ARELLANO UNIVERSITY UNIVERSITY SCHOOL OF LAW
FUNDAMENTALS OF ALTERNATIVE DISPUTE RESOLUTION Cabreros, Ameera Nympha M. Malabanan, Leilani C. Taccad, Atheena Baquiran, Florencio Madlambayan, Madlambayan, Isaiah Gil 2/9/2015
Basic Principles of Alternative Dispute Resolution. Definition, Basis/Legal Sources, Forms, Classifications, objectives and examples.
Alternative Dispute Resolution
Any ordinary person may be clueless as to what Alternative Dispute Resolution subject is all about but for law students like us, Alternative Dispute Resolution (ADR for brevity) is just like any other law or statute that we need to learn and understand for a better appreciation of what law practice can offer us in the future. In this report we will start to discover one by one the importance of ADR. I. Definition. i
In a broad sense, Alternative Dispute Resolution (ADR) is a system, using means and methods allowed by law and approved by the parties, for the purpose of resolving or facilitating the resolution of disputes and controversies between them, in an expeditious and speedy manner, without resorting to court adjudication. As defined under Section 3 (a) of R.A 9285 otherwise known as, " Alternative Dispute Resolution Act of 2004," ADR means 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, as defined in this Act, in which a neutral third party participates to assist in the resolution of issues, which includes arbitration, mediation, conciliation, early neutral evaluation, mini-trial, or any combination thereof.
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"Arbitration" means 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 this Act, resolve a dispute by rendering an award. "Mediation" means a voluntary process in which a mediator, selected by the disputing parties, facilitates communication and negotiation, and assists the parties in reaching a voluntary agreement regarding a dispute. ivThe term " mediation’' shall include conciliation. "Mini-Trial" means a structured dispute resolution method in which the merits of a case are argued before a panel comprising senior decision makers with or without the presence of a neutral third person after which the parties seek a negotiated settlement. "Proceeding" means a judicial, administrative, or other adjudicative process, including related pre-hearing motions, conferences and discovery.
In the above-stated definition of ADR what is important to know is that Arbitral Proceedings under administrative agencies exercising quasi-judicial powers such as NLRC, Regional Offices of DOLE, IPO, Mines and Geosciences Bureaus, Insurance Commission and other similar Government Agencies are not covered by ADR Act of 2004. The limitation as to the applicability of the said law into the said administrative agencies is expressly provided for under Section 6 of R.A 9285; SEC. 6. Exception to the Application of this Act. - The provisions of this Act shall not apply to resolution or settlement of the following: 2
(a) labor disputes covered by Presidential Decree No. 442, otherwise known as the Labor Code of the Philippines, as amended and its Implementing Rules and Regulations; (b) the civil status of persons; (c) the validity of a marriage; (d) any ground for legal separation; (e) the jurisdiction of courts; (f) future legitime; (g) criminal liability; and (h) those which by law cannot be compromised. vii
The above stated provision of the law does not necessarily mean that similar procedures before quasi-judicial agencies are not considered forms of arbitration, mediation or conciliation. They are, the rationale is just different there being other specific laws and rules governing their procedures. (ex. Those by law cannot be compromised – Acts or Omissions punishable under Act No. 3815 or the Revised Penal Code of the Philippines.) A crime committed against the state cannot be compromised. II. State Policy on ADR
To enlighten us further of what ADR is, Section 2 of ADR Act of 2004 (Declaration Of Policy) specifically provides the ultimate goal of the state for enacting such law, and that is “ to actively promote party autonomy in the resolution of disputes or the freedom of the party to make their own arrangements to resolve their disputes …” viii “Towards this end, the State shall encourage and actively promote the use of Alternative Dispute Resolution (ADR) as an important means to achieve speedy and impartial justice and declog court dockets. . . To give effect on its goal/purpose; The State shall provide means for the use of ADR as an efficient tool and an alternative procedure for the resolution of appropriate cases. Likewise, the State shall enlist active private sector participation in the settlement of disputes through ADR. This Act shall be without prejudice to the adoption by the Supreme Court of any ADR system, such as mediation, conciliation, arbitration, or any combination thereof as a means of achieving speedy and efficient means of resolving cases pending before all courts in the Philippines which shall be governed by such rules as the Supreme Court may approve from time to time.”
