Alternative Dispute

Resolution
ATTY. GIL P. VILORIA, JR.

ISABELA STATE UNIVERSITY

COLLEGE OF LAW
Cauayan City, Isabela
“Settle with your opponent quickly while on the
way to court with him. Otherwise, your
opponent will hand you over to the judge, and
the judge will hand you over to the guard, and
you will be thrown into prison. Amen and I say
to you, you will not be released until you have
paid the last penny.”

- Book of St. Matthew, Chapter 5:25-26

2
Constitutional Basis for Alternative
Dispute Resolution

“All persons shall have the right to a

speedy disposition of their cases
before all judicial, quasi-judicial, or
administrative bodies.”- Article III,
Section 16.

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Causes of Court Delays

• misuse of the due process and the abuse of legal

technicalities;
• the intervention of political pressure in court
cases;
• the sheer weight of court litigations arising from
development and growth;
• the dilatory tactics of lawyers; and
• neglect and laxity on the part of judges.

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Alternative Dispute Resolution
• the choice given to parties to a dispute to choose the mode
of resolving their differences either through arbitration,
mediation, conciliation and other similar modes thereby
avoiding costly and time-consuming court litigation
• 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, x x x, in
which a neutral third party participates to assist in the
resolution of issues;
• includes arbitration, mediation, conciliation, early neutral
evaluation, mini-trial, or any combination thereof

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Advantages of Arbitration
• Proceedings are private and confidential.
• Shorter time-scale (compared to court litigation, it is generally
faster and more cost efficient).
• Parties can appoint arbitrators based on their special
knowledge, skill or experience.
• Parties have more flexibility in the conduct of and in selecting
the rules that govern the proceedings.
• The finality of the award. The modification or reversal of
arbitral awards is legally possible only on very stringent and
specified grounds unlike decisions rendered in court litigation.
• The guarantee of the impartiality, fairness and independence
of arbitrator(s). 6
Disadvantages of arbitration
• The final decision of an arbitrator is difficult to overturn even
if erroneous with respect to the merits.
• The cost of arbitration has risen dramatically in recent
years.
• Some pieces of evidence which are, under the Rules of
Court, obviously inadmissible, can be admitted and
considered by the arbitral tribunal.
• The weight placed on evidence by the tribunal may not be
very clear to the parties.
• Third party joinder is limited or may even be prohibited

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History of ADR in the Philippines
8
Chung Fu Industries (Phil.) Inc. v. Court of Appeals
[G.R. No. 96283. February 25, 1992.]

“The early judges called upon to solve private conflicts were primarily
the arbiters, persons not specially trained but in whose morality, probity
and good sense the parties in conflict reposed full trust. Thus, in
Republican Rome, arbiter and judge (judex) were synonymous. The
magistrate or praetor, after noting down the conflicting claims of litigants,
and clarifying the issues, referred them for decision to a private person
designated by the parties, by common agreement, or selected by them
from an apposite listing (the album judicium) or else by having the
arbiter chosen by lot. The judges proper, as specially trained state
officials endowed with own power and jurisdiction, and taking
cognizance of litigations from beginning to end, only appeared under the
Empire, by the so-called cognitio extra ordinem."

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 Ley de Enjuiciamento Civil

• Applied to the Philippines during the Spanish Colony

• Contained provisions for the appointment by the
parties of friendly adjusters, known as juicio de
amigables componedores, for the settlement of their
differences.
• With the advent of American rule, the provisions of
the Ley were impliedly repealed with the enactment
of the Code of Civil Procedure

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Chan Linte vs. Law Union and Rock Insurance
Co., et al., 42 Phil. 548 (1921)

”The settlement of controversies by arbitration is

an ancient practice at common law. In its broad
sense, it is a substitution, by consent of the parties,
of another tribunal for the tribunals provided by the
ordinary processes of law.… Its object is the final
disposition, in a speedy and inexpensive way, of
the matters involved, so that they may not become
the subject of future litigation between the parties.”

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Dissenting Opinion of Justice Malcom in Vega
vs. San Carlos Milling Co., 51 Phil. 908 (1924)

“The rule now is that unless the agreement is such

as to absolutely close the doors of the courts
against the parties, which agreement would be
void, the courts will look with favor upon such
amicable agreements and will only with great
reluctance interfere to anticipate or nullify the
action of the arbitrator.” - Manila Electric Co. vs.
Pasay Transportation Co., 57 Phil. 600 (1932).

