DOJ Department Circular No.

98 - The
Lawphil Project
Republika ng Pilipinas
KAGAWARAN NG KATARUNGAN
DEPARTMENT OF JUSTICE
Manila

DEPARTMENT CIRCULAR NO. 98

IMPLEMENTING RULES AND REGULATIONS OF THE ALTERNATIVE

DISPUTE RESOLUTION ACT OF 2004.

Whereas, pursuant to Section 52 of Republic Act No. 9285, otherwise known as

the "Alternative Dispute Resolution Act of 2004" (ADR Act"), the Secretary of
Justice is directed to convene a Committee for the formulation of the
appropriate rules and regulations necessary for the implementation of the ADR
Act;

Whereas, the committee was composed of representatives from the

Department of Justice, the Department of Trade and Industry, the Department
of the Interior and Local Government, the President of the Integrated Bar of the
Philippines, a representative from the ADR organizations.

Wherefore, the following rules and regulations are hereby adopted as the
Implementing Rules and Regulations of Republic Act no.9285.

IMPLEMENTING RULES AND REGULATIONS OF THE ALTERNATIVE

DISPUTE RESOLUTION ACT OF 2004 (R.A No. 9285)

Pursuant to Section 52 of republic Act No. 9285, otherwise known as the

alternative Dispute Resolution Act of 2004" ("ADR Act"), the following Rules and
Regulations (these "Rules") are hereby promulgated to implement the provisions
of the ADR Act:

Chapter 1
GENERAL PROVISIONS

RULE 1 – Policy and Application

Article 1.1 Purpose. These Rules are promulgated to prescribe the procedures
and guidelines for the implementation of the ADR Act.

Article 1.2 Declaration of policy. It is the policy of the State:

(a) To promote party autonomy in the resolution of disputes or the freedom

of the parties to make their own arrangements to resolve their disputes;

(b) To 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;

(c) To provide means for the use of ADR as an efficient tool and an
alternative procedure for the resolution of appropriate cases; and

(d) To enlist active private sector participation in the settlement of disputes

through ADR

Article 1.3 Exception to the Application of the ADR Act. The provisions of the
ADR Act shall not apply to the resolution or settlement of the following:

(a) labor disputes covered by Presidential Decree No. 442, otherwise

known as the "Labor Code of the Philippines, as a amended", and its
Implementing Rules and Regulations;

(b) the civil status of persons;

(c) the validity of marriage;

(d) any ground for legal separation;

(e) the jurisdiction of courts;

(f) future legitimate;

(g) criminal liability;

(h) those disputes which by law cannot be compromised; and

(i) disputes referred to court-annexed mediation.

Article 1.4. Electronic Signature and E-Commerce Act. The provisions of the
Electronic Signature and E-Commerce Act, and its implementing Rules and
Regulations shall apply to proceedings contemplated in the ADR Act.

Article 1.5. Liability of ADR Providers/Practitioners. The ADR provides

/practitioners shall have the same civil liability for acts done in the performance
of their official duties as that of public officers as provided in Section 38 (1),
Chapter 9, Book 1 of the Administrative Code of 1987, upon a clear showing of
bad faith, malice or gross negligence.

RULE 2- Definition of Terms

Article 1.6 Definition of Terms. For purposes of these Rules, the terms shall be
defined as follows:

A. Terms Applicable to All Chapters

1. ADR Provider means the Institutions or persons accredited as

mediators, conciliators, arbitrators, neutral evaluators or any person
exercising similar functions in any Alternative dispute resolution system.
This is without prejudice to the rights of the parties to choose non-
accredited individuals to act as mediator, conciliator, arbitrator or neutral
evaluator of their dispute.

2. Alternative Dispute Resolution System means any process or

procedures 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 the ADR Act, in which neutral third person
participates to assist in the resolution of issues, Including arbitration,
mediation, conciliation, early neutral evaluation, mini-trial or any
combination thereof.