In the case of Insular Savings Banks vs. Fareast Bank and Trust Company (G.R. No. 141818, June 22, 1006), the Supreme Court declared the policy of the Judiciary on ADR as follows: “Alternative dispute resolution methods or ADRs – like arbitration, mediation, negotiation and conciliation – are encouraged by the Supreme Court. By enabling parties to 3
resolve their disputes amicably, they provide solutions that are less time-consuming, less tedious, less confrontational, and more productive of goodwill and lasting relationships. ” This is a case which involves an issue of jurisdiction between PCHC Arbitration Committee and the Regional Trial Court in order for the Petitioner Insular Bank to avail of the proper remedy after contesting the decision rendered by the Arbitration Committee in favor of the respondent Fareast Bank. The Supreme Court ruled here that arbitration proceedings are mainly governed by the Arbitration Law and suppletorily by the Rules of Court. III. Principles of ADR ix
The following are the principles of ADR: 1. Promotion of party autonomy and self-determination in the resolution of disputes. -The parties are given the freedom to choose the form of ADR they desire to avail of. 2. Recognition of ADR as an efficient tool and an alternative procedure for the resolution of cases. – ADR does not altogether do away with the court trial system. ADR merely provides the parties with an alternative means of settling their disputes in a manner that is different, separate and independent from the court trial system. 3. Enlisting of Private Sector participation. – The essence of ADR is that it usually requires the participation of third parties who do not necessarily dispense public service. Many ADR practitioners or providers hail the private sector in various fields of endeavour.
IV. OBJECTIVES AND BENEFITS OF ADR:
1) Speedy and impartial justice – ADR has been judicially recognized as a tool for the speedy, inexpensive and amicable settlement of disputes. 2) Declogging of court dockets – the decongestion of court dockets is the ultimate objective of ADR. In this sense, ADR and the court trial system, one being the alternative to the other, work hand-in-hand to achieve an optimum performance for the providers of both systems. V. FEATURES OF ADR: 1) ADR is a means used to resolve a dispute or controversy. The objective of the ADR forms, methods and processes is to resolve or facilitate the resolution of a dispute or controversy in a speedy, amicable and inexpensive manner. ADR should not be resorted to when the motive is to delay or suspend the proceedings rather than to put an end or facilitate the conclusion of the controversy. 2) ADR utilizes means and methods allowed by law. ADR usually takes the form of arbitration, mediation, conciliation, early neutral evaluation, or mini trial.
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It may also be combination of the foregoing methods. ADR is contractual in nature. 3) In keeping with the policy of the law to actively promote party autonomy, the parties to a dispute are given the freedom to agree to resolve their dispute and decide on the procedure therefore. Any form of ADR that satisfies the essential requisites of contract and which is not contrary to law, morals, good customs, public order or public policy, is allowable as a form of ADR. ADR avoids court trial. 4) ADR is conduct outside of the court trial system. The Arbitration Law (RA No. 876) recognizes the right of any party to apply with the courts to take measure to safeguard and/or conserve any matter which is the subject of the dispute in arbitration. The Arbitration Act of 2004 (RA No. 9285) allows the filing of petitions for provisional or interim measures with the regular courts whenever the arbitral tribunal has no power to act or to act effectively. ADR usually involves the participation of a neutral third party. 5) The third party participant may whether be the arbitrator, mediator, conciliator or neutral evaluator. He is required to disclose any factor that may influence the performance of his duties in conducting the ADR. VI. SOURCES OF ALTERNATIVE DISPUTE RESOLUTION 1. Domestic laws and rule
a. General ADR law – those that are applicable to all forms of ADR. e.g. Article III, sec. 16, 1987 Constitution, Chapters 1 and 2, Title XIV, Book IV, Civil Code of the Philippines, The Arbitration Law b. Special - those that pertain to special subject matter. e.g. The Local Government Code of the Philippines, the Labor Code and its implementing rules and regulations. 2.