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Commonwealth Act No. 103

“The Court shall, before hearing the dispute and in the course
of such hearing, endeavor to reconcile the parties and induce
them to settle the dispute by amicable agreement. If any
agreement as to the whole or any part of the dispute is arrived
at by the parties, a memorandum of its terms shall be made in
writing, signed and acknowledged by the parties thereto before
the Judge of the Court or any official acting in his behalf and
authorized to administer oaths or acknowledgments, or, before
a notary public. The memorandum shall be filed in the office of
the Clerk of the Court, and, unless otherwise ordered by the
Court, shall, as between the parties to the agreement, have the
same effect, and be deemed to be, a decision or award.”

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The New Civil Code of the Philippines
(Republic Act No. 386)

• Enacted by Congress on January 26, 1949 and took effect

on August 30, 1950
• Replaced the old Civil Code (Spanish Codigo Civil) which
was first enforced in the Philippines in 1889
• Contains general provisions relating to compromise and
arbitration (Articles 2028 to 2046)

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• Once a compromise has been accepted, it is binding
upon the parties provided consent was not vitiated
(McCarthy v. Barber Steamship Steamship Lines, 45
Phil. 488) even if such agreement may turn out to be
unfavourable to either or both parties (Castro v. Castro,
30 June 1952)
• This is because both parties to a compromise
agreement signed the same willingly and voluntarily
(Martin v. Martin, 23 May 1959) and any judgment
based thereon has the effect of res judicata (Magpale v.
Sobrepena, 30 June 1955)

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Arbitration Law (Republic Act No. 876)

• Passed by the legislature in 1953

• Authorized the making of arbitration and submission
agreements and provided for the appointment of
arbitrators and the procedure for the arbitration in civil
controversies.
• Became the cornerstone of legislative participation in
elevating arbitration as a recognized and viable mode
alternative to litigation in settlement of disputes

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Eastboard Navigation Ltd. vs. Juan Ysmael &
Co., Inc., 102 Phil. 1 (1957).

“With its passage, Philippine Congress adopted the

modern view that arbitration, as an inexpensive, speedy
and amicable method of settling disputes and as a
means of avoiding litigation should receive every
encouragement from the courts which may be extended
without contravening sound public policy or settled law.”

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Eastboard Navigation Ltd. vs. Juan Ysmael & Co.,
Inc., 102 Phil. 1 (1957).

“Considering this declared policy of Congress in favor of

arbitration of all kinds of disputes, and the fact that,
according to the explanatory note of Republic Act No. 876,
"to afford the public a cheap and expeditious procedure of
setting not only commercial but other kinds of controversies
x x x we find no plausible reason for holding that the
arbitration agreement in question, simply because it refers
to a future dispute, is null and void as being against public
policy.”

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United Nations Convention on the
Recognition and the Enforcement of
Foreign Arbitral Awards

• Also known as the New York Convention;

• It entered into force on June 7, 1959 (Article XII)
• The Philippines became a signatory on 10 June 1958
and ratified the treaty on 6 July 1967;
• Art. III of the Convention provides that “[e]ach contracting
state shall recognize arbitral awards as binding…”].

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United Nations Convention on the Recognition
and the Enforcement of Foreign Arbitral Awards
• Seeks to provide common legislative standards for the
recognition of arbitration agreements and court recognition
and enforcement of foreign and non-domestic arbitral
awards
• Principal aim: Foreign and non-domestic arbitral awards
will not be discriminated against and it obliges Parties to
ensure such awards are recognized and generally capable
of enforcement in their jurisdiction in the same way as
domestic awards.
• Ancillary aim: Require courts of Parties to give full effect to
arbitration agreements by requiring courts to deny the
parties access to court in contravention of their agreement
to refer the matter to an arbitral tribunal. 20
 United 1. Each Contracting State shall recognize an agreement in
Nations writing under which the parties undertake to submit to
arbitration all or any differences which have arisen or which
Convention
may arise between them in respect of a defined legal
on the relationship, whether contractual or not, concerning a subject
Recognition matter capable of settlement by arbitration.
and the 2. The term "agreement in writing" shall include an arbitral clause
Enforcement in a contract or an arbitration agreement, signed by the parties
of Foreign or contained in an exchange of letters or telegrams.
Arbitral 3. The court of a Contracting State, when seized of an action in a
Awards matter in respect of which the parties have made an
agreement within the meaning of this article, shall, at the
request of one of the parties, refer the parties to arbitration,
unless it finds that the said agreement is null and void,
inoperative or incapable of being performed.
21
National Union Fire Insurance Company of Pittsburg,
PA/American International Underwriter (Phil.) Inc. v.
Stolt-Nielsen Philippines, Inc., G.R. No. 87958, April
26, 1990

“Foreign arbitration as a system of settling commercial

disputes of an international character was likewise
recognized when the Philippines adhered to the United
Nations "Convention on the Recognition and the
Enforcement of Foreign Arbitral Awards of 1958," under the
10 May 1965 Resolution No. 71 of the Philippine Senate,
giving reciprocal recognition and allowing enforcement of
international arbitration agreements between parties of
different nationalities within a contracting state.”