3. Arbitration means a voluntary dispute resolution process in which one

or more arbitrators, appointed in accordance with the agreement of the
parties or these Rules, resolve a dispute by rendering an award.

4. Arbitration Agreement means agreement by the parties to submit to

arbitration all or certain disputes which have arisen or which may arise
between them in respect of a defined legal relationship, whether
contractual or not. An arbitration agreement may be in the form of an
arbitration clause in a contract or in the form of a separate agreement.

5. Authenticate means to sign, execute, adopt a symbol or encrypt a

record or establish the authenticity of a record or term.

6. Award means any partial or final decision by an arbitrator in resolving

the issue or controversy.

7. Confidential Information means any information, relative to the subject

of mediation or arbitration, expressly intended by the source not to
disclosed, or obtained under circumstances that would create reasonable
expectation on behalf of the source that the information shall not be
disclosed. It shall include:

(a) communication, oral or written, made in a dispute resolution

proceeding, including any memoranda, notes or work product of the
neutral party or non-party participant;

(b) an oral or written statement made or which occurs during

mediation or for purposes of considering, conducting, participating,
initiating, continuing or reconvening mediation or retaining a mediator;
and

(c) pleadings, motions, manifestations, witness statements, reports

filed or submitted in arbitration or for expert evaluation.

8. Counsel means a lawyer duly admitted to the practice of law in the

Philippines and in good standing who represents a party in any ADR
process.

9. Court means Regional Trial Court Except insofar as otherwise defined

under Model Law.

10. Government Agency means any governmental entity, office or officer,

other than a court that is vested by law with quasi-judicial power or the
power to resolve or adjudicate disputes involving the government, its
agencies and instrumentalities or private persons.

11. Model Law means the Model on International Commercial Arbitration

adopted by the United Nations Commission on International Trade Law on
21 June 1985.

12. Proceedings means judicial, administrative or other adjudicative

process, including related pre-hearing or post hearing motions,
conferences and discovery.

13. Record means information written on a tangible medium or stored in an

electronic or other similar medium, retrievable in a perceivable form.

14. Roster means a list of persons qualified to provide ADR services as

neutrals or to serve as arbitrators.

15. Special ADR Rules means the Special Rules of Court on Alternative
Dispute Resolution issued by the Supreme Court on September 1, 2009.

B. Terms and Applicable to the Chapter Mediation

1. Ad hoc Mediation means any mediation other than institutional or court-

annexed.

2. Institutional Mediation means any mediation process conducted under

the rules of a mediation institution.

3. Court-Annexed Mediation means mediation process conducted under

the auspices of the court and in accordance with Supreme Court approved
guidelines, after such court has acquired jurisdiction of the dispute.

4. Court-Referred Mediation means mediation ordered by a court to be

conducted in accordance with the agreement of the parties when an action
is prematurely commenced in violation of such agreement.

5. Certified Mediator means a mediator certified by the Office for ADR as

having successfully completed its regular professional training program.

6. Mediation means a voluntary process in which a mediator, selected by

the disputing party voluntary agreement regarding a dispute.

7. Mediation Party means a person who participates in a mediation and

whose consent is necessary to resolve the dispute.

8. Mediator means a person who conducts mediation.

9. Non-Party Participant means a person, other than a party or mediator,

who participates in a mediation proceeding as a witness, resource person
or expert.

C. Terms Applicable to the Chapter on International Commercial Arbitration

1. Appointing Authority as used in the Model Law shall mean the person
or institution named in the arbitration agreement as the appointing
authority; or the regular arbitration institution under whose rules the
arbitration is agreed to be conducted. Where the parties have agreed to
submit their dispute to institutional arbitration rules and unless they have
agreed to a different procedure, they shall be deemed to have agreed to
the procedure under such arbitration rules for the selection and
appointment of arbitrators. In ad hoc arbitration, the default appointment of
an arbitrator shall be made by the National President of the Integrated Bar
of the Philippines (IBP) or his /her duly authorized representative.