Acts of the Executive Branch e.g. Rules of ADR for Disputes Between National Government Agencies, E.O. No. 1008
3. Decisions of the Supreme Court 4. International Laws e.g. UNCITRAL, Convention on Recognition and Implementation of Foreign Arbitral Awards 5. General Principles of Law and Equity
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VII. FORMS OF ADR 1. Arbitration - It is an arrangement for taking and abiding by the judgement of selected persons in some disputed manner, instead of carrying it to established tribunals of justice and is intended to avoid formalities, the delay, the expense and vexation of ordinary litigation. - ADR Act of 2004 defined ADR as a voluntary dispute resolution process in which one or more arbitrators, appointed in accordance with the agreement of parties or rules promulgated pursuant to the ADR Act, resolve dispute rendering and award . 2. Mediation - A voluntary process in which a mediator, selected by the paties, facilitates communication and negotiation and assists the parties in reaching a voluntary agreement regarding a dispute.
3. Conciliation - Adjustment of dispute in a friendly, untagonistic manner. 4. Neutral and Early Neutral Evaluation
Neutral Evaluation - It is a process wherein the parties and their lawyers are brought together to present summaries of their case and received a non binding assessment by an experienced neutral person with expertise in the subject or in substance of the dispute. Early Neutral Evaluation
5. Mini Trial - A structured dispute resolution method in which the merits of a case are argued before a panel composed of senior decision makers with or without the presence of neutral third person, after which a party seek a negotiated settlement 6. Any combination of the foregoing 7. Any other ADR form.
VIII. Classification of forms of ADR 1) number of parties Bilateral/Bi-party- when only 2 contending parties are involved Multilateral/multi party- if there are more than 2 contending parties involved 2) number of issues involved Simple- single issue involved 6
Complex- two or more issues involved 3) extent of conclusion Complete- when all the issues involved are resolved Partial- it only one or some but not all the issues are resolved Goal is to resolve dispute fully or partially rather than merely suspend or delay the resolution of dispute. 4) Role of evidence in proceedings Evidentiary/merit-based- when the resolution of the dispute or controversy Involved requires the presentation of evidence & evaluation of the merits of the case as in a case or arbitration Non-evidentiary/non merit based- merits of the case is not indispensable in the resolution of the dispute as in the case of mediation 5) pendency of a court case Case-related - conducted in connection w/ or as a pre-requisite to trial as in the case of court -annexed mediation / court referred mediation Independent - conducted irrespective of any pending court case involving the issue 6) as to applicable law Domestic - parties places of business , place arbitration & place of Performance of the obligation involved or subject matter of Dispute , are located in the Phil ( governed by RA #876 the arbitration law) Internal- parties place of business are in state/ or the place where a Substantial of the obligation is to be performed or the place where the subject matter of the dispute is most closely connected outside the Phil / parties have agreed that the subject matter of the dispute Relates to more than one country Intl. commercial arbitration is governed by the pr ovisions of ADR act On intl. commercial arbitration Foreign - conducted outside the Phil Governed by provisions of ADR act of 2004 on intl. commercial Arbitration Provisions of RA 9285- both domestic & intl. in character 7) permanence of ADR provider Ad hoc- existence of ADR provides only temporary for purpose of a Particular dispute/ controversy Institutional- if ADR providers existence is permanent in character and is not dependent On any dispute or controversy
IX. Components of ADR 7
1) contending parties - involved in a dispute or controversy 2) dispute / controversy- susceptible of being subjected to ADR 3) form- arbitration Mediation Conciliation Early neutral evaluation Mini trial Combination ADR provider- institution or person exercising similar functions in any ADR system ADR practitional- individual acting as mediator , conciliator , arbitrator or neutral e evaluator who is not necessarily accredited as an ADR provider
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X. Subject Matter of ADR
In line with the policy to encourage the use of ADR, in general, all adversarial disputes and controversies can be the subject matter of ADR, except those which by law or reasons of public policy are declared not capable of being subjected to ADR. Under Section 6(b) to (h), R.A. No. 9285, the following issues are not susceptible of ADR: a). The civi l status of per sons . A person’s status, whether married or capable of marri age, emancipated or not, legally capacitated or incompetent, is a matter determined by law and is not subject to the discretion of the parties. b). The vali dity of mar ri age or any groun d for legal separation . 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 instructed 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 distribution and disposition of the assets of the conjugal partnership of gains or the absolute community, custody of minor children, and support pendente lite may, however, be the subject of ADR. c). The j ur i sdicti on of th e cour ts . Jurisdiction over the subject matter of a case is determined by law and is not dependent upon the allegations of the parties, except in the case of jurisdiction by estoppel. d). F utur e legitime. Future legitime is inexistent and, hence, cannot be waived. This principle is consistent with Articles 772 and 905 of the Civil Code of the Philippines. e). Criminal liabili ty . Criminal liability is not susceptible of ADR, although the civil liability arising from the offense and the separate civil liability for quasi-delict based on the act or omission constituting the offense, is proper subjects of ADR. f. I n gener al, th ose whi ch, by law, cannot be compr omised . Article 2035 of the Civil Code of the Philippines is an example of a provision of law prohibiting compromise. It states that: “ART. 2035. No compromise upon the following questions shall be valid: (1) The civil status of persons; 8
(2) (3) (4) (5) (6)
The validity of a marriage or a legal separations; Any ground for legal separation; Future support; The jurisdiction of courts; Future legitime.”
