the contract; (3)_ Cause of the obligation which is established.” * “art, 1347 (Coil Code of th Philippines). xx x. All servieos which are not contrary to law, morals, good customs, public order or public poliey may lisewise be the object ofa contract.”the pre-trial” and prior to the start of the trial stage. This is also the case of the court-annexed mediation (CAM) conducted by the Philippine Mediation Center which, while not governed by the ADR Act of 2004, is required to be condueted prior to pre-trial. ADR, however,dg not inconsistetwith judicial proceedings as ‘opposed to the trial system. Judicial proceedings complement ADR proceedings. Wher ADR is availed of during the pendency of an action in court, the court does not lose jurisdiction over the case ‘The court proceeding will only be stayed. After the special proceed- ing for arbitration has been pursued and completed, then the court ‘The pendency of arbitral proceedings does not foreclose resort to courts for provisional reliefs. The Arbitration Law (R.A. No. $76) recognizes the right of any party to apply with the courts to take to safeguard and/or conserve any matter which is the subject of the dispute in arbitration. The ADR Act of 2004 (R.A. No. soeogiatene filing of petitions for provisional or interim meas- ures with the regular courts whenever the arbitral tribunal has no fate” 5. ADR usually involves the participation of a newtral third party. The third party participant. may either be the arbitrator, mediator, conciliator or neutral evaluator. It is imperative that the third party participant “observe neutrality at all times. He is re- quired to disclose any factor that may influence the performance of his duties in conducting the ADR. These factors may include rela- Chan Kent v. Micarez, 645 SCRA 176 [2011], p. 182; Real Bank, Inc, v. Samsung Mabuhay Corporation, 633 SCRA 124 (2010), p. 124; Senarlo v. Judge Paderanga, 617 SCRA 247 [2010] * Benguet Corporation v. Department of Environment and Natural Resources-Mines Adjudication Board, 545 SCRA 196 (2008), p. 209, citing BF Corporation v. Court of Appeals, 288 SCRA 267 [1998], p. 265; Lif Power Engineering Corporation v. Capitol Industrial Construction Groups, ne., 399 SCRA 562 [2003], p. 572; Rizal Commercial Bunking Corporation . Magwin Marketing Corporation, 402 SCRA 592 [2003I, p. 606. ™ Korea Technologies Co., Lid. v. Lerma, 542 SORA 1 (2008, pp. 35- 6, citing Transfield Philippines, Inc. v. Luzon Hydro Corporation, 490 CRA 14 [2006], pp. 20-21. WISPUTE tHSSOLUTION tionship or affiliation. or prior dellings, with the parties or the latter's relatives. Sources of ADR Rules ADR rules emanate fron: 1, Domestic laws andl rules which may either be general or specia{General ADR laws are those applicable to all forms of ADR. such as, Section 16. 1987 Constitution; Chapters 1 and 4, 2, Title XIV, Book IV, Civil Code of the Philippines; the Arbitration Law (R.A. No. 876); and the ADR Act of 2004 (R.A. No. 9285) and its IRI eee On the other handSpecial ADR TaWs are those that pertain to specific subject matters. Examples of these are the Local Government Code of $991, the Labor Code and its Implementing Rules and Regu- Z, ations, and other similar laws applicable to specific classes of dis- putes. 2. “Acts of the Executive Branch. Examples of these are the Rules of ADR for Disputes Between National Government Agenci cnactod on 23 March SOTG-and EO. No. 1008 creating the ‘Construc- tion Industry Arbitration Commis Rules of Procedure Governing ‘ber 2005). 3. Decisions of the Supreme Court which form part of the law of the land.” 4, International laws such as the UNCITRAL “Model Law on International Commercial Arbitration,” and the “Convention on Recognition and Implementation of Foreign Arbitral Awards.” 5. General principles of law md equity. “Article 8 (Civil Code of the Philippines|. Judicial decisions apply- ing or interpreting the laws or the Constitution shall form part of the legal system of the Philippines.” :y* Aurumurve Deore Kesourmon Forms of ADR ‘As enumerated under the ADR Act of 2004, the following are the forms of ADR: 1. Arbitration, Arbitration is en “arrangement for takin; and abiding by the judgment of selectedpersons in some disputed “manner, instead of carrying it to established tribunals of justice, ‘Fexation of ordinary ligation” In its restricted sense, for purposes of the ADR Act of 2004, arbitration is 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 the ADR Act, resolve a dispute by rendering an awe 2. Mediation, Mediation is a voluntary process in which # mediator, selected by the dieputing parties, Tacihtates comMUnta- tion and negotiation, and assists the partieSin reaching a vam fary agreement regarding a dispute.” ‘The basic distinction between arbitration and mediation is that in the former, an arbitral tribunal or arbitrator evaluates evidence and the merits of the case and renders an arbitral award based 0 his appreciation thereof; while in the latter, the parties to the com> troversy are convinced by a mediator to settle their controversy through a voluntary agreement executed by the parties themselves ‘ealled a “mediated settlement agreement.” In other words, the con- cluding arbitral award in an arbitration proceeding is rendered by ‘the third party arbitral tribunal or arbitrator; while the concluding mediated settlement agreement in a mediation proceeding is the voluntary agreement executed by the parties themselves. 3. Conciliation. Conciliation ss th adjustmes? Laci o> Gaent'pf a dispute in a friendly, unantagonistie manner.” ™ Uniwide Sales Realty ond Resources Corporation v. Titan-Tkeda Construction and Development Corporation, 511 SCRA 335 [2006}, p. 356. ™ Section 4(d), ADR Act. * Section 3(q), ADR Act. ™ Black's Law Dictionary. Bes, FUNDAMENTALS OF ALTERNATIVE aw Dispute, Resowution 4, Neutral ond earls nsiltial evaluation. Neutral evalua- an ADR process wherein i a to present summaries of their cases and receive a pon-bnan ent by an 2 noutral_pérson with expertise in the subject or in tho substance of the dispute.” Early neutral evaluation is availed of early in the pre-trial phase. 5. Mini-trial Mini-trial is 4 structured dispute resolution method in which the merits of a case are argue composed of ofa, Settiément.” =, after which the parties seek a negotiated 6. Aniy combination of the foregoing. Any combination of the foregoing ADR forms, approves by the parties, not contrary to law, morals, good customs, public order or publie policy, may be implemented. An example of a combination ADR form is media- tion-arbitration or med-arb, which is a two-step dispute resolution process involving both mediation and arbitration.” Another combi- nation is a mini-trial conducted as a continuation of mediation, neutral or early neutral evalution or any other ADR process." 7. Any other ADR form (Innominate ADR Form). Any ar- rangement agreed upon by the parties that satisfies the requisites of ADR.” complies with the essential requisites of a valid con- tract," and is not contrary to law, morals, good customs, public order and public policy,” fe an accoptable form of ADR. An agree- ment to,resolve a dispute depending on the outcome. for instance, of a boxing match, is tantamount to gai ich is contrary to Taw. Therefore, such arrangement, apart from being void, cannot De considered a form of ADR. ® Section 3(n), ADR Act. © Section 3(u), ADR Act. * Section a(t), ADR Act. ® Article 7.716), IRR. * Section 3(a}, ADR Act. ” Article 1318, Civil Code of the Philippines. ™ Article 1347, Civil Code of the Philippines.party if there are more than two (2) contending Parties involved. shen oni, ©, the Mtmber of issues involved, ADR may ¥ hen only a single issue is involved, ¢F complayit there are wooo more issues involved. 5. As to the extent of the conclusion, ADR is either complete when all the issues involved are resolved, or partial if only one or Gome but not all the issues are resolved. In either case: the objec- fay: ue ADR form must be to resolve the dispute fully oe par- Sally rather than merely suspend or defer the resoluticn af va troversy involved requires the presentation of evidence and evalua- tion of the merit of the case as in the case of arbitration; and it is non-evidentiary or non-merit based if the merits of the ease 1 net indispensable in the resolution of the dispute as in the cace of me diation. 5. As to the pendency of a court case, ADR is ase-related it 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 ease involving the issue. 6. As to the applicable law, ADR is domestic if the parties’ Places of business, place of arbitratjon, and place of performance of the obligation involved or subject matter of the dispute, are located in the Philippines. Domestic arbitration is governed by R.A. No 876 (“The Arbitration Law”). ADR is international, if the parties places of business are in different states; or the place of arbitration is outside the Philippines; or the place where a substantial part of the obligation is to be performed or the place where the subject matter of the dispute is most closely connected is outside the Phil- 1, Atta the numberof parties, ADR may be bilateral or bi- par when only two (2) contending parties are involved, or mawlat- soko UP ALESKNATIVE, a9 Dispute Rusouvtion ippines; or the parties have agroed that the subject matter of the dispute relates to more than one country.” International eommes, cial arbitration is governed by the provisions of the ADR Aet ea International Commercial Arbitration. And, ADR is foreign if i re conducted outside the Philippins.” It is submitted, however, that itis more accurate to define a foreign arbitration as one whose seat is outside the Philippines. Foreign ADR is also governed by the provisions of the ADR Act of 2004 on International Commercial Arbitration. Based on these classifications, an international come mercial arbitration conducted pursuant to the provisions of RA. No. 9285 is domestic and international in character. On the other hand, an international commercial arbitration whose seat is other than the Philippines is foreign and international in character. 7, (Asta the permanenos.of the ADR provider or practitioner ADR is either ad hoc if the existence of the ADR practitioner is only temporary for purpose of a particular dispute or controversy, or institutional if the ADR provider's existence is permanent 1 charactor and is not dependent on any dispute or controversy. Components of ADR ‘The components of ADR are the following: 1. Contensine parties who are involved in a dispute or con- troversy — 2. Dispute or controversy which is tible of being sub- jected to ADR. 3. Romi ePADR which m&cithd> be arbitration, mediation, conciliation, early neutral evaluation, mini-trial or any combina tion of the foregoing. 