2. Arbitral Tribunal (under the Model Law) means a sole arbitrator or a

panel of arbitrators.

3. Arbitration means any arbitration whether or not administered by a

permanent arbitration institution.

4. Commercial Arbitration means an arbitration that covers matters

arising from all relationships of a commercial nature, whether contractual
or not. Relationships of a commercial nature include, but are not limited to,
the following commercial transactions: any trade transaction for the supply
or exchange of goods or services; distribution agreements; construction of
works; commercial representation or agency; factoring; leasing; consulting;
engineering; licensing; investment; financing; banking; insurance; joint
venture and other forms of industrial or business cooperation; carriage of
goods or passengers by air, sea rail or road.

5. Convention Award means a foreign arbitral award in a Convention State.

6. Convention State means a state that is a member of the New York

Convention.

7. Court (under the Model Law) means a body or organ of the judicial
system of the Philippines (i.e., the Regional Trial Court, Court of Appeals
and Supreme Court).

8. International Arbitration means an arbitration where:

(a) the parties to an arbitration agreement have, at the time of the

conclusion of that agreement, their places of business in different
states; or

(b) one of the following places is situated outside the Philippines in

which the parties have their places of business:

(i) the place of arbitration if determined in, or pursuant to , the

arbitration agreement;

(ii) any place where a substantial part of the obligations of the

commercial relationship is to be performed or the place with the
subject matter of the dispute is most closely connected; or

(c) the parties have expressly agreed that the subject matter of the
arbitration agreement relates to more than one country.

For this purpose:

(a) if a party has more than one place of business, the place of
business is that which has the closest relationship to the arbitration
agreement;

(b) if a party does not have a place of business, reference is to be

made to his/her habitual residence.

9. New York Convention means the United Nations Convention of the

Recognition and Enforcement of Foreign Arbitral Awards approved in 1958
and ratified by the Philippine Senate under Senate Resolution No.71.

10. Non-Convention Award means a foreign arbitral ward made in a state,

which is not a Convention State.

11. Non-Convention State means a state that is not a member of the New
York Convention.

D. Terms Applicable to the Chapter on Domestic Arbitration

1. Ad hoc Arbitration means arbitration administered by an arbitrator

and/or the parties themselves. An arbitration administered by an institution
shall be regarded as ad hoc arbitration if such institution is not a
permanent or regular arbitration institution in the Philippines.

2. Appointing Authority in Ad Hoc Arbitration means, in the absence of

an agreement, the National President of the IBP or his/her duly authorized
representative.

3. Appointing Authority Guidelines means the set of rules approved or

adopted by an appointing authority for the making of a Request for
Appointment, Challenge, termination of the Mandate of Arbitrator/s and for
taking action thereon.

4. Arbitration means a voluntary dispute resolution process in which one

or more arbitrators, Appointed in accordance with the agreement of the
parties or these Rules, resolve a dispute by rendering an award.

5. Arbitral Tribunal means a sole arbitrator or a panel, board or committee

of arbitrators.

6. Claimant means a person/s with a claim against another and who

commence/s arbitration against the latter.

7. Court means, unless otherwise specified in these Rules, a Regional Trial

Court.

8. Day means calendar day.

9. Domestic Arbitration means arbitration that is not international as

defined in Article 1(3) of the Mode Law.

10. Institutional Arbitration means arbitration administered by an entity,

which is registered as a domestic corporation with the Securities and
Exchange Commission (SEC) and engaged in. among others, arbitration of
disputes in the Philippines on a regular and permanent basis.

11. Request for Appointment means the letter-request to the appointing

authority of either or both parties for the appointment of arbitrator/s or of
the two arbitrators first appointed by the parties for the appointment of the
third member of an arbitral tribunal.