A.M. No. 07-11-08-SC “SPECIAL RULES OF COURT ON ALTERNATIVE DISPUTE RESOLUTION” Rule 1.1 provides that:
“Rule 1.1. Subject matter and governing rules.-The Special Rules of Court on Alternative Dispute Resolution (the "Special ADR Rules") shall apply to and govern the following cases: a. Relief on the issue of Existence, Validity, or Enforceability of the Arbitration Agreement; b. Referral to Alternative Dispute Resolution ("ADR"); c. Interim Measures of Protection; d. Appointment of Arbitrator; e. Challenge to Appointment of Arbitrator; f. Termination of Mandate of Arbitrator; g. Assistance in Taking Evidence; h. Confirmation, Correction or Vacation of Award in Domestic Arbitration; i. Recognition and Enforcement or Setting Aside of an Award in International Commercial Arbitration; j. Recognition and Enforcement of a Foreign Arbitral Award; k. Confidentiality/Protective Orders; and l. Deposit and Enforcement of Mediated Settlement Agreements. ” 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 alternative dispute resolution if present. Hence, even if a case is already 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. If the alternative dispute resolution efforts materialize and result in a settlement agreement, either party may submit the agreement 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 so approved, either party may ask for the execution of the agreement in the same manner that a judgment is executed if necessary to compel the other party to comply therewith.
XI. Office for Alternative Dispute Resolution (Sections 49 and 50, ADR Act; Articles 2.1 to 2.3, IRR)
In order to maximize the benefits of ADR and to ensure the smooth and effective implementation of the provisions of the ADR Act of 2004 and its IRR, as well as R.A. No. 876, the ADR Act of 2004 called for the creation of an Office for Alternative Dispute Resolution (OADR), which will be an agency attached to the Department of Justice. It is to be headed by an Executive Director appointed by the President upon the recommendation of the Secretary of Justice. 9
Among the principal objectives, powers and functions of the OADR are the following: 1. To promote, develop and expand the use of ADR in the private and public sectors through information, education and communication; 2. To assist the government to monitor, study and evaluate the use by the public and private sectors of ADR, and recommend to Congress needful statutory changes to develop, strengthen and improve ADR practices in accordance with world standards; 3. To act as appointing authority of mediators when the parties agree in writing that it shall be empowered to do so; and 4. To compile and publish a list or roster of ADR providers/practitioners, and to compile a list or roster of foreign or international ADR providers/practitioners.
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Robeniol, Gabriel T. Al tern ative Dispute Resolu ti on, page 9, Man il a: Central B ookstore, 2012.
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Section 3(d), R.A 9285 Section 3(q), R.A 9285 iv Section 7, R.A 9285 v Section 3(u), R.A 9285 vi Section 3(aa), R.A 9285 vii Robeniol, Gabriel T. Alternative Dispute Resolution, page 10, Manila: Cent ral Bookstore, 2012. viii Sec. 2 of R.A 9285 continuation . . . ix Robeniol, Gabriel T. Alternative Dispute Resolution, page 11, Manila: Central Bookstor e, 2012. x A.M. No. 07-11-08-SC “SPECIAL RULES OF COURT ON ALTERNATIVE DISPUTE RESOLUTION” iii
Republic Act No. 9285 “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” Robeniol, Gabriel T. Al ternative Dispute Resoluti on, M anil a: Central Bookstore, 2012.
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