4. ADR provider or practizieer: An ADR provider is an in- titution or person accredited as mediator, conciiator, arbitrator, neutral party evaluator, oF any person exercising sirailar functions ® Article 1.6, B(8), Implementing Rules and Regulations of the ADR Act of 2006 (IRR), “ Rule 1.11(@), Special ADR Rubyp” Summa Loven ssesuuron in any ADR system.” On the other hand, an ADR practitioner is an individual acting as mediator, conciliator, arbitrator or neutral evaluator” who is not necessarily accredited as an ADR provider. Subject Matters of ADR In line with the policy to encourage the use of ADR, in gen- eral, all_ adversarial disputes aud contraversies can ke the subject matter of ADR, except those which jaw or reasons of public ‘policy are declared not capable of being subject {0 ADR: Inder Section 6(b) to (h), R.A. No. 9285, the following issues are not sus- ceptible of ADR: a. ‘The civil status\of persons») A person's status, whether married or capable of marriage, emancipated or not, legally capaci tated or incompetent, is a matter determined by law and is not subject to the discretion of the parties. b. The validity of marriage or any ground for legal separa Hion) These are matters over which the State has a keen interest to protect. Thus, in proceedings for the declaration of nullity of marriage, or for legal separation, the public prosecutor is in- structed to conduct a summary proceeding in order to ensure that there is no collusion between the parties.” During the proceedings for the declaration of nullity of marriage or the dissolution of the ‘conjugal partnership of gains or the absolute community, the dis- ® Section 3(b), ADR Act. id. % “Art, 48 [Family Code of the Philippines], In all cases of annul ment or declaration of absolute nullity of marriage, the Court shall order the prosecuting attorney or fiseal assigned to it to appear on behalf of the State to take steps to prevent collusion between the parties and to take care that the evidence is not fabricated or suppressed. In the cases referred to in the preceding paragraph, no judgment shall be based upon a stipulation of facts or confession of judgment.” “Art. 60. No decree of legal separation shall be based upon a stipu- lation of facts or a confession of judgment. In any case, the Court shall order the prosecuting attorney or fiscal assigned to it to take steps to prevent collusion between the parties and to take care that the evidence is not fabricated or suppressed.” ‘Disrure: Resouunion tribution and disposition of the assets of the conjugal partnership at gains or the absolute community, custody of minor abject to court approval, and support pendente lite may, however, he the subject of ADR. Te jariseictioneof the courts Jurisdiction over the sub- ject matter of a case is determiner. by law and is not dependent “upon the allegations of the par'ies,” except in the ease of jurisdic- tion hy estoppel oO 0 Fukire lepiti® “Potrre legitime is inexistent ani, hence, cannot be waived. This-pringplo is consistent with Articles 772” and 905% of the Civil Code of the Philippines. cqgOFiintaaN liability. Criminal liability is not susceptible of ADR, although the evil habiiity a-ising from the offense and the separate civil liability for quasi-delict based on the act or omission constituting the offense, are proper subjects of ADR* f In general, those which, by lau, cannot be compromised. Article 2035 of the Civil Code of Philippines is an example of a sion of law prohibiting compromise. It states that: pro. ™ Pwople v. Vanzucta, 559 SCRA 231 (2008); Sulmorin s. Zaldivar, 559 SORA 564 (2008), * Tijam, ct al. v, Sibonghanoy, et al, 181 Phil. 556 (1968), p. 564; 23 SORA 29, pp. 35-36, ‘Art. 772 [Civil Code of the Philippines!. Only those who at the time of the donor's death have a right to the legitime and their beire and successors in interest may ack for tie reduction of inofficious donations, ‘Those referred to in the precedi-s paragraph cannot rencunce their right during the lifetime of rine donor, vither by express declaration, oF by consenting to the donation. SAn 805 [id.|. Every renunciation or compromise as regards a fu- ture legtime between the pezson ving it and his compulsory heirs ia void, fad the latter may claim the saine upon the death of the former; but they nut bring to collation whatever they may have received by virtup of the renunciation or compromise ® Articles 29-35, 2176, 2177. Civil Code of the Philippines, and Arti- le 100, Fevised Penal Code. Also rie 2084 of the Civil Code provides: “There may be a compromise pen the eivil liability arising from the offense, but such compronise shail not extinguish the public action for the imposition ofthe logal penalty”nEeE® 92 Aumiownvs Disrure Resouniow “ART, 2035, No compromise upon the following ques- tions shall be valid: (2) The civil status of persons; @) Thevalidity of a marriage or a legal separation; (3) Any ground for legal separation; @) Fature support; () The jurisdiction of courts; (@) Future logitime.” It is against public policy to waive or enter into a compro mise regarding future support. In principle, support is the basis for life and sustenance which no one can contract away. However, support pendente lite and accrued support, no longer being indis- pensable for the life and sustenance of the person entitied there to, may be the subject of a compromise and, hence, may he the subject of ADR. Section 6, R.A. No. 9285 also mentions labor @isputes in the enumeration of issues which cannot be subjected to ADR under the ADR Act of 2004. This does not mean that labor disputes under the Labor Code of the Philippines (E.0. No, 442, as amended) and its Implementing Rules and Regulations, are not susceptible of ADK. Section 6, R.A. No. 9285 merely enumerates the disputes over which it is not applicable. Hence, while R.A. No, 9285 is not appli- cable to labor disputes, they may still be the subject matters of ADR under the auspices of the Labor Code and its Implementing Rules and Regulations, but not under R.A. No. 9286. Seat and Venue of ADR ‘The seat of ADR is the jurisdiction under whose law the pro- ceeding is being conducted. The venue or place of ADR, on the other hhand, is the actual site where the arbitration is being conducted Hence, it is possible for the venue or place of arbitration to be in a country different from the country where the arbitration has its seat. FUNDAMENTALS UF AUrEARALIVE ee Dispute: ResyiuTion Basic Concepts Concluding Acts or Agrecnent ADR proceodings an Zonpio0)) upon ihe execution aba end fang “or agreomen|, Thos concliding acts or agreements way take the form of a mediated ssttlement agreement (or simply Tonlemont agrecment”) or acampiomise agreement in the case of ton nthe case of arizona the ore oa —picard-on agreed taruidebnsent award pr award based ‘on compromise. slop by an arbi- trator in resolving the issoein 7 A mediated séfilement agree: (Gains by the modiating patties, with the assistance of their Tespective counsel, certified by the mediator, evidencing a successful mediation.” A@ompromiise or compromise zgreement iss Yontrac herby the partice, Dy making reciprocal caneessions,-evoiditgation or ” If the controversy subject is also the subject of litiga tion, the compromise agreement can be submitted to the court or tribunal fa mitained in a F quifelaim tsa statement renouncing any right or iratontraversy by one party in favor ef the other. If the waived right or claim is also the subject of litigation, the waiver and quitclaim ean be submitted to the court or tribunal and become the basis of the dismissal of th n oF proceeding. ‘The concluding acts or agreembits are not forms of ADR, Rather, they constitute the part af the at COM pletes it ection 9(0, R.A. No. 9285 cetion 17, i © Article 2028, Cwil Code ofthe Shiippines.24 Aummurive Disrore Resournos ADR Providers and Practitioners Among the ADR providers and practitioners, the arbitrator is, unquestionably authorized to render a binding resolution of the dispute between the parties and, as such, is bound to consider the merits of the controversy. On the other hand, the mediator is pre cluded from discussing the merits of the controversy and cannot render a binding assessment of the dispute. ‘The following neutral third persons are authorized to consider the merits of the controversy and required to render a binding resolution of the dispute: 1, Arbitrator; 2, Mediator-arbitrator in a mediation-arbitration proceeding; and 3. The neutral third person in a mini-trial, neutral evalua- tion (neutral evaluator), combination of ADR forms, or in- nominate ADR form, who, upon agreement of the parties, is directed to render a binding assessment. By the nature of their functions, ADR providers and practi- tioners, including arbi z ‘judicial capacity." They are quasi-judicial agencies or instrumventalities, ‘As such, their decisions or awards are generally reviewable in ‘a special civil action for certiorari under Rule G5 of the 1997 Rules of Civil Procedure as amended.* Basis for this principle is Section 1, Article VIII of the 1987 Constitution, which provides that: “SECTION 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may be established bylaw. © Philrock, Ine. v. Construction Industry Arbitration Commission, 1959 SCRA 632 [2001]. Asian Construction and Development Corporation v. ‘Sumitomo Corporation, 704 SCRA 332 [2013], pp. 345-346 © Metro Construction, Inc. v. Chatham Properties, Inc., 965 SCRA 697 (2001. “ ABS-CBN Broadcasting Corporation v. World Interactive Network ‘Systems (WINS) Japan Co., Ltd., 544 SCRA 308 [2008], pp. 318-820. Fuxpawenrals oF AUTERNATIVE 25 Disrovs: ReSoLvTION Judicial power includes the duty of courts of jus- tice (o settle actual controversies involving rights which are legally demandable snd enforceable, and to determine whether or not there has heen grave abuse of discretion Ameunting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.” GEmpbasis supplied) In a domestic arbitration, how-ver, i the arbitral tribunal, in the exercise ofits authority to resolve or defer the resolution of te frolimmary issue on its juridietion over the arbitrati IHENE-ople To defer the resolution of the jurisdictional issue until the imal rendition of the arbitral award, none of the partie®’can Set judiciat relief from the deferivent. Motions Tor Teconsidera- tion, appeals and petitions for certiorari are not available to chal- Tenge the decision of the arbitral tribunal to defer the resolution of the preliminary jurisdictional issue.” The remedy of an aggrieved party is to proceed with the arbitration and petition the court for the setting aside of the arbitral award on the ground that the arbi- tal tribunal exceeded its powrere." Similarly, a petition for review under Section 43 of the 1997 Ruies of Civil Procedure is generally an available remedy* for the review of decisions and awards ofDR providers end practitioners because said remedy is applicable for the following judgments or final orders: “SECTION 1. Scope.—This rule shall apply to appeals from judgments or final orders of the x x x voluntary arbitra: tors authorized by Inw.” (Rule 13, 1997 Rules of Civil Proce- dure; emphasis supplied) So also, in view of their quasi-judicial character, the civil ability of ADR providers and vrrctitioners for acts done in the performance of their duties is the same as that for public officers as © Rule 8.20, Special ADR Rutes. article 6.34, TRR; Section 24, Avbitration Law. © Rule 8.20, Special ADR Rules; sce also Asian Construction and De- velopment Corporation v, Sumitomo Corporation, id. pp. 345-346, citing Philrock, Inc. v. Construction Industry Arbitration Commission, id, pp. 849-644,26 Aurore Disere Resoumos provided for under Section 38(1), Chapter 9, Book I of the Adminis- trative Code of 1987,* which provides: "Soc. $8. Liability of Superior Ojficers.