12. Representative is a person duly authorized in writing by a party to a

dispute, who could be a counsel, a person in his/her employ or any other
person of his/her choice, duly authorized to represent said party in the
arbitration proceedings.

13. Respondent means the person/s against whom the claimant

commence/s arbitration.

14. Written communication means the pleading, motion, manifestation,

notice, order, award and any other document or paper submitted or filed
with the arbitral tribunal or delivered to a party.

E. Terms Applicable to the Chapter on Other ADR Forms

1. Early Neutral Evaluation means an ADR process wherein parties and

their lawyers are brought together early in the pre-trial phase to present
summaries of their cases and to receive a non-binding assessment by an
experienced neutral person, with expertise in the subject matter or
substance of the dispute.

2. Mediation-Arbitration or Med-Arb is a two-step dispute resolution

process involving mediation and then followed by arbitration.

3. Mini-trial means a structured dispute resolution method in which the

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

CHAPTER 2
THE OFFICE FOR ALTERNATIVE DISPUTE RESOLUTION

RULE 1- Office for Alternative Dispute Resolution (OADR)

Article 2.1. Establishment of the Office for Alternative Dispute Resolution.

There is hereby established the OADR as an agency attached to the Department
of Justice. It shall have a Secretariat and shall be headed by an Executive
Director, who shall be appointed by the President of the Philippines, taking into
consideration the recommendation of the Secretary of Justice.

Article 2.2. Powers of the OADR. The OADR shall have the following powers;

(a) To act as appointing authority of mediators and arbitrators when the

parties agree in writing that it shall be empowered to do so;

(b) To conduct seminars, symposia, conferences and other public fora and
publish proceedings of said activities and relevant materials/information
that would promote, develop and expand the use of ADR;

(c) To establish an ADR library or resource center where ADR laws, rules
and regulation, jurisprudence, books, articles and other information about
ADR in the Philippines and elsewhere may be stored and accessed;

(d) To establish training programs for ADR providers/practitioners, both in

the public and private sectors; and to undertake periodic and continuing
training programs for arbitration and mediation and charge fees on
participants. It may do so in conjunction with or in cooperation with the IBP,
private ADR organizations, and local and foreign government offices and
agencies and international organizations;

(e) To certify those who have successfully completed the regular

professional training programs provided by the OADR;

(f) To charge for services rendered such as, among others, for training and
certifications of ADR providers;

(g) To accept donations, grants and other assistance from local and foreign
sources; and

(h) To exercise such other powers as may be necessary and proper to carry
into effect the provisions of the ADR Act.

Article 2.3. Functions of the OADR. The OADR shall have the following
functions;

(a) To promote, develop and expand the use of ADR in the private and
public sectors through information, education and communication;

(b) To monitor, study and evaluate the use of ADR by the private and public
sectors for purposes of, among others, policy formulation;

(c) To recommend to Congress needful statutory changes to develop,

strengthen and improve ADR practices in accordance with international
professional standards;

(d) To make studies on and provide linkages for the development,

implementation, monitoring and evaluation of government and private ADR
programs and secure information about their respective administrative
rules/procedures, problems encountered and how they were resolved;

(e) To compile and publish a list or roster of ADR providers/practitioners,

who have undergone training by the OADR, or by such training
providers/institutions recognized or certified by the OADR as performing
functions in any ADR system. The list or roster shall include the addresses,
contact numbers, e-mail addresses, ADR service/s rendered (e.g.
arbitration, mediation) and experience in ADR of the ADR
providers/practitioners;

(f) To compile a list or roster of foreign or international ADR

providers/practitioners. The list or roster shall include the addresses,
contact numbers, e-mail addresses, ADR service/s rendered (e.g.
arbitration, mediation) and experience in ADR of the ADR
providers/practitioners; and

(g) To perform such other functions as may be assigned to it.

Article 2.4. Divisions of the OADR. The OADR shall have the following staff and
service divisions, among others:

(a) Secretariat – shall provide necessary support and discharge such

other functions and duties as may be directed by the Executive Director.

