ALTERNATIVE DISPUTE RESOLUTION (R.

A 9285)

Alternative Dispute Resolution – is any process or procedure used to

resolve a dispute or controversy, other than by adjudication of a presiding judge of
a court, or an officer of a government agency, in which a neutral third-party
participates to assist in the resolution of the issues, which includes arbitration,
mediation, conciliation, early neutral evaluation, mini-trial or any combination thereof.

Neutral third-party is a PRIVATE PERSON unlike a judge or an officer of a

government agency who are public officers who draws their power from the sovereign.

Without having to go to court or administrative agencies

Arbitration is the only form of ADR where we can find a third party that can
render a resolution (arbitration award) that will BIND the parties. It has the force and
effect of a court judgment(The law says so).

If arbitration clause is provided in a contract, the same SHOULD be observed.

There are only THREE statutory requisites for the appointment of an arbitrator:
1. You must be of legal age
2. You must be in full possession of your civil rights
3. You must know how to read and write

Disqualifications:
1. An arbitrator shall NOT be related to any of the party within the sixth civil
degree of consanguinity or affinity
2. An arbitrator should NOT have financial interest in the dispute or in the
outcome of the dispute
3. An arbitrator must not show any form of bias against any party

• The parties may add to the qualifications or disqualifications through stipulations.

 It is not required that he should be licensed as an arbitrator or a lawyer etc, there
is no requirement that you must be accredited as an arbitrator. You DON’T need
a prior experience

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 R.A 9285, resolve a dispute by rendering an award.

If the parties cannot agree as to who should be appointed as arbitrator within a

period prescribed by law, then the law will step in and it will be the law who will appoint.

Mediation – is a voluntary dispute resolution process in which a mediator,

selected by the disputing parties, facilitates the communication and negotiation, and
assists the parties in reaching a voluntary agreement regarding a dispute.

In Arbitration, the arbitrator/s renders a binding award. In Mediation, the

mediator does not have the power to render a binding decision.

Where a party files an action to enforce an obligation under a contract but fails to
observe the arbitration clause, the same constitutes as an affirmative defense (Failure
to comply with a condition precedent). If raised in the answer, the same shall be
resolved by the court within 30 days. If not raised, it is deemed waived.

Court-annexed Mediation – mediation process conducted under the auspices of

the court, after such court has acquired jurisdiction over the dispute.

In a court-annexed mediation, mediation is not voluntary, it is imposed by law,

the parties are compelled even in the absence of a clause in a contract. In mediation as
a mode of alternative dispute resolution, the same is voluntary.

Court-referred Mediation – is a mediation ordered by the court in accordance

with the agreement of the parties when an action is prematurely commenced in violation
of such agreement.
 Court-annexed Mediation
Mandatory and should be conducted in
every civil case even in the absence of
any mediation clause in a contract
between the parties
Court-referred Mediation
Conducted only when there is an existing
mediation clause and the same was not
observed by the party by filing a
premature action

Conciliation – is similar to mediation. Instead of mediator, conciliator.

Early Neutral Evaluation – it is an ADR process wherein the parties and their
lawyers are brought together early, before going to court, to present the summaries of
their case and receive a non-binding assessment by an experienced, neutral person,
with expertise in the subject of the substance of the dispute.
EXAMPLE: A is a contractor arguing with B that the reason why the windmill
malfunctioned is because B failed to duly maintain the same. B, at the same time, is
arguing that the malfunction is attributable to A because of the latter’s poor
workmanship. X, who is an early neutral evaluator, points out that the reason why it
malfunctioned is because of the materials used by A which was imported from Europe,
that the materials is not fit for use in the environment here in the Philippines.
- The assessment of X is not binding but it will have the tendency to, at least,
put in the mind of A to be more receptive to settlement and avoid having
litigation with B thereby avoiding unnecessary costs as well.
- But if the contractor still refuses to assert its claim then, again, the
assessment will not bind him. They can still go to court.

MINI-TRIAL – is a structured dispute resolution method in which the merits of the

case are argued before a panel comprising of senior decision makers with or
without the absence of a neutral third person, after which the parties seek a
negotiated settlement.