—(1) A public of ficer shall not be civilly liable for aets done in the performance of his official duties, unless there is a clear showing of bad faith, malice or gross nogligence.” (Emphasis supplied) Preference for ADR ‘There is a clear preference for the use of alternative dispute resolution methods over the court trial system. Even before the advent of the ADR Act of 2004, Article 2030 of the Civil Code of the Philippines already instructs the courts to suspend proceedings if the possibility of settlement through the different modes of alter- native dispute resolution is present. Hence, even if a case is al ready pending in court, either party may, before or during the pre- trial, file a motion for the court to refer the parties to alternative dispute resolution. And, even after the pre-trial, the parties may jointly move for the suspension or dismissal of the action to allow a ‘compromise agreement. Thus: “Article 2080. Every civil action or proceeding shall be suspended: @)_ If willingness to discuss a possible compromise is, ‘expressed by one or both parties; or (2) fit appears that one of the parties, before the com: mencement of the action or proceeding, offered to disc ‘possible compromise but the other party refused the offer. ‘The duration and terms of the suspension of the eivil ac- tion or proceeding and similar matters shall be governed by such provisions of the rules of court as the Supreme Court shall promulgate, Said rules of court shall likewise provide for the appointment and duties of amicable compounders.” ‘The Supreme Court, in the case of Koppel, Inc. v. Makati Ro- tary Club Foundation, Inc., made a clear and categorical decla- * Section 5, ADR Act; Article 1.5, IRR, “705 SORA 142 [2018], pp. 167-169, FUNDAMENTALS OF ALTERNATIVE 2 Disptrri, Resoutrrion ration that judicial proceedings Aisregarding arbitration agree- ments, heyond the point when the parties should have been re- ferred to arbitration, are null and void, and the decisions ren- dered therein shall be reversed and set aside in order to allow the remand of the case to the trial court and the referral of the dis- pute to arbitration in accordance with the arbitration agreement. If the alternative dispute ro:elution efforts materialize and result in # settlement agreement, cither party may submit the ag- reement to the court before which the action is pending" and move for the approval thereof. If the court finds that the settlement agreement is not contrary to law, morals, public policy or public order, it shall approve the same and render judgment based thereon. Once s0 approved, either party may ask for the execution of the agreement in the sarme manner that a judgment is executed” if necessary to compel the other party to comply therewith. Office for Alternative Dispute Resolution (Sections 49 and 50, ADR Act; Articles 2.1 to 2.3, IRR) In order to maximize the berefits of ADR and to ensure the < smooth and effective implementat'on of the provisions of the ADR Act of 2004 and its IRR, ar well as R.A. No. 876, the ADR Act of 2004 created the Office for Alternarive Dispute Resolution (OADR), which is attached to the Department of Justice. It is headed by an Executive Director appointed by the President upon the recom- mendation of the Secretary o istice.”™ Among the principal objectiv OADR are the following: 1. To promote, develop and expand the use of ADR in the private and publi sectors through information, education and communieation;* . powers and functions of the 2. To assist the government to monitor, study and evaluate the use by the public and private sectors of ADR, and rec- “ Article 7.5, IPR. © Rale 39, 1987 Rules of Civil Procecure. * Section 49, ADR Act of 2004; A-ticle 2.1, IRR. © Section 49(a), ADK Act of 2004; Article 2.3, IRR,ommend to Congress needful statutory changes to de- velop, strengthen and improve ADR practices in accor- dance with world standards; 8. To act as appointing authority of mediators when the par- ties agree in writing that it shall be empowered todo so;* an 4, To compile and publish a list or roster of ADR provid- ers/practitioners, and to compile a list or roster of foreign or international ADR providers/practitioners."* * Section 49(a), ADR Act of 2004; Article 2.8(b) and (c), IRR. ™ Article 2.2(a), IRR. Article 2.3(f) and (g), IRR. CHAPTER 3 MEDIATION UNDER HE ADR ACT OF 2004 Mediation in General (Sections 7 and 8, ADR Act) Among the forms of alterna’.ve dispute resolution, mediation and arbitration are the n:ost common and popular. Mediation, as defined under the ADR Act of 2004 is “a volun- tary process in which a mediator. selected by the disputing parties, facilitates communication and ne.rotiation, and assists the parties in reaching a voluntary agreemer : regarding a dispute." The same definition is carnied over to the implementing Rules and Regula- tions of the ADR Act of 2004 (B® Excluded from the coverag: of the ADR Act are the court- annexed mediation, which is a “n ediation process conducted under the auspices of the court,” and cc urt-referred mediation, which is a ‘mediation erdered by a court to be conducted in accordance with the agreement of the parties whin an action is prematurely com- menced in violation of such agreement.” Specifically, court annexed mediation (CAM) is that. conducted prior to the pre-trial “where the judge refers the par ies to the Philippine Mediation * Section 3(q), ADR Act. * Article 1.6, B.6, IRR. » Section 31), ADR Act; Article 1.6, B.3, IRR, “Section 3(m), ADR Act; Article 1.6, B.4, IRR,Aumewarve Disvure Resoumos ommend to Congress needful statutory changes to de- velop, strengthen and improve ADR practices in accor. dance with world standards; 3. To act as appointing authority of mediators when the par- fies agree in writing that it shall be empowered to do s0;" an 4. To compile and publish a list or roster of ADR provid- ersfpractitioners, and to compile a list or roster of foreign or international ADR providers/practitioners.* “ Section 49(a), ADR Act of 2004; Article 2.9(b) and (e), IRR. Article 2.2(a), IRR. “ Article 2.3(f) and (g), IRR. CE APYER 3 MEDIATION UNDER 7 HE ADR ACT OF 2004 Mediation in General (Sections 7 and 8, ADR Act) Among’ the forms of alterna’.ve dispute resolution, mediation and arbitration are the n:ost common and popular. Mediation, as defined under the ADR Act of 2004 is “a volun- tacy process in which a mediator. selected by the disputing parties, facilitates communication and n¢ sotiation, and assists the parties in reaching a voluntary agreeme: : regarding a dispute.” The same definition is carmind over to the implementing Rules and Regula- tions of the ADR Act of 2004 28 Excluded from the eoverag: of the ADR Act are the court- ‘annexed mediation, which is a “n ediation process conducted under the auspices of the court,” and cc irt-referred mediation, which is 2 ‘mediation erdered by a court to be conducted in accordance with the agreement of the parties wh:n an action is prematurely com- menced in violation of such ngreement.~ Specifically, court: annexed mediation (CAM) is that conducted prior to the pre-trial “where the judge refers the par ies to the Philippine Mediation Section 34q), ADR Act. * Article 1.6, B 6, IRR. * Section 3(1), ADR Act; Arucle 1.6, B.3, IRR. *Soction 3m), ADR Act; Article 16, BA, IRR.30 Aurernative Dispute Resovurion Center (PMC) for the mediatio mn of their di ite accredited mediators.”> eae > te ined anc Likewise excluded from the coverage of the ADR Act is the conciliation conducted by the lupong tagapamayapa und pongkat ng tagapagkasundo under Chapter 7, Book Il of R.A. No. 7160 (The Local Government Code of 1991), and the judicial dispute resolution (JDR)’ which is the mediation, conciliation and early neutral evaluation process conducted by the judge of a pendir 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 person who conducts the mediation is called the media tor, and the parties thereto are the mediation parties. All other parties who take part in the process are called non-party partici- pants who can either be witnesses, resource persons or experts. Classification of Mediation As a form of ADR, mediation is non-evidentiary or non-mevit based. Compared with arbitration which takes into account the morits of the case in the rendition of the arbitral award, me: focuses on the facilitation of communication and negotiation be- ‘tween 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, ang must abstain from expressing his personal opinion on the rights ‘and duties of the parties and the merits of any proposal made.” ion * Consolidated and Revised Guidelines to Implement the Hxpanded Coverage of Court-Annexed Mediation (CAM) and Judicial Dispute Reso- ution (IDR). o * See also Koppel, Inc. v. Makati Rotary Club Foundation, Inc., 105 SCRA 142 (20181, pp. 165-166. ” Article 2.10, IRR. Meoixrion Upek stu ADR Act oF 2008 31 On the basis of the structure of the ADR provider, mediation is either institutronad when admin‘stered 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 institu- tion shall include an agreement: 1. To be bound by the internal mediation and administrative policies of such institution; ana 2. To have such rules govern the mediation of the dispute and for the mediator, the parties and their respective ‘counsels and non-party participants to abiae by such rules. Place of Mediati In order to promote solf-determination and party autonomy of the mediation parties, they are g'ven the freedom to agree on the place of mediation. Iu; the absence of such agreement. the place of mediation shall be any place corvenient and appropriate to all parties. This is the defau/t 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 hy the parties; 3. Exchange by the parties: 4. Summary of issues 5. Generalization and evaluation of options; and 6 Closure ‘Articles 1.6, B.\ and 2, 1RR. "Section 16, ADR Act: Article 3.19, IRR. " Saction 18, ADR Act. ™ Article 3.17, IRR»” Avrernanive Dispute Resowvrion The foregoing process, however, is not obligat ocess, is ne jory and the par. ties, under the principles of self-determination and party sate. omy, may choose the procedure that will govern their mediation. The mediation process shall be held in private unless the par- Sies consent to the presence of persons other than themselves, their Tepresentatives and the mediator. ‘The mediation shall be closed and concluded {i) by the execu: tion of a settlement agreement by the parties; lii] 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 ¢ and 8, ‘The decision-making authority rests in the parties, sputes; Confidential and Privileged Nature of Medietion Communication (Sections 9, 10, 11, and 12, ADR Act) ‘The ADR Act of 2004 maintains the confidentiality of the me- diation 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 rela. tionship or interest, either permits a witness to refrain from giving testimony he otherwise could be expected to give, or permits somie- ‘one, usually one of the parties, to prevent the witnesses from re- * Section 2, ADR Act; Article 1.2(a), IRR. Mepiarton Usps su ADR Act oF 2004 33 yealing 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 ensi:ring the privilege is by declar- ing the privileged information inadwissible 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 tha‘ would create a reasonable expectation on chalf 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 conficential if obtained under circumstances that would create a reasonable expectation on behalf oi the source that the information shall not be disclosed. Confidential information includes: 1. Communication, oral or written, made in a dispute resolu- tion proceeding, including any memorandum, note oF work product of the neutral party or nen-party partic- pant; 2. An oral or written statement made or which occurs during tie mediation or for purposes of considering, conducting, participating, initiating, continuing or reconvening me. diation or retaining a mediator; and 3. Pleadings, motions, man. and reports filed or evalvation, stations, written statements ubminted in arbitration or for expert ‘The foregoing list of confidential information is not exclusive ® Remedial Law, by Oscar M. Hervera, p. 315, * Section 