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UNCITRAL Model Law on International
Commercial Arbitration of the United Nations
Commission on International Trade Law

• Adopted by the United Nations Commission on

International Trade Law (UNCITRAL) on 21 June 1985, at
the end of the eighteenth session of the Commission.
• The General Assembly, in its resolution 40/72 of 11
December 1985, recommended “that all States give due
consideration to the Model Law on International
Commercial Arbitration, in view of the desirability of
uniformity of the law of arbitral procedures and the
specific needs of international commercial arbitration
practice”.
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UNCITRAL Model Law on International
Commercial Arbitration of the United Nations
Commission on International Trade Law

• The Model Law was amended by UNCITRAL on 7 July

2006,
• The General Assembly, in its resolution 61/33 of 4
December 2006, recommended “that all States give
favorable consideration to the enactment of the revised
articles of the UNCITRAL Model Law on International
Commercial Arbitration, or the revised UNCITRAL Model
Law on International Commercial Arbitration, when they
enact or revise their laws (…)”.

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UNCITRAL Model Law on International
Commercial Arbitration
• Designed to assist States in reforming and modernizing
their laws on arbitral procedure so as to take into account
the particular features and needs of international
commercial arbitration.
• Covers all stages of the arbitral process from the arbitration
agreement, the composition and jurisdiction of the arbitral
tribunal and the extent of court intervention through to the
recognition and enforcement of the arbitral award.
• Reflects worldwide consensus on key aspects of
international arbitration practice having been accepted by
States of all regions and the different legal or economic
systems of the world.
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Korea Technologies Co., Ltd., v. Lerma,
542 SCRA 1 (2008).

“As signatory to the Arbitration Rules of the UNCITRAL Model

Law on International Commercial Arbitration of the United
Nations Commission on International Trade Law (UNCITRAL)
in the New York Convention on June 21, 1985, the
Philippines committed itself to be bound by the Model
Law. We have even incorporated the Model Law in Republic
Act No. (RA) 9285, otherwise known as the Alternative
Dispute Resolution Act of 2004 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,
promulgated on April 2, 2004.”
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 The Construction Industry
Arbitration Law (E.O. 1008)

 Enacted in 1985
 Purpose: To establish an arbitral machinery that would
allow the early and expeditious resolution of
construction industry disputes
 Mandate: Establish the Construction Industry Arbitration
Commission

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 The Construction Industry
Arbitration Commission (CIAC)
 Consists of a Chairman and two (2) members
 Term of office of the members is six (6) years;
members first appointed, the Chairman holds office
for six years; the other member for four (4) years
and the third for two (2) years.
 Presence of a majority of the members constitutes
a quorum for the transaction of business
 Decisions shall be arrived at by a majority vote

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Jurisdiction of the CIAC

E.O. No. 1008, Sec. 4

The CIAC shall have original and exclusive jurisdiction
over disputes arising from, or connected with, contracts
entered into by parties involved in construction in the
Philippines, whether the dispute arises before or after
the completion of the contract, or after the abandonment
or breach thereof. These disputes may involve
government or private contracts. For the Board to
acquire jurisdiction, the parties to a dispute must agree
to submit the same to voluntary arbitration.

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Presidential Decree No. 1508
• Issued on June 11, 1978 by President Marcos to establish
a system of amicably settling disputes at the barangay
level;
• On February 10, 1979, the Katarungang Pambarangay
Rules took effect;
• The Rules governed the establishment, administration, and
operation of the Lupong Tagapayapa and the Pangkat ng
Tagapagkasundo as well as the procedures in settling
disputes among barangay members through mediation,
conciliation and arbitration;

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Local Government Code
• Batas Pambansa Blg. 377 (Local Government Code of
1983);
• Book II, Title One Chapter 9, Sec. 114 of said 1983 Code
merely referred to PD 1508 as the governing law on
Katarungang Pambarangay;
• Revised Rule on Summary Procedure mandates the
dismissal without prejudice of cases which fail to comply
with the requirement of prior referral to the Lupon for
conciliation under PD 1508.