SPECIAL RULES OF COURT ON ALTERNATIVE DISPUTE RESOLUTION (Special

ADR Rules)

• Arbitral Tribunal = Arbitrator/s

• If the parties go to court and it is ADR related case, then the Special Rules of Court on
Alternative Dispute Resolution.
• The Special Rules of Court on ADR shall apply to and govern the following
cases:
1. Relief on the issue of Existence, Validity or Enforceability of Arbitration
agreement

(Pertains to the jurisdiction of the Arbitrator to render an award)

2. Referral to ADR

(Pertains to a situation where a party filed an action prematurely without

observing ADR)

3. Interim measures of protection

(Contemplates Provisional Remedies that we find under the Rules of Court, so if
this provisional remedies are availed of relative to ADR issues, then the court
shall apply Special ADR Rules and NOT the Rules of Court.

Example: A wants B to deliver the real property but B is disposing its assets
during the ADR. He may go to court and ask for provisional remedy of
receivership, the court should apply Special ADR Rules NOT the Rules of Court.)

4. Appointment of arbitrator
(Disagreement as to the appointment of arbitrator, the parties may go to court to
seek the appointment of the arbitrator)
• In all these things, the function of the court is limited to the issues raised by the parties
but NOT RESOLVED THE DISPUTE. The jurisdiction of the court is LIMITED under the
Special ADR Rules.
5. Challenge to appointment of arbitrator
(The concept of this is like the concept of a motion for inhibition. You file it before
the arbitrator. Some of the grounds are incompetency, previous relationship of
the arbitrator to a disputing party which were not disclosed.
If the challenge is denied by the arbitrator, the aggrieved party may bring
his challenge to the court.
The parties may stipulate additional qualification of an arbitrator aside
from the 3 statutory requirements. Example: the arbitrator should be a member of
the bar)
6. Termination of mandate of arbitrator

(Refers to the ABILITY of the arbitrator to discharge his duties as such. Although
he has all the qualifications and does not possess any of the disqualifications, the
arbitrator is unable to discharge his function as an arbitrator.

Example? Absenteeism of the arbitrator. It pertains not to his qualification, not to

his disqualifications but to his ability to function as an arbitrator. You may go to
the court to terminate his or her mandate, but the court, again, is limited to that
issue and CANNOT decide the merits of the case. Also, it is to be governed by
the Special Rules of Court on ADR and not the Rules of Court)

7. Assistance in taking evidence

(An arbitrator has the authority to issue subpoena [ad testificandum or duces
tecum] but it DOESN’T have contempt powers. If the addressee refuses to obey
the subpoena issued by the arbitrator, the arbitrator cannot cite that person in
contempt. But a party may go to court and ask for the issuance of a subpoena to
compel that party.)

8. Confirmation, correction or vacation of award of Domestic Arbitration (NOT

SUBJECT TO SUMMARY PROCEEDINGS)

9. Recognition, Enforcement or Setting Aside of Award in International Commercial

Arbitration (NOT SUBJECT TO SUMMARY PROCEEDINGS)

10. Recognition and Enforcement of a Foreign Arbitral Award (NOT SUBJECT TO

SUMMARY PROCEEDINGS)

- Enforcement of a foreign arbitral award is the business of the court and NOT
by the arbitral tribunal/arbitrator

11. Confidentiality/Protective Orders

(Arbitration is confidential, the parties do not need to stipulate because the law
provides.
 12. Deposit and Enforcement of Mediated Settlement Agreements
(If there is a breach, the aggrieved party can ask the court to compel the offending party
to comply without going through litigation IF the mediated settlement agreement was
deposited in court.)
• In all these things, the function of the court is limited to the issues raised by the
parties but NOT RESOLVED THE MERITS OF THE DISPUTE. The jurisdiction of the
court is LIMITED under the Special ADR Rules.

• 9 of the enumerations are governed by the rules on summary proceedings under the
Special Rules of Court on ADR (1-7 and 11-12)

• All proceedings under the Special ADR Rules are SPECIAL PROCEEDINGS.