3th), ADR Act; Article 1.6, A(7), IRR. "Td,Legal Effects of Confidential and Privileged Nature The legal effects of the confidential and privileged nature o information obtained during mediation are the flowy: nee 1. A party, mediator or non-party participant may refuse to disclose and may prevent any other person from disclos- ing 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 dis- covery does not become inadmissible or protected from discovery solely by reason of its use in medial 3. In an adversarial proceeding, the following persons in- volved or previously involved in mediation may not be compelled to disclose confidential information obtained during mediation: Parties to the dispute; Mediator or mediators; Counsel for the parties; ‘Non-party participants; ‘Any person hired or engaged in connection with media~ tion as secretary, stenographer, clerk or assistant; and £ Any person who obtains or possesses confidential in- formation by reason of his profession. In other words, practically all of the parties, inediator, and non-party perticipants are bound by the probibi- tion 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 impar- tially.” eae oe » Section {b), ADR Act; Article 3.21(b), IRR. ™ Section 6), ADR Act; Article 3.21(c), IRR. * Section 9(4), ADR Act; Article 3.21), IRR. » Section 9(e), ADR Act; Article 3.21(e), IRR. ica oases raed 36 5. A mediator may not be called to testify to provide infor- mation gathered in mediati- a.” Exceptions Based on or Social Justice cement, Nature of Proceedings, Crime ‘The privilege does not attach tr: or exist the following com- munication’ 1. Those contained in an agreement evidenced by a record authenticated by all parties to the agreement. This kind of information is not confider:tial in the first place because the parties, by reducing ~neir agreement into writing, have impliedly monifested their intention to make use of the written agreement for some future legal purpase. 2. Those avuilable to the public or made during ¢ session of mediation which is open, vi 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 confident:al ‘A threat or statement of « plan to inflict bodily injury or commit @ crime of violence. The State has a greater inter- est to prevent acts of violence than to Frotect the confi- denticlity of information obvained in mediation. 4. Communication intentiona!ly used to plan, attempt to commit, or commit, w crime, ur conceal cn on-going crime fr criminal activity. As in the immediately preceding ex- ception, the State has a greater interest to prevent the commission of crimes than to protect the coufidentiality of informatior. obtained in mediation. 5. Communication sought or offered to prove or disprove chuse, neglect, abandonment, or exploitation in a proceed- ing in which @ public agency is protecting the interest of fan individual protected by law. ‘The violator eannot con © Section 9), ADR Act: Article 3.21(0, IRR, Section 11a), ADR Act: Article 3.2319), IRR,r.. Auternanive Dispure Resowvtion Legal Effects of Confidential and Privileged Nature The legal effects of the confidential . fi ‘the nntial and privileged nature of information obtained during mediation are the following 8 1. A party, mediator or non-party participant may refuse to disclose and may prevent any other person from discios: ing confidential information.”” 2. Confidential information shall not be subject to discovery and shall be inadmissible in any adversarial proceedi whether judicial or quasi-judicial. However, evidence or information that is otherwise admissible or subject to dis covery does not become inadmissible or protected trom discovery solely by reason of its use in mediation.” 3. In an adversarial proceeding, the following persons in- volved 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; e. Counsel for the partie: d.Non-party participants; fe. Any person hired or engaged in connection with media- tion as secretary, stenographer, clerk or assistant; and ‘Any person who obtains or possesses confidential in- formation by reason of his profession. In othor words, practically all of the parties, mediator, ‘and non-party participants are bound by the prohibi- tion 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 impar- tially.” ™ Section 9(b), ADR Act; Article 3.21(b), IRR. ” Section 9(c), ADR Act; Article 3.21(c), IRR. * Section 9(€), ADR Act; Article 3.21(0), IRR. * Section 9(e), ADR Act; Article 3.21(c), IRR. Mepiavion Uxnew tr ADR ACT OF 2008 35 5. A mediator may not be called to testify to provide infor- mation 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 com- munication:” 4, 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 puclic or made during a session of mediation which is open, o 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 « plan to inflict bodily injury or ‘commit « erime nf violence, The State has greater inter- est to prevent acts of vielence than to protect the confi- dentiality of information e’tained in mediation. 4. Communication intentionally used to plan, attempt to commit, or commit, a critse, or conceal an on-going crime or criminal activity. s in the immediately preceding x- ception, the State has + greater interest wo prevent the commission of crimes {han to protect the confidentiality of information obtained in n-ediation, Communication sought or offered to prove or disprove abuse, neglect, abandonment, ar exploitation in a proceed: ing in which a public az-ncy is protecting the interest of fon individual protect Ly law, The violator cannot eon- * Section K0, ADR Act: Article 32100, IRR. ® Section 11a), ADR Act: Articte 3.28%e), IRR-_- Aurennarive Diseure Resouvtion ceal the abuse he has cominitted against a pr vidual by using the benefit ofthe ADR Act, Nowsven dng exception does not apply where a child protection matter is referred to mediation by a court or a public agenc which participates in the child protection mediation. Communication sought or offered to prove or disprove a claim or complaint of professional misconduct or malprac- tice filed against a mediator in a proceeding. The mediator cannot be allowed to hide under the protective mantel of confidentiality for his own misconduct or malpractice dur- ing the mediation. 7. Communication sought or offered to prove or disprov claim or complaint of professional misconduct or malpra tice filed against a party, non-party participant, or repre- sentative of a party based on conduct occurring during mediation. Like in the case of a mediator, the parties, their representatives, or non-party participants cannot be allowed to hide under the protective mantel of confidenti- ality 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 inter fest in protecting confidentiality, and the mediation communication is sought or offered in:” 1. Acourt proceeding involving a crime or felony; 2. A proceeding to prove a claim or defense that under the Jaw is sufficient to reform or avoid a liability on a contract arising out of mediation. * Privately” or “in chambers” * Section 11(b), ADR Act; Article 3.23(b), IRR. ‘Mepiation Uspix tin ADR Act OF 2004 37 As in the case of the exceptions, hased on agreement, nature of proceedings, crimes or social justice, evidence admissible by reason of exceptions based on pubic policy have the same limited extent of Limited Use of Exempted Eviéonce Notwithstanding the ing licability of the privilege and the confidential nature of mediation communication in the foregoing instances, only sucl portion of the communication necessary for the application of the excoption can be admitted in evidence. And the admission of the evidence for the limited purpose of the excep- tion does not render that evidence admissible for any other pur- post Privilege of the Mediator ‘The mediator himself is bound by the confidential and privi- loged nature of mediation communication. He is required to keep in utmost confidence oll confidential information obtained in the course of the mediation process, ancl to discuss issues of confidenti- ality with the mediation parties before beginning the mediation process.” A mediator may not be compelled to provide evidence of a me- diation communication or testify in such proceeding.” He may not anake a report, assessment, evaluation, recommendation, finding or other communication regarding a mediation to a court or agency oF other authority that ruling on a dispute that is the subject of a mediation, excep: make 1. Where the mediation occurred or has terminated, or where a settlement was voached; or tion 110d), ADR Act; Article .28td, IRR. * Id. * Article 9.8, IRR. ® Seetion 11(e), ADK Act; Article $.23(@), IRR, ection 12, ADR Act; Article 8.2, IRR,er Aurennanve Dispur Resouvrion 2. As permitted to be disclosed under sectic Act, ie, the disclosure of known. cae ae individual would consider likely to affect the impartiality of the mediator, including financial or personal interost in the outcome of the mediation and existing or past rela- tionship with a party or foreseeable participant mediation.” pesispanc in ie ADR nable Waiver of Confidentiality The protection of confidentiality and privileged nature of me diation communication prescribed under Section 9 of the ADR Act, is susceptible of waiver. ‘The waiver can either be expressed such as when it is con- tained 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 testify- ing or presenting a witness to testify on confidential and privi leged 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 not party participant himself discloses the erstwhile confidential in- formation. Also, a person who discloses confidential information is barred from invoking the privilege as to the remainder of the in- formation necessary to a complete understanding of the previo disclosed information.” Similarly, a person who discloses or makes fa representation about mediation is precluded from asserting the privilege to the extent that the communication prejudices another Jn the proceoding and it is necessary for the person prejudiced to respond to the representation of disclosure.” * Section 18, ADR Act; Article 3.7, IRR. ® Section 10, ADK Act; Article 3.22, IRR. “Td. "Id. Mrination Unbrx THE ADR Act OF 2004 39 These principlee are rated or fair play and equity such that a person who benefits from a diselosit-e nught not to prevent another from disclosing vr securing the nisrlosure of the rest of the erst- while confidential information .. xy be necessary to overcome the prejudice caused by the discinsure The Mediator (eetion 13, ADR Act) In consonance with the ADR policies of party autonowy and self-determination, the mediation parties are given the freedom to select their mediator and they moy request the Office for Alterna- tive Dispute Resolution (QADR: t provide them ath a bast or roster of its certified mediators, anv! their resumes” The OADR ia an agency attached to the Departni-nt of Justice which prinapally acts as the appointing authority of riediators and arbetrators ™ ‘The role of the inediater is vers crucial that hus presence and ‘competence must be ensurud., If the mediator selected hy the parties is unable to act for any reason, the parties may. upon being mformed of such fact, select another medistor " .