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Local Government Code
• On October 10, 1991, Republic Act 7160 was signed
into law;
• Chapter 7, Title One, Book III provides for the Revised
Katarungang Pambarangay Law, repealing Presidential
Decree No. 1508
• While RA 7610 became the governing law on
Katarungang Pambarangay, the jurisprudence built on
PD No. 1508 may still be applicable in cases where its
provisions were reproduced in the Code.

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Republic Act 7160
Local Government Code of 1991

• Expanded the scope and powers of the Katarungang

Pambarangay or the Barangay Justice System to:
a. Decongest the courts of cases;
b. Address inequalities in access to justice, particularly
experienced by marginalized communities.

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1997 Rules of Civil Procedure
as amended by A.M. No. 19-10-20-SC
• Took effect on July 1, 1997, in accordance with the resolution
in Bar Matter No. 803 adopted by the Supreme Court on April
8, 1997;
• The Rules were promulgated pursuant to the provisions of
Section 5(5) of Article VIII of the Constitution which grants the
Supreme Court the power to adopt and promulgate Rules
concerning the protection and enforcement of constitutional
rights, pleading, practice and procedure in all courts, the
admission to the practice of law, the Integrated Bar, and legal
assistance to the underprivileged;
• The Rules are based in part, on some of the Federal Rules of
Civil Procedure of the United States;
34
1997 Rules of Civil Procedure
• Under Rule 18, Pre-Trial is mandatory;
• One of the purposes of Pre-Trial is to determine the
possibility of an amicable settlement or of a submission to
alternative modes of dispute resolution [Rule 18, Section
2(a)];
• After pre-trial and, after issues are joined, the court refers
the parties for mandatory court-annexed mediation (Rule
18, Section 8)
• Under Section 9, Rule 18, if the judge is convinced that
settlement is still possible, the case may be referred to
another court for judicial dispute resolution
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1997 Rules of Civil Procedure
• Provisions on deposition-discovery procedure which aim
to educate the parties in advance of trial as to the real
value of their claims and defenses, thereby encouraging
settlements out of court. (Rule 23 to 29)

36
Philippine Mediation Center
• Launched by the Supreme Court on April 6, 2001 to:
a. Promote the use of court-related mediation;
b. Encourage the development of other mediation
application to divert cases from the trial courts;
c. Provide training for the development of new mediators
and determine continued authorization of mediators;
d. Ensure quality mediation services for court-related
cases; and develop and prescribe curricula for
mediation training for court-connected and legal
education programs

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Alternative Dispute Resolution Act
of 2004 (RA No. 9285)
• Signed into law on 02 April 2004 and became effective
on 28 April 2004
• Articulated the policy of the state "to actively promote
party autonomy in the resolution of disputes or the
freedom of the parties to make their own arrangements
to resolve their disputes“ and "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.”

38
Alternative Dispute Resolution Act of
2004 (RA No. 9285)
• Institutionalized a national policy on alternative dispute
resolution and updated the Arbitration Law of 1953 and
helped make our legal system in sync with the UNCITRAL
Model Law and the New York Convention;
• Recognized the international application of the ADR
system as it paved the way for the Philippines to be a
venue for international commercial arbitration
• It likewise strengthened Katarungang Pambarangay
• DOJ Circular No. 98 s. 2009 - IRR

39
Department Circular No. 98
Implementing Rules and Regulations of the Alternative
Dispute Resolution Act of 2004

• Promulgated by the DOJ and was approved on December 4,

2009
• The IRR of RA 9285 reiterate that RA 9285 is procedural in
character and applicable to all pending arbitration
proceedings. Consistent with Article 2046 of the Civil Code,
the Special ADR Rules were formulated and were also
applied to all pending arbitration proceedings covered by RA
9285, provided no vested rights are impaired. (DFA v. BCA
International Corporation, et al., G.R. No. 225051, July 19,
2017)
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Department of Foreign Affairs v. BCA
International Corporation
(G.R. No. 210858, June 29, 2016)

Arbitration is deemed a special proceeding and governed by

the special provisions of RA 9285, its IRR, and the Special
ADR Rules. RA 9285 is the general law applicable to all
matters and controversies to be resolved through alternative
dispute resolution methods. While enacted only in 2004, we
held that RA 9285 applies to pending arbitration proceedings
since it is a procedural law, which has retroactive effect.