(b) Public information and Promotion Division – shall be charged with

the dissemination of information, the promotion of the importance and
public acceptance of mediation, conciliation, arbitration or any combination
thereof and other ADR forms as a means of achieving speedy and efficient
means of resolving all disputes and to help in the promotion, development
and expansion of the use of ADR.

(c) Training Division – shall be charged with the formulation of effective

standards for the training of ADR practitioners; conduct of training in
accordance with such standards; issuance of certifications of training to
ADR practitioners and ADR service providers who have undergone the
professional training provided by the OADR; and the coordination of the
development, implementation, monitoring and evaluation of government
and private sector ADR programs.

(d) Records and Library Division – shall be charged with the

establishment and maintenance of a central repository of ADR laws, rules
and regulations, jurisprudence, books, articles, and other information about
ADR in the Philippines and elsewhere.

RULE 2 – The Advisory Council

Article 2.5. Composition of the Advisory Council. There is also created an

Advisory Council composed of a representative from each of the following:

(a) Mediation profession;

(b) Arbitration profession;

(c) ADR organizations;

(d) IBP; and

(e) Academe.

The members of the Council, who shall be appointed by the Secretary of Justice
upon the recommendation of the OADR Executive Director, shall choose a
Chairman from among themselves.

Article 2.6. Role of the Advisory Council. The Advisory Council shall advise the
Executive Director on policy, operational and other relevant matters. The Council
shall meet regularly, at least once every two (2) months, or upon call by the
Executive Director.

CHAPTER 3
MEDIATION

RULE 1 – General Provisions

Article 3.1. Scope of Application. These Rules apply to voluntary mediation,

whether ad hoc or institutional, other than court-annexed mediation and only in
default of an agreement of the parties on the applicable rules.

These Rules shall also apply to all cases pending before an administrative or
quasi-judicial agency that are subsequently agreed upon by the parties to be
referred to mediation.

Article 3.2. Statement of Policy. In applying and construing the provisions of

these Rules, consideration must be given to the need to promote candor of
parties and mediators through confidentiality of the mediation process, the
policy of fostering prompt, economical and amicable resolution of disputes in
accordance with principles of integrity of determination by the parties and the
policy that the decision-making authority in the mediation process rests with the
parties.

A party may petition a court before which an action is prematurely brought in a

matter which is the subject of a mediation agreement, if at least one party so
requests, not later than the pre-trial conference or upon the request of both
parties thereafter, to refer the parties to mediation in accordance with the
agreement of the parties.

RULE 2- Selection of a Mediator

Article 3.3. Freedom to Select mediator. The parties have the freedom to select
mediator. The parties may request the OADR to provide them with a list or roster
or the resumes of its certified mediators. The OADR may be requested to inform
the mediator of his/her selection.

Article 3.4. Replacement of Mediator. If the mediator selected is unable to act

as such for any reason, the parties may, upon being informed of such fact,
select another mediator.

Article 3.5. Refusal or Withdrawal of Mediator. A mediator may refuse from

acting as such, withdraw or may be compelled to withdraw from mediator
proceedings under the following circumstances:

(a) If any of the parties so requests the mediator to withdraw;

(b) The mediator does not have the qualifications, training and experience
to enable him/her to meet the reasonable expectations of the parties;

(c) Where the mediator's impartially is in question;

(d) If continuation of the process would violate any ethical standards;

(e) If the safety of any of the parties would be jeopardized;

(f) If the mediator is unable to provide effective services;

(g) In case of conflict of interest; and

(h) In any of the following instances, if the mediator is satisfied that:

(i) one or more of the parties is/are not acting in good faith;

(ii) the parties' agreement would be illegal or involve the commission

of a crime;

(iii) continuing the dispute resolution would give rise to an appearance

of impropriety;

(iv) continuing with the process would cause significant harm to a

non-participating person or to the public; or