\ mediator who refuses to set napelled to withiraw from the mediation proceedings under an: ~> he “allowing exreumtances” as such may withdraw or may 1. If any of the parties rvqin ste the medotor to wuthdres. This promotes cnd strenzthens parry autonomy and self determination in the select:on of the media 2. The mediator docs not have the qualificenons, training land experienice to enable mimi #9 meet the reasonable expec tations of the parties. No special quahficaton by back- ground or profession is recuired of mediators.” However, if'a mediator is selvctel be the partes on account of hie special quelifications whic turn out to be false or inscca- tute, the mediation artes may ask for his withdrawal. Apticle 4, Te » Article 2.8, IRR. » Article 86. IRR- ALTERNATIVE Disruts Resouution the mediator may be requested by h ame disclose his qualifications to mediate 3. The mediator’s im; wartiality is in question. An impar settlement of the dispute is one of the objectives wt ADR Act of 2004. 4. The continuation of standard. 5. The safety of any one of the parties will be jeopardized. 6. The mediator is unable to provide effective services 7. Incase of conflict of interest. 8. Other instances provided for under the IRR. the process will violate an ethical A mediator is generally precluded from making a report, av sessment, evaluation, recommendation, finding or other communi cation regarding a mediation. Unlike an arbitrator, he cannot rule ‘upon the merits of a claim and render an award thereon except in mediation-arbitration where the mediator, upon an agreement: 07 the parties in writing, is eppointed as the arbitrator for the arbi- tration phase of the proceedings.” Duties and Functions of Mediators Apart from the general duty of mediators to conduct mmedia- tion, mediators are required to perform 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, train- ing and experience are known to and accepted by the parties; serve only when his qualifications, training and experience enable him to meet the reasonable ex- pectations of the parties and not to hold himself out or give the impression that he has qualifications, train- ™ Article 7.8(b), IRR; Rule 2.7, Special ADR Rulk Mrniation Usoee. rie ADR Act oF 2006 aL ing and experience tha’. he does not have; and, upon the request of a meia:ion party, disclose his qualifi- cations to mediate a dis ute” }. On impartiality. Before accepting @ mediation, the mediator should make an inquiry that is reasonable under the circumstanos to determine whether there are known fects that «1 reasonable individual would consider likels to affect his impartiality, and disclose any such fact known er learned as soon as practica- ble." These disclosures may include a financial or per- sonal interest in the ruteome of the mediation and any existing or past re ationship with a party or fore- seeable particinant i the mediation. During the mediation a. Confidentiality ax «oevs discussed. On consecit anc se’*stermination. A mediator shall exert reasonable cfiort- t> ensure that cach party un- derstands the nature and character of the mediation proceedings, and that each party is free and able to make whatever choices he desires regarding his par- ticipation in the mediacion as well as his specific set- tlement options. ¢ On promotion of respect and control of abuse of proc- ess. ‘The mediator shall encourage mutual respect be- tween the parties. an.i shall take reasonable steps, suiject to the princip'r of self-determination, to limit abuses of the mediation: process. ‘A mediator is alowed to change casts, reasonable fees and charges against the parties bet he is under obligatior to folly dia- close and explain the basis sh ™ Section 1a, ADE Nets Artie 7S IRR © Section 18, ADR Act: Artsle U7 IRR © Artite 38.9, IRR. © Article 3.12, IRR._ ee Inan ea hoc ‘mediation, the parties are free to make arrangements as to mediation costs and fees.” In an institut medintion, mediation corte shall include. the aime charges of the mediation institution, mediator's fees and associated ssoci their own If the mediator withdraws from the modiation, he shall return ‘any unearned fee and unused deposit. He shall not enter into a fee ‘arrangement contingent upon the results of the mediation or the amount of the settlement” because by doing so, he acquires financial and Personal interest in the outcome of the mediation which compro- mises his impartiality. He, or any: member of his immediate family his agent, shall not request. solicit, receive, or accept any gift or any ‘type of compensation other than the agreed fee and the reim| ment 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 tc the court for approval. However, there can be no execution of the concivding agreement ‘unless it has first been judicially approved." The parties, by mo- tion, 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. © Article 3.25, IRR. “ Article 8.26., IRR. Article 3.11, IRR. “ Acticle 3.13, IRR. “Article 2037 [Civil Code]. A compromise has upon the parties the ‘effect. and authority of res judicata; but there shall be no execution excep in compliance with a judicial compromise.” Mepiatiow Uxner vite. ADR Act OF 2004 43 jeing a by-product of mutual concessions and good. faith of the parties, an amicsble settlement has the force and effect of res judicata even if not judi cially approved. It transcends being a mere contract \vinding only upon the parties thereto, and is akin to a judgment that is subject of eaccution in accordance with, the Rules, x x x™ ‘The following principles apply to these concluding agree- plied, 1. A settlement agreement following a successful mediation shall be prepared by the parties with the assistance of their reepective 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 the Rogional Trial Court (a) where the Principal place of ousiness in the Philippines of any of the parties is located; (b) if any of the parties is an individual, where any of thase individuals reside; or (c) in the Na- tional 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 shail summarily proceed to hear te petition, in accordance with the Special ADR Rules, 5. The parties may agree in the settlement agreement that the meciaior shall become 1 sole arbitrator for the dispute ~ and shall treat the scttienent agreement as an’ arbitral award which shall be subject to enforcement under R.A. No. 876 (The Arbitration Law), © Miguel v. Montanez, 664 SCR®. 345 (20121, p. 8 phasis sup- * Section 17, ADR Act; Articie 3.25, IRR.Auremnanve Disrors Resouuioy of the agreement. Unless llement agreement is pre- ind that a condition prece. lied with.” The Regional will be the venue of the agreement." Trial Court whereat the deposit is made Petition to enforce the deposited settlement 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 porson 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 to wards 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 agroe- ment to resolve their dispute. i ent to comprehend and appreciate the media- . ay ‘and its benefite, as well as the client's greater and personal responsibility for the success of mediation in resolving the dispute 4. Confer and discuss with the clieat the mediation process and substance. © Section 1 (), Rule 16, 1997 Rules of Civil Procedure. * Rule 16.5, Special ADE Rules, © Section 14, ADR Act; Article 3.14, IRR. © article 3.15, IRR. Mroiation Untum te x91 Act oF 2004 45 In the Consolidaied and Revived Guidelines to Implement the Expanded Coverage of Court-Anresse! Mediation (CAM) and Judi. cial Dispute Resolution CIDR», ayro-nd by the Supreme Court in the Resolution dated 11 January <1 s.M. No. 11-1-SC-PHILJA), albeit concerning CAM and .!1 Supreme Court defined the role of lawyers in mediation as folinw ‘Lawyers may atwond msdhation proveedings in the role of adviser and consultant "their cents, dropping heir combative role in the aul'u icative process. aad git ing up their dominant role in judicial tala. They must accept a lese directive role in orier to allow the parties ‘more opportunities to erat their wn agreement. In particular, they sha‘! perform the following fune- tions: 1. Help. their clients cor prehend the mediation process and its benefits ant low them to assume greater personal responsibility °n making decison for te success of mediation in resnl-ing toe dispute 2, Discus with their cients the following: ‘The substantive sues involved in the dis pte, solunen an terms of um portance to Understanding th side and and needs Need for moro iniormation or farts to be Sgatherest or oxchasged wih the other made foe informed deviston-making. 4 Dossible Mars oni ye options but sereesing the newt 10 "he enea-minded about other possibilities The best, worst, and mast kety alterna: tives toa negotiated agreement.Auternative Dispute Resovtion 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 ease 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.” CHAPTER 4 ARBITRATION IN GENERAL Concept of Arbitration her ‘As defined under the ADR Act, ar} in accordance with the agreeinsoeorhe parties GF Tules promul- gated pursuant to the ADK Act, rasolve a dispute by rendering an award.’ It has also heen defined nd distinguished from the court trial system as follows: “sc x x [Aln arrangement for ta cing and abiding by the judg- rent of selected persons in sore disputed matter, instead of carryiag it to established tribu vals of justice, and is intended to avoid the formalities, the Gel-y, the expense and vexation of ordinary litigation.” ‘The primary distinction between arbitration and mediation is that, in the former. it is the arbity ator that decides the dispute and renders_an_arbitrel_award to conclude x i while in the latter, it is the partics themselves who enter into and execute a mediated settlement agivement to conclude the mediation proceeding [As to the role of evidence ard the merits of the ease, arbitra- tion is a merit evidence hased! for of ADR, Section 3(), ADR Act, Article :.6, AG), IRR. Unitside Soles Realty crs? sources Corporation v. Titan-Tkeda Construction and Development Corpo ation, 511 SCRA 335 (2006), p. 356. 47Atrenanve Dispute Resouvrion A completed arbitral proceeding is concluded by an_ arbitral award constituting the partial or final decision by A arbi ee z resolving the issue in a controversy.""The arbitral award may come in the form of an award on agreed terms, consent award, or award based on compromise if the parties settled their dispute arnicably. Kinds of Arbitration ally, there are two types of arbitration, <@fipulsory ahd fitary.Axbitration is voluntary if it: “x x x involves the reference of a dispute to an impartia! body, the members of whie-are-chosen-by the parties theniselvus, which’ parties freely consent in advance to abide by the’ arbitral award issued after the proceedings where both parties had the ‘opportunity to be heard.”