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Special Rules of Court on ADR
(A.M. No. 07-11-08-SC)

• Promulgated by the Supreme Court on September 2009 to govern the

following process and proceedings:
1. Relief on the issues, existence, validity and enforceability of the arbitration
agreement;
2. Referral to alternative dispute resolution;
3. Interim measures of protection;
4. Appointment of arbitrator;
5. Challenge to appointment of arbitrator
6. Termination of mandate of arbitrator
7. Assistance in taking evidence
8. Confirmation, correction or vacation of award in domestic arbitration
9. Recognition and enforcement or setting aside of an award in international
commercial arbitration
10. Recognition and enforcement of foreign arbitral award
11. Confidentiality/protective orders
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12. Deposit and enforcement of mediated settlement agreements
Revised Guidelines for Continuous
Trial of Criminal Cases
A.M. No. 15-06-10-SC

• Promulgated by the Supreme Court on April 25, 2017 and took

effect on September 1, 2017
• The Revised Guidelines was promulgated to : (a) protect and
advance the constitutional right of persons to a speedy
disposition of their criminal cases; (b) reinforce and give teeth
to the existing rules on criminal procedure and other special
rules prescribing periods for court action and those which
promote speedy disposition of criminal cases; and (c)
introduce innovations and best practices for the benefit of the
parties.
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Revised • Provides for the referral to mediation on the civil liability of the following
Guidelines cases (unless a settlement is reached earlier in the pre-trial/ preliminary
for conference):
Continuous i. Crimes where payment may prevent criminal prosecution or may
Trial of extinguish criminal liability, such as violations of:
Criminal a. B.P. Blg. 22;
Cases b. SSS Law (R.A. No. 1161, as amended by R.A No. 8282); and
A.M. No. 15-06-10-SC c. PAG-IBIG Law (R.A. No. 9679).
ii. Crimes against property under Title 10 of the Revised Penal Code
(RPC), where the obligation may be civil in nature, such as:
a. Theft under Art. 308, RPC, cognizable by the first level courts;
b. Estafa under Art. 315(1 ), RPC, except estafa under Art. 315 (2) and
(3);
c. Other forms of swindling under Art. 316, RPC;
d. Swindling of a minor under Art. 317, RPC;
e. Other deceits under Art. 318, RPC; and
f. Malicious mischief under Art. 327, RPC. 44
Revised
Guidelines iii. Crimes against honor under Title 13, RPC, where the liability may be
civil in nature, such as:
for
a. Libel by means of writings or similar means under Art. 355, RPC;
Continuous b. Threatening to publish and offer to present such publication for a
Trial of compensation under Art. 356, RPC;
Criminal c. Prohibited publication of acts referred to in the course of official
Cases proceedings under Art. 357, RPC;
d. Grave Slander (Grave Oral Defamation) of serious and insulting
A.M. No. 15-06-10-SC
nature under Art. 358, par. 1, RPC;
e. Simple Slander (Oral Defamation) - not of a serious and insulting
nature under Art. 358, par. 2, RPC;
f. Grave Slander by Deed - of a serious nature under Art. 359, par. 1,
RPC;
g. Simple Slander by Deed - not of a serious nature under Art. 359, par.
2, RPC;
h. Incriminating innocent person under Art. 363, RPC;
i. Intriguing against honor under Art. 364, RPC;
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Revised
Guidelines
for iv. Libel under R.A. 10175 (Cybercrime Prevention Act of 2012) where the
Continuous liability may be civil in nature;
Trial of v. Criminal negligence under Title 14, RPC, where the liability may be civil
Criminal in nature; and
Cases vi. Intellectual property rights cases where the liability may be civil in
nature.
A.M. No. 15-06-10-SC

46
2019 Rules on Mediation in the
National Prosecution Service

• Governs the mediation of the civil aspect of all

criminal complaints for simple theft, qualified
theft, estafa and criminal negligence resulting in
damage to property under the Revised Penal
Code and for violations of BP 22, (provided that a
complaint where the amount involved does not
exceed P200,000 shall be referred to mandatory
mediation)

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ADR and the Legal Profession
• The Lawyer’s Oath
• Code of Professional Responsibility
• Rule 1.03 – A lawyer shall not, for any corrupt motive
or interest, encourage any suit or proceeding or delay
any man’s cause.
• Rule 1.04 – A lawyer shall encourage his clients to
avoid, end or settle a controversy if it will admit of a
fair settlement.
• Specific duties of a lawyer (Sec. 20, Rule 138)
“6. Not to encourage either the commencement or
the continuance of an action or proceeding, or delay any
man’s cause, for any corrupt motive or interest;”
48
ADR and the Legal Profession

The Lawyer’s Role

• Contribute to the promotion of ADR

• Assist courts in encouraging the parties to avail of
alternative means of dispute resolution
• Explain the benefits of the ADR system.

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