• The following pleadings, motions or petitions shall not be allowed in the cases
governed by the Special ADR Rules and shall NOT be accepted for filing by the Clerk of
Court:
1. Motion to dismiss
2. Motion for bill of particulars
3. Motion for new trial or for reopening of trial
4. Petition for relief from judgment
5. Motion for extension, except where an ex-parte temporary order of protection has
been issued.
6. Rejoinder to reply
7. Motion to declare a party in default
8. Any other pleading specifically disallowed under the Special ADR Rules

Competence-competence – The Special ADR Rules recognizes the principle of

competence-competence, which means that the arbitral tribunal may initially rule
on its own jurisdiction, including any objection with respect to the existence or
validity of the arbitration agreement or any condition precedent to the filing of a
request for arbitration.
- The counterpart of this in litigation language is a motion to dismiss on the
ground of lack of jurisdiction over the subject matter.
Recognition of competence-competence principle – The arbitral tribunal shall be
accorded the first opportunity or competence to rule on the issue of whether or not it has
competence or jurisdiction to decide a dispute submitted to it for decision, including any
objection with respect to the existence or validity of arbitration agreement.
The court must exercise judicial restraint and defer to the competence or
jurisdiction of the arbitral tribunal by allowing it to rule on such issues, whether before or
after the arbitral tribunal is constituted.
- Thus, if a party has an objection to the jurisdiction of the arbitral tribunal, then
it must bring its objection to the arbitral tribunal. You cannot go to court right
away.

Principle of Separability – The Special ADR Rule recognizes the principle of

separability of the arbitration clause, which means that the arbitration clause shall be
treated as an agreement independent of the other terms of the contract of which it forms
part. A decision that the contract is null and void shall NOT entail ipso jure the invalidity
of the arbitration clause.
- In the eyes of law, the arbitration clause is a separate contract that has a life
on its own.
Commencement of Arbitration – An arbitration is instituted by the service by either
party upon the other of a demand for arbitration.
Such demand shall set forth the nature of the controversy, the amount involved, if
any, and the relief sought together with a true copy of the contract providing for
arbitration.

- Upon such service, in the eyes of law, the arbitration is COMMENCED. It is

similar to the commence of an action upon the filing of a complaint and paying
the prescribed docket fees.

Judicial Relief BEFORE Commencement of the Arbitration – Any party to an

arbitration agreement may petition the court to determine any question concerning the
existence, validity and enforceability (E-V-E) of such arbitration agreement.
During the pendency of the petition, the arbitration proceedings may
nevertheless be commenced and continue to the rendition of an award, while the issue
is pending before the court.
Judicial relief AFTER Arbitration Commences – Any party to the arbitration may
petition the appropriate court for judicial relief from the ruling of the arbitral tribunal on a
preliminary question upholding or declining its jurisdiction.
The court shall NOT enjoin the arbitration proceedings during the pendency of
the petition.
If the arbitral tribunal renders a final arbitral award and the Court has not
rendered a decision on the petition from the arbitral tribunal’s preliminary ruling
affirming its jurisdiction, that petition shall become ipso facto moot and academic
and shall be dismissed.
- In this situation, the arbitrator declined or uphold its jurisdiction similar to that
of motion to dismiss granting or denying the same.

Referral to Arbitration – A court before which an action is brought in a matter that is

the subject of an arbitration agreement, if at least one party so requests not later than
the pre-trial conference, or upon the request of both parties thereafter, REFER the
parties to arbitration UNLESS it finds that the arbitration agreement is null and void,
inoperative or incapable of being performed.

• Interim measures of protection is the equivalent of Provisional Remedies in litigation.

Interim Measure of Protection – it is compatible with the arbitration agreement for a

party to request, before the constitution of a tribunal, from a court an interim measure of
protection and for the court to grant such measure.
After the constitution of the arbitral tribunal and during the arbitration
proceedings, a party may request for an interim measure of protection, or a modification
thereof, with the arbitral tribunal. If the arbitral tribunal has no power to act or is unable
to act effectively, the request may be made with the court.