* On the other hand, compulsory arbitration is: “x xx the process of settlement of [labor] disputes by a govern ‘ment agency which has the authority to investigate and to make ‘an award which is binding on all parties, and as a mode of arhi- tration where the parties are compelled to accept the resolution of their dispute through arbitration by a third party.” ‘As thus defined, the ADR Act and its IRR govern_voluntary, arbitration but not compulsory arbitration. a Of particular importance is the classification of arbitration based on the seat of arbitration and the presence of foreign cle- ments. Under this classification, arbitration is either domestic, igternational commercial or foreign. * Section 8(0, R.A. No. 9285. « "Gniwide Sales Realty and Resources Corporation v. Titon-Theda Construction and Development Corporation, supra. Senguet Corporation v. Department of Environment and Natural Resources-Mines Adjudication Board, 545 SCRA 196 [2008], pp. 209-210, Ating Reformist Union of RB. Liner, Inc. v. NLRC, 265 SORA 719 119971, p. 728; Ludo & Luym Corporation ». Saornido, 895 SCRA 451 (2003), pp. Anorrration: 2s GENERAL 49 According to the ADR Act, aruitration is domestic i tis not “internatinnal in charactor On the «ther handeaPbitraton i iter if any of the following inst 1. The parties’ places of business, which at the time of te oon lusion of the arbitration vig cement, is in different states; 2. The place of arbitration provided in the arbitration agree- ment and in which the parties have their places of busi ness, is outside che Philippines, 3. ‘The place where a substantial part of the obligation is to be performed er the piace with which the svbject matter of the dispute is most clo-ely connected, and in which the parties have their places of business, is outside the Phil- appines; or 4, The parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country. the compones ‘place of perfo: Philipines, Domestic arbitration is sav (Rud. No. 876), the Model Law, fons of the ADP. at It is international if any che above-enumerated instances is present, Thus, if the partics’ places of business, place of arbitration, place of performance of a substantia’ part of the obligation, or place Where the subject matter of the dispte is most closely connected, is outside the Philippines. u sn is international in character. is at the same timpoonmmersiaP it cover’ matters «ttsins b-rcttionshi 3 nature, whether contractaat oF HOt ( arbitration ul « rbitration. In defining the ex- and specific pro AK internat * Section 32, ADR Ast. . * Article 1.6, 1), IRR. * Section 3(@), Article 1.6, But), IRF50 Avrenvanive Dispure Resovution tent of commercial relationships covered by this kind of arbitra. tion, the IRR sought to expand rather than delimit its coverage. Hence, the IRR, instead of defining commercial relationships gave examples thereof implying that the enumeration is merely descrip tive and not exclusive. An international commercial arbitration with the Philippines as its seat is governed by the ADR Act and its IRR even if the place of arbitration is outside the Philippines, Arbitration is foreign if its seat is outside the Philippines oven 5. Therefore, an infor. national commercial arbitration whose seat is outside the Philip. pines is a foreign arbitration. This is true even if the place of arbi- tration is in the Philippines as long as the seat of arbitration is not the Philippines. The ADR Act and its IRR govern the recognition and enforcement of foreign arbitral awards. In this book, an ICA with the Philippines as its seat is re ferred to as plain “ICA” or “Philippine ICA.” On the other hand, an ICA whose seat is outside the Philippines is denominated as “for: eign ICA.” By providing for a system of arbitration of an international and commercial character, the ADR Act of 2004 opened the Philip- pines as a venue for international commercial arbitration. Policy on Arbitration In Korea Technologies Co., Ltd. v. Lerma,’ the Supreme Couzt had an opportunity to reiterate the judicial policy on arbitration in the following manner: * 542 SCRA 1 [2008], p. 23; citing LM Power Engineering Corpora: tion v. Capitol Industrial Construction Groups, Inc,, 399 SCRA 562 {2005}. See also: Maria Luisa Park Association, Inc. v. Almendras, 588 SCRA 663 [2009], p. 677; Frabelle Fishing Corporation v. Philippine American Life Insurance Company, 530 SCRA 543 [2007], p. 549; Reyes v. Balde II, 498 ‘SCRA 186 [2006], pp. 196-197; Fiesta World Mall Corporation v. Linborg Philippines, Inc., 499 SCRA 332 [2006], p. 339; Sea-Land Service, Inc. Court of Appeals, 327 SCRA 135 {2000}. See also: Gerardo Lavuzu, Jr. & BF Corporation, G.R. No. 174938, October 1, 2014. Annrrearion “6 GENERAL 61 “Being an inexpensive, speedy and amicable method of settling disputes, arbitration — vlong with mediation, coneilia- tion and negotiation —tix cnruvrayed by the Supreme Court. A. Aside fiom unclogging udisiat srckets, arbitration also has- tens the resolution of disputes. especially of the commercial Kkind, {tis thus rogarsed sis Hi. wave of the future in interna tional civil and eomraereial dlispten, Brushing aside a eontrac- tual agreement calling, for arbitration between the parties would be a step buckward.” ducted by courts in viotaticn of arbitration agreements, including the decisions rendered therein, went on to sustain the state policy of encouraging alternative dispute resolution notwithstanding the harsh legal implications that that policy may ereate. The Supreme Court said: “This Court is not wnawate of the apparent harshness of the Decision that itis abou to miake. Nonetheless, this Court ‘mus! rake the eame if only to s:ress the point that, in oar ju- risdietion, bona fide arbitration agreements are recog: nized as valid; and that laws, roles and regulations do exist protecting and ensuring their enforcement as a matter of state potiey. could be the days when courts reat ofhersise valid arbitration agreements with disdain and hostility, if not outright ‘iealov;," and then get away with it, Courts should instead learn to reat alternative means of dis- pte resolution as effective partners in the administration of Justien and, in the ease of arbitration agreements, to afford them judicial restraint, ‘Today, this Court only performs its part in upholding a once disregarded state policy.” Objectives of Arbitration ‘The basic objective of arbitration is to provide a speedy and allowing the partiesAurennamive Disrure ResowTi0n monly accompany ordinary litigatic specially litigation wl ation, especially litigation which goes through the hierarchy of courts." Arbitrator Arbitration is conducted by an-irbitrator or an arbitral com- posed of two (2) or more arbitrators. An arbitrator is the person ‘appointed to render an award, alone or with others, in a dispute that is the subject of an arbitration agreement. An arbitrator bound r who may hjs functions. The Labor Arbiters of thé Arbitration Branch of the National Labor Relations Commission are examples of arbiters, ‘Voluntary arbitrators, by the nature of their functions, act in @_quasi-judicial capacity, such that their decisions are within the scope of judicial review.” A voluntary arbitrator has been charac terized as a “quasi-judicial instrumentality.” Thus: “Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not strictly be considered os 2 quasi-judicial agency, board or commission, still both he and ‘the panel are comprehended within the concept of a ‘quasi judicial instrumentality.’ It may even be stated that it wi to meet the very situation presenied by the quasi-judicial fune- tions of the voluntary arbitrators here, as well as the subse- quent arbitrator/arbitral tribunal operating under the Con- struction Industry Arbitration Commission, that the broader term ‘instrumentalities’ was purposely included in [Section 9 of BOP. Big, 129 as amended by R.A. No. 7902)."* ™ Id.; see also Del Monte Corporation-USA v. Court of Appeals, 351 SCRA 373 [200i], p. 382. * Philrock, Inc. v. Construction Industry Arbitration Commission, 359 SCRA 632 [2001], p. 644, Asian Construction and Development Corpo ration v. Sumitomo Corporation, 704 SCRA 332 [2013], pp. 345-346, * Metro Construction, Inc. v. Chatham Properties, Inc., 365 SCRA 697 2001], pp. 723-724; emphasis supplicd. mTRATION 1S GENERAL Arbitration Agreement (Articles 4.7 to 4.9, IRR) An arbitration agreement ix the agreement of the parties to submit to acitation all or coriin disputes which have arisen or which may arise between them in respect of a defired legal rela- tional whether contractual o i tra cane ck decerch hs dheald have toe‘eoeaat> elements of-a-contrast such as ‘Liconsent of the parties fraaly tien (2)-he eau or consideration and (8) lawful object,” ‘The Supreme Court explained cont nature of an ar- hitration agreement in the case of ('rmoc Sugareane Planters’ Asso- ciation, Ine. (OSPA) . Court of Appels.° Said the Court: gx x An agreemont to arbitrate is a contract, the relation of the partios is contractual, and th> rights and liabilities of the, for arbitration, the onfinare appear, including an_asr.cncn. to arbitrate some specific Thing, and an agreement to bd y the award, either in ex press language er by impl So also, in Cargill Phil Inc. v. San Fernando Regala Treding, Inc,” it was held that “A contract is required for arbitration to take plage and to be hindipe ar-itration 1s a contract and & clause in @ contract pravidin. :i a ail matters in digpute be tween the parties shall be refern:! to arbitration is a contract. al cration any dispute arising iy al the parties is part of the com ‘The provision to submit therefrom and the relation: tract and is itself a contract Likewise, in Thema Processing, Inc. v. Philippine Kingford, Inc.,” the Supreme Court elucisiate:! that: * Article 1.6, AU), IRR ® Article 1318, Civil Code ot ctv 1 iilippines. * 596 SCRA G20 [200) "641 SCRA 31 (20111, 9 "667 SCRA 287 [201 td p.804y - ALIBANATIVE LISCUTE IKESOLUTION “x x x When a party enters into a contract containing a for ‘eign arbitration clause and, as in this case, in fact submits it self to arbitration, it becomes bound by the coutract, by the ar bitration and by the result of the arbitration, conceding AuarreaTion 1 GENERAL 20 may also come in the form of a reference in a written contract to a document containing an arbitration clause such as to make that clause part of the contract therby the capac ofthe ether party to eter nt the con: Arbitration clauses must bé]berally construed conaietght tract, participate in the arbitration and cause the implementa. with the policy of encouraging nlterhative diopute resolution meth- tion of the result. x x x.” ods. Provided such clause is susceptible of an interpretation that covers the asserted dispute, an order to arbitrate should be ranted, Any doubt should be resolved in favor of arbitration,” oath 7 ankecharn ol. ‘There are two (2) modes of submitting a dispute or contro- versy to arbitration depending on the existence or pendency of the dispute or controversy to be submitted for resolution, namely {ian agreement to submit to arbitration, and {ii} a-submission agreo~» a ment. These modes were differentiated in Ormot Sugarcane Plant. a q ers’ Association, Inc. (OSPA) v. Court of Appeals. supra, as follows of Vboudcntof then ; \ else thr ares ere oF clauEe te tobe treayed as a “The foregoing provision: (Section 2, R.A. No. 876] speaks of two modes of arbitration: (a) an agreement to sebmit to a tration some future dispute ssually-etipulated-upen-in-e-sivil-> ® separate agreement such that, oven if-the-validity-of the main contract bofween the porties, and known as an agreement to slwaee oct act is challenged, the arbitration a e aubmit to arbitration, and (b)a agreement to submit an e ee pa ing matter of difference t6-Sfbitrators. termed the subrrission agreement. xx" — Se = ‘An arbitration agreement is formal contrac hence. its va lidity is dependent on the-contract being executed th a particular form. An arbitration agreement “shall be in writing and subscribed by the party to be charged, or by his lawful agent>> Ta Gonzales v. Clima Mining Lid. (G.R. Nos. 161957 and 167954),” the Supreme Court expleined the doctrine as follows: “The separability of the arbitration agreement Ts expel ally significant tothe delpeminstion of whether the invalidity of the main cont ullifies the arbitration clause, Tn- deed, nfics that the invalidity of the main contract, also~ ‘ed to as the ‘Container’ con- tract, does not affect the validity of the-arbitration agreement. Irrespective of tre Tact that the main con- tract is invalid, the arbitration clauselagreement still ins valid and enforceabl .” (Emphasis supplied) “The formal requirements of an agreement to arbitrate are therefore the following: (a) it must be in writing ond (h) it must be subscribed by the parties or their representotives vo ‘The foregoing ruling of the Supreme Cot eran Mich) carlier ruling in the same-case, Gonzales v. Mining Ltd. (GR. No. 161987),” whorein the Supreme Court held that: © LM Power Engineering Corporution v. Capitol industrial Construc- «tion Groups, Ine., supra, pp. 569-570; ‘#erardo Lanuza, Jr, v. BF Corpora- tion, id. * 512. SORA 148 (2007), p. 170. ™ 452 SCRA 607 (20051, pp. 824 jtration agreement may be included in the container which case, it is referred to as an arbitration ciawse-¢r a Smpromissire” or may be constitutetin a separate contract. It <—ascaion 4, Arbitration Law: Article 47, 1D ™ Ormoc Sugarcane Planters” Association, Inc. (OSPAj v. Court of Appeals, supra, p. 642. : Insular Savings Bank v. Far East Baik and Trust Company, 432 ‘SCRA 145 [2006], p. 152; citing Custodio Parlade, “Alternative Dispute ‘Resolution Act of 2004,” 2004, p. 275.“Arbitration before the Panel of Arbitrators is proper ee ee ‘some provisions of the contract between thein, which needs the interpretation and the application of that particular knowledge and expertise possessed by members of that Pancl. It is Proper when one of the partick vepudiates the existence or-vatidity of such contract or bgreement on the ground of fraud or oppression #s in this case. The validity of the contract cannot be subject of arbitration proceedings tions of fraud and duress if the execution of a contract are matters within the jurisdiction of the ordi- courte of aw Tha ston aw ei nature and ire the apy ‘and interpretation of laws and juris- prudence which is necessarily a judicial function. Bt We agree that the case should not be brought under the ambit of the Arbitration Law, but for a different reason. The question of validity of the contract containing the ‘agreement to submit to arbitration will affect the appli- cability of the arbitration clause itself. A party cannot rely on the contract and claim rights or obligations un der it and at the same time impugn its existence or v lidity. Indeed, litigants are enjoined from taking inconsistent positions. As previously discussed, the complaint shovld have been filed before the regular courts as it involved issves which ‘are judicial in nature.” (Emphasis supplied) Explaining the justification for the reversal of the above: ‘earlier ruling, the Supreme Court said in the subsequent decision in G.R. Nos. 161957 and 167994 that: “This brings us back to G.RONo, 161957. The adjudica- tion of the petition in G.R-No. 167994 effectively modifies part of the Decision dated 28 February 2005 in G.R. No. 161 Hence, we now hold that the validity of the contract con- the agreement to-submit to arbitrati is rm tnvarbitratee Fuling would suggest that a por mererery [ ;e main contract js sufficient to avoid arl is exactly the situttion that the separability do well a8 jurisprudence applying it; seeks wr avoid. x x fabw _ A mote extensive explanation for the difference in the Gonza- les dacsions waa presented by the Supreme Court in Koppel, Inc. v. Makati Rotary Club Foundation, Inc.” as follows: ee ‘sg ROE it na the Coa han wat chetier thSSMGB (Panel of arbitrators of the Mines and enrlonces Caren has jrisdielin over that pertcser tration complnint. Stated otherwise, the question was whether the complaint-for-aPbitration rsiuas prbiteable isbUe that the PAMGR een take cognizance ft. Gonzales decided the issue in the negative. In holding that the PA-MGB was devoid of any jurisdiction to take cogni- zance of the complaint for arbitration, this Court pointed out to the provisions of R.A. No. 7942, or the Mining Act of 1995, which granted the PA-MGB with exclusive original jurisdiction only over mininy disputes, i.c., disputes involving “rights to mining areas," “mineral agreements or permits,” and "surface owners, occupants, elaimholders vr concessionaires” requiring —— the technical knowledge and experience of mining authorities in order to be resolved. Accordingly, since the complaint for arbitration in Gonzales did not raise minthg disputes as contemplated ander R.A. No. 7942 but only issues relat- ing to the validity of certain mining related agreements, this Court held that such complaint could not be arbi- trated hezore the PA-MGI:. 1t is in this context that we mate the pronouncement now in discussion: Arhitration bi sehen there is a di pro ore the Panel of Arbitrators is proper only rocment elween the parties as to some mns of the contract hetwe an them, which needs interpre- tation and the application of tht particular knowledge and ex- pertite possessed by membre f that Panel. It is not proper puiliatus the existence or validity of such contract or agreement on the ground of fraud or oppression ‘in this case. ‘The validity of the contract cannot be the Subject of arbitration proceedings. Allegations of fraud and Guress in the execution of a contract are matters within the jur risdietion of the ordinary courts of law. ‘These questions are Tegal in nature and require the application and interpre- tation of Inws and jurisprudence which is necessarily a judicial function. (Emphasis sapplied) when one of the particAurexxarive Dispute Resowwtion ‘ie The Court in Gonsutes did not not simply base its rejection of the complaint for arbitration on the ground that the locus Faised therein, ie he jail of contra peice Te real colstderaon buhind to Sang sex on laced by Rt: that such issue is rendered rbitrable bef’ ed non-arbitrable before the PA-MGB. As stated beforehand, R.A. No. 7942 clearly limited the jurisdiction of the PA-MGB only to mining disputes." Jn Cargill Philippines, Inc. v. San Fernando Regala Tracing, Inc..™ the doctrine of separability was further explained in the following manner: “xxx [Ain arbitration agreement which forms part of the main contract shall not be regarded as invalid or non-existent just because the main contract is invalid or did not come into existence, since the arbitration ‘Agreement shall be treated as a separate agreement is dependent of the main contract, To reiterate a contra ruling would suggest that a party's mere repudiation of the ‘contract fa sufficient to avord arbitration at that 1x. the situation that the separability doctrine sought to avoid. Thus, we fat even the party who has repudiatert {the tain contract is not prevented from enforcing its arbitra ttorreisuse.” (Emphasis supplied) ‘Also, in Koppel, Inc. v. Makati Rotary Club Foundation, Ine. supra,, the legal implications of the dectrine of separability was explained as follows: “Under the doctrine of separability, an arbitration agreement is considered as independent of the main contract. Being a reparate contract in itself, the arbitration agreement may thus be invoked regardless of the-possible nullity er inva: Hidity ofthe main contract. — a ™ 641 SCRA 31 [2011], pp. 46-47; reiterated in Koppel, Inc. v ‘Rotary Club Foundation, Inc., id., pp. 161-162. AnniTRATION iN GENERAL 59 Once again instructive is Cargill, wherein this Court hheld that, as a further conserquaner OF EHC doctrine of separabil- iy, exan_the very” party who Fepudates the-mein-con- | pue Process in Arbitral Proceedings In line with the principle that ADR providers and practitio- ners, including arbitratore, act in» quasi-judicial capacity,” and that they are quasi-judicial agencies or instrumentalities,” the principles of administrative due process equally apply to arbitral Jroveedings. Thus, in Equitable PCI Banking Corporation v. RCBC Capital Corporation,” the Supreme Court applied the principles of administrative due process Th FETEMT tthe right to cross-examine witnesses in-an-erbites! provecding ir * Judicial Review and Court Intervention * (Articles 4.5 and 4.8, IRR) Casts. The first Gudicial asst tion to socute fromthe cour etonduct of the arbjtration deuance of ingesin-measutes of protection,” assistance, in taking evidence,” and issuance of con‘idestiality and protective orders.” ‘dp. 162, emphasis supplied. * Philrock, Inc. 0. on fadustry Arbitration Commission, SCRA 632 (2001), ® Metro Construetion, Jne. v. Chstham Properties, Inc., 365 SCRA 697 (20011, % 574 SCRA 858 (2008), pp. 890-393; citing CMP Federal Security “Agency, Ine. v. NLRC, 303 SCRA 99 {1619}, pp. 109-110, and Quiambao v. Court of Appeals, 454 SCRA 17 (20051, ». 40. © Rules 4.1 to 4.8, Special ADR R les, * Rules 5.1 to 5.6, Special ADR Ri !es, * Ruies 9.1 to 9.11, Special ADR Rules. © Roles 10.1 to 10.10, Special ADI: Rules, 355he Ares Dis Rein Whe second (judicial re of arbitr 2s _pasy upon, to the extent allowed and Ls , : _ ODE of the acral at Th rd xb low, the aa e third (judicial review of cot isk sn eeed cones) involves the remedies availat t from decisions or orders of the Regional ‘Trial Courls and the Court at Appeals rendered in the first two a decisions of an arbitral tribunal are subj ribunal are subject to ju 1¢ inclustonof-an-arbitration-clause-i-a conirart doc: Facto divest the coi pass ps0 Fac fiction to pass upon the Kadinge of arbitral bodies, Because avards arc atl judicially voviewat under certain conditions.” In ABS-CBN Broadcasting Corporation v. World Interactive Network Systems (WINS) Japan Co., Lid.," the Supreme Court, citing Insular Savings Bank v. Far East Bank an Trust Company,” enumerated the judicial remedies an ageri party to an arbitral award may take, namely: “(1)< 4 petition in the proper RTC to issue an order twa} wollwt Ta, fard-on the grounds provided for in-Section 24 of KA 7 OE, —— jourt on quéations of fact, of lav, oF of fact and lawpand—— es sera (8)_a,petitidy Tor certiorari under Rule 65 of the Rules Court should the atbitrator have acted without or in excess of his lack or excess of jurisdiction.” (p. 320) 4 The foregoing ruling is applicable to domestic arbitral awards but not to international commoreiat arbitral awards which cannot be __ the subject of pettionscander Rule 43 or 65 of the Rules of Court) ' Moreover, in a domostic-arbitration, if the arbitral tribunal, instead of rendering a preliminary ruling on its jurisdiction, do- cides to defer such ruling until the rendition of the arbitral award, none of the parties can seek judicial relief from-the deferment jorari ave * LM Power Engineering Corporation v. Capitol Industrial Constrie- tion Groups, Ine., 399 SCRA 562 [2003) * 544 SCRA 308 [2009]. * 492 SCRA 145 [2006], p. 156. jurisdiction or with grave abuse of discretion amounting tw 9° 77 1 AnprTeation 18 GENERAL 61 not availuble to challenge {the arbitral tribunal to defer the réssTation of the preliminary jurisdictional issuas“The -partiescan, however, await the rerUition of the final arbitral ‘award, and raise the jurisdictional iscues before the courts in @ preceeding for setting aside or vacating the award. Furthermore, not every question of fact is reviewable by the courts, The review of factual issues by the Supreme Court on mat- ters arising from arbitration has becr held limited. Thus: “aware of the objective of voluntary arbitration in the labor field, in tie emstructon inéncrs, ind in any other area for that “io the other or even both par- thes in any effort 9 eubvort or defral thet objective for their private puryasen, The Coury will ot review the fhetual findings of an ‘tititeal teibunal upon te rtf) allegation that such body hut ‘misapprohended facts an will not pase upon issues which are, at bottom, issues of *aet, no matter how cleverly Uisynised they might be as egal questions? ‘The parties hnere had recourse to arbitration and chose the arbitrators aselves: they met have had confidence in such arbitra will net, therefore, permit the parties to re- litigate before it the issues of facts previously presented and argued before the Arbitral Tribunal, save only where a car showing is made that, in reaching its factual eonclu- ions, the Arbitral Tribunal committed an error 80 egre- ‘rious arid Tmnrifil to-one-paris-as-to-constitute grave abuse of diseretion reslting in lack OF Toss of jurisdiction. = xx other, more relaxed-Fule would result in setting at naught the usie objective of « voluntary arbitration and would reduce arbitration to a largely inutile institution.” rmattor, the Conrt will not ass The nature and extent of judicial review under the Special ADR Ruies was explained by the Supreme Court in RCBC Capital Corporation v. Banco de Oro Unibank, Inc.,* citing Asset Privatiza- tion Trust v. Court of Appeats,” as follows: Rule 3.20, Special ADR Rules © Uniwide ‘Sales Realty and Resources Corporation v. Titan-Ikeda, ‘eupre, pp. 362-363; sce also National Piwer Corporation v. Alonzo-Legasto, 443 SCRA 342 [2004), pp. 359-262 © G87 SCRA 583 [2012], pp. 616-628; emphasis supplied. * 300 SCRA 579, G.R. No. 121171 December 29, 1998.