• A party to an arbitration agreement may petition the court for an interim measure of
protection:
1. Before arbitration is commenced
2. After arbitration is commenced, but before the constitution of an arbitral tribunal,
or
3. After the constitution of an arbitral tribunal, but only to the extent that it has no
power to act or is unable to act effectively.
• Any party may request that provisional relief be granted against an adverse party.
Such relief may be granted:

1. to prevent irreparable injury or loss

2. to provide security for the performance of an obligation
3. to produce or preserve any evidence
4. to compel any other appropriate act or omission

• The following, among others, are the interim measure of protection that the COURT
may grant:

1. Preliminary injunction against a party to the arbitration

2. Preliminary attachment of a property or garnishment of funds in the custody of a
bank or a third person
3. Detention, preservation, delivery, or inspection of property
4. Appointment of a receiver
5. Assistance in the enforcement of an interim measure of protection granted by the
arbitral tribunal, which the latter cannot enforce effectively
- Again the Arbitral Tribunal has no contempt powers

• Any court order granting or denying any interim measure/s of protection is

issued without prejudice to the subsequent grant, modification, amendment,
revision or revocation by the arbitral tribunal.
- So, under the Special ADR Rules, the arbitrator may override the court.

DIFFERENT TYPES OF ARBITRATION

1. Domestic Arbitration – an arbitration that is not international.

2. International Arbitration – conducted in the Philippines although the nature of the

arbitration is international in character.

3. Foreign Arbitration
• A foreign arbitral award is one made in a country other than the Philippines.
Consequently, a foreign arbitration is one conducted outside the Philippines.

NO APPEAL/NO CERTIORARI – An agreement to refer a dispute to arbitration means

that the arbitral award is final and binding. Consequently, a party to the arbitration is
PROHIBITED from filing an appeal or a petition for certiorari questioning the merits of
the arbitral award.

Petition for Confirmation of DOMESTIC Arbitral Award – At any time after the lapse
of 30 days from receipt by the petitioner of an arbitral award, he or she may petition the
court to confirm that award.
NOTE: The petitioner is the winning party in the arbitration.
- Parang pumunta ka sa court to issue a writ of execution, the Court is NOT
called upon to review the award but to ENFORCE the arbitral award.
Petition to Vacate the Domestic Arbitral Award – Not later than 30 days from receipt
of the arbitral award, a party may petition the court to vacate that award based on
specified grounds.

8 grounds for Vacating Domestic Arbitral Award – The arbitral award may be
vacated on the following grounds:
1. The arbitral award was procured through corruption, fraud, or other undue means
2. There was evident partiality or corruption in the arbitral tribunal or any of its
members
3. The arbitral tribunal has been guilty of misconduct or any form of misbehavior
that materially prejudiced the rights of any party such as refusing to postpone a
hearing upon sufficient cause shown or to hear any evidence that is pertinent and
material to the controversy
4. One or more of the arbitrators was disqualified under the law to act as such and
has willfully refrained from disclosing such disqualification
5. The arbitral tribunal has exceeded its power, or so imperfectly executed them
6. The arbitration agreement did not exist or is invalid based on any ground for the
revocation of the contract or is otherwise unenforceable
7. A party to arbitration is a minor or judicially declared to be incompetent
8. Public policy is violated
 In deciding a petition to vacate, the court shall disregard any other ground than
those enumerated above.

Petition to Correct/Modify Domestic Arbitral Award – 4 grounds

• The court may correct/modify or order the arbitral tribunal to correct/modify the arbitral
award in the following cases:
1. Where there was evident miscalculation in the figures, or evident mistake in the
description of persons, things or property referred to in the award.
- It is evident if it does not require reviewing thoroughly
2. Where the arbitrators have awarded upon a matter not submitted to them
3. Where an arbitrator omitted to resolve an issue submitted to them for resolution
4. Where the award is imperfect in the matter of form not affecting the merits of the
controversy

Petition to Recognize and Enforce Foreign Arbitral Award – Any party to a foreign
arbitration may petition the court to recognize and enforce a foreign arbitral award.

Petition to Refuse Recognition of Foreign Arbitral Award – A Philippine Court may

NOT set aside a foreign arbitral award but may REFUSE its recognition and
enforcement.

JUDICIAL REVIEW OF ARBITRAL AWARDS

Only the REGIONAL TRIAL COURT may confirm, modify or vacate a domestic
arbitral award, or recognize/enforce or set aside an international arbitral award, or
recognize/enforce or refuse recognition of foreign arbitral award.
However, any action of the RTC may be questioned before the COURT OF
APPEALS by way of appeal or petition for certiorari.
The appeal shall NOT stay the award, judgment, final order or resolution sought
to be reviewed unless the Court of Appeals directs otherwise upon such terms as it may
deem just.
Appeal by certiorari to the Supreme Court is ALLOWED.