“Sudicial Review At the outset, it must this Coney epcutset it must be stated that a the Specis reves brouGl Rule 19.36 of said Rules mecee oper tio “ater uen > by this Cour’s “am lito m= it of sound judicia ary review of the CA's decision. Rule 19.36. Reva Supreme Courtis not a masta of Haht, byt of seed edie i the court's discretion, indicate the serious ond compelling, and necessarily, restrictive nature of the seeunds that will warrant the exercise of the Supreme Court's diese tionary powers, when the Court of Appeals: _& Failed to apply the applicable standard or tost, for judicial review prescribed in these Special ADE Rules in arriving at its decision resulting in substantia! preju- dice to the aggrieved party; b. Erred in upholding a final order or decision despite the lack of jurisdiction of the court that rendered such final or- dor or decision; ©. Failed to apply any provision, principle, pelicy or rule contained in these Special ADR Rules resulting in substantial prejudice to the aggrieved party; and d. Committed an error so egregious and harmful to a party as to amount to an undeniable excess of jurisdiction. The mere fact that the petitioner disagrees with the Court of Appeal’s determination of questions of fact, of law or both questions of fact and law, shall not warrant the exercise of the Supreme Court's discretionary power. The error imputed to the Court of Appeals must be grounded upon any of the above prescribed grounds for review or be closely analogous thereto. ‘A mere general allegation that the Court of Appeais committed a serious and substantial error or that it has acted with grave abuse of discretion resulting in substantial preju- dice to the petitioner without indicating with specificity the na- "ARBITRATION IN’ GENERAL 63 ture of such error oF aime of dite dice suffered by the petitioner on iceount thereof, shall consti tute sufficient ground for the Supreme Court to dismiss out- right the petition, ‘Emphasis -npp ied The applicable standard for judicial review of arbitral awards in this jurisdiction + ot Guth in Rule 19.10 which retion and the serious preju- states: Rule 19.10. Rule on judicial review on arbitrasion in the Phil:ppines. a gercra! rule, he enurt ean only vacate or set aside the decision uf ‘an arb:ral tribunal upon a clear showing that vacating an arbi:ral awurd under Sectiot 24 of Republic Act ae mary are a a arbitration. or for setting aside an award in or Tor such other mveunds prove undur these Special Rules a St SALA thor mein Ea meet avlital Wivunayerepn nal committed ene fet?” NFP and law a he _——emmrt cannot substitute it Judgment for that of the arbitral tribunel. (Emphasis supplied ‘The above rule embodird tho stricter standard in decid- ing appeals ony arti sacs sablished by jurisprudenes In the case of Asset Privat Court held Asa rule, the award af an ok for meze errors of judgment cithe> as to the Taw or as to the facts, Courts are without power © amend o overrule merely Decause of disagreement wit!s m sters of law or facts deter mined by the arbitrators, They will not review findings of law and fact contained in an award. and will not undertake to aub- stitute their judgment for that of she arbitrators, since any other mule would make an award the commencement, not the end, of litigation. Errors of law avd fact, of an erroneous deci- sion of matters submitted to the ndment of the arbitrators, ave insufficient to insahdate an award fairly end honestly made, Judicial Review of an arbitration is, thus, more liunited than judicial review of a trial.”dependently of « ‘A court bole a nPlement each other. os . cor efore which is tae Sangeet 7s Which an action is brought on am Ditration agreeme, party so requests not later than the eretrial ofan the request of both parties, tion unless it finds that the arbitration agri: rani incapable of being pei lose its jurisdiction over the case, and the ic case, judicial proceeding merely stayed until after the completion of the orbitral oe wi case the court may then confirm the award of the arbitrato: This is the ruling in the case of Benguet Corporation v. Department of Environment and Natural Resources-Mi 7m nt jatural Resources-Mines Adjudication Board,* wherein it was held that: — fatter which or upon the parties to arbitra- eement-ixputtand-veid, “In other words, in the event a case that should propo bbe the subject of voluntary arbitration is erroneously filed with the courts or quasi-judicial agencies, on motion for the defen- dant, the court or quasijedicial agency shail determine whether such contractual provision for arbitration is sufficient and effective. If in the affirmative, the court or quesi judicial agency shall then order the enforcement of said provision. Be- sides, in BF Corporation v. Court of Appeals, we already ruled ‘In this connection, it bears stressing that the lower court has not lost its jurisdiction over the case, Section 7 of Republic Act No. 876 provides that the proceedings therein have only been stayed. After Ine SpEcisi urneeed- ing of arbitration has beer pursued and-completed, then the lower court may confirm the award made.” (p. 209) Prior to the ADR Act and its IRR, where the arbitration is multi-party, and one or more but not all of them are parties to an arbitration agreement, the court is given the discretion to refuse a referral to ADR if arbitration will not be decisive and speedy or if it will result to multiplicity of suits, duplicitous procedure and un- 545 SCRA 196 [2008]; citing BF Corporation v. Court of Avpeats, 288 SCRA 267, p. 2865; see also Section 7, Arbitration Law. rformed. The court doesnot ABDIERATION IN GENERAL 0 necessary delay." Under the ADR Act and its IRR, the court is directed to refer to arbitration those wbGaee parties to the arbitra- tigh Aageeement, and proceed with the court action as to those who are/not bound by such arbitration agreement." As a rule, only those parties who have agreed {0 stiamit a controversy to arbitra tion may be compelled to submit to arbitration,” including their hheits and assignees. However, in the case of Gerardo Lanuzu, Jr. v. BF Corporation, surra., the Svprere Court held that corporate representatives may be compelled to submit to arbitration proceed- ings purswant to a contract entered into by a corporation they rep- resent if there are allegations of bad faith or malice in their acta warranting the piercing of the veil of corporate fiction. Under the Special Rules of Court on Alternative Dispute Resolution, the court may issue an order directing the inelusion in the arbitration of those parties who are not bound by the arbitra- tion agreement but who agree to petition the court to take meas tires to safeguard and/or conserve o ay matter which is the sub- ject of the dispute in arbitration. In addition, RA. No, 9285, dtherise known as the ‘Altert:ative Dispute Resolution Act of 2004" allows the filing of provision-I or interim measures with the regular courts whenever the arhitral tribunal has no power to act or to act effectively.” Complementation between arhitation and court action is best exemplified in the area of interin> ~>asures. Interim measures, oth ‘erwise referred to in the ADE Act as “/nferim measures: of protection” rovisional reliefs,” are avcillaty remedies intended for the pro- Ag © ABS.CBN Broadcasting Corpra'on ©. World Interactive Network #3 systems (WINS) Japan Co.. Lic. sur insular Savings Bank v. Far East : Bank and Trust Company, sunra, Unuide Sales Realty and Resources Corp, & TitancTkeda, supra; and Notional Power Corporation v- Alonso Legasto, supni. 490 SCRA 14 {2006}, pp. 20-21ALTERNATIVE Dispury Resouution tection of the subj 2 ject matter of the di, Provisiox edie he dispute. y are akin to 57 to oD. The Tender the 1997 Rules of Gin Pee e Gtloe appointment of suse but are not limited to pee eats ppointment i 0 preliminary injunction, a detention of property mn J Propenty end inspection of property suject fe eet oF instances, a party may apply for interisa measures with a court Ehich may grant them, The petition for this purpoce salt en ently of their principal actions which could be an action for n sun of money in the case of preliminary attachment, permanent injure. tion in the case of preliminary injunction, corporate rehabilitation in the case of receivership, foreclosure of chattel mortgage in the case of replevin, and support in the case of support pendante lite However, this principle is not true for interim measures un- der the ADR Act and its IRR. In the case of interim measures, a court cannot refuse to grant, implement or enforce a petition for an interim measure on the sole ground that the petition is merely an ancillary relief and the principal action is pending with the arbitral tribunal. While interim measures are categorized in the ADR Act and IRR as ancillary remedies, they are different from provisional remedies under the Rules of Court in that the application for in- terim measures filed before the regular courts can stand by them. selves despite the pendency of the arbitration of the principal ac- tion before the arbitral tribunal.” * Article 4.17, IRR; Sections 28 and 29, ADR Act, ” Article 4.9, IRR. " Article 4.6(c), IRR. CHAPTER 5 INTERNATIONAL COMSIET‘CIAL ARBITRATION UNDER THE ADR ACT OF 2004 AND ITS IMPLEMENTING RULES AND REGULATIONS The ADR Act of 2004 adopts the UNCITRAL Model Law on International Commercial Arbitration and. by operation of Article 19 of the ADR Act, made the Model Law the governing statute for international commercial arbitration tor *ICA") conducted in ae. cordance with Philippine law In view of the adoption by reference of the Model Law, the ADR Act of 2004 devoted scine of i: provisions on international commercial arbitration to the harmonization of the principles con- tained in the Mode! Law with esistirg Philippine laws, rules and jurisprudence. Thus, the ADR Act of 2004 bas provisions dealing with legal representation in internat smal arbitration, confidential ity of arbitral proceedings, referral f court action to arbitration, definition and functions of the appointing authority, the grant of interim measures of protection. cove "ning law, and the place and language of arbitration. In view of the adoption of the Model Law, the Implementing Rules and Regulations of the ADR ct of 2004 (IRR) became the repository not only of the rules implementing the ADR Act but also the rules implementing the Moe! Law. The IRR was passed by the Department of Justice on 25 Oc:ohc - 2009 and took effect on $1 December 2009 fifteen (15) days after the completion of its publica-