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FUNDAMENTALS OF ALTERNATIVE
DISPUTE RESOLUTION

I. Definition.
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 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.1
ADR proceedings in quasi-judicial agencies exercising quasi-judicial power are also
considered ADR. However, they are not governed by ADR Act of 2004 but by other laws and
rules governing their procedures.

II. State Policy on ADR

 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.
 State shall encourage and actively promote the use of Alternative Dispute Resolution as
an important means to achieve speedy and impartial justice and declog court dockets.
 State shall provide means for the use of ADR as an efficient tool and an alternative
procedure for the resolution of appropriate cases
 State shall enlist active private sector participation in the settlement of disputes through
ADR.
Insular Savings Bank v Far East Bank and Trust Company – ADR resolution 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
ggodwill and lasting friendship.2
RCBC Capital Corporation v Banco de Oro Unibank, Inc. - Institutionalization of ADR was
envisioned as "an important means to achieve speedy and impartial justice and declog court
dockets." The most important feature of arbitration, and indeed, the key to its success, is the
public’s confidence and trust in the integrity of the process, For this reason, the law authorizes
vacating an arbitral award when there is evident partiality in the arbitrators.3
1
Sec 3 ADR Act of 2004
2
Insular Savings Bank v Far East Bank and Trust Company, GR No. 141818, June 22, 2006
3
RCBC Capital Corporation v Banco de Oro Unibank, Inc, GR No. 196171, December 10, 2012
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DISPUTE RESOLUTION

III. Principles of ADR

1. Promotion of party autonomy and self-determination in the resolution disputes.
2. Recognition of ADR as an efficient tool and an alternative procedure for the resolution of
cases.
3. Enlisting of private sector participation.

IV. Objectives and Benefits of ADR

1. Speedy and Impartial Justice
2. Declogging of Court Dockets

V. 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 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 Act of 2004 did not limit the
forms of ADR. Any means or methods aim at resolving disputes outside the court trial
system may be recognized as an ADR form provided it is not contrary to law, morals,
good customs, public order or public policy.
3. ADR is contractual in nature. The parties to a dispute are given the freedom to agree to
resolve their dispute and decide on the procedure therefor. Any form of ADR that
satisfies the essential requisites of a contract, 4 which is not a contrary to law, morals,
good customs, public order or public policy is allowable as form of ADR.
The consent to undergo ADR may be 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 consent may also be present-causal consent as when the parties to an existing
controversy voluntarily submit themselves either to an arbitration or mediation.

4. ADR avoids court trial. ADR is conducted outside of the court trial system. It is in lieu of
and conducted precisely to avoid trial.
Judicial Dispute Resolution or "JDR" which, although not governed by ADR Act of
2004, requires judges to conduct mediation between the parties as part of the pre-trial and
prior to start of trial stage.

4
Art. 1318 New Civil Code of the Philippines
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DISPUTE RESOLUTION

5. ADR usually involves the participation of neutral third party. Third party participant may
either be the arbitrator/s, mediator, conciliator or neutral evaluator. It is imperative that
the third party participant observe neutrality at all times.
VI. Sources of ADR
1. Domestic laws anc rules which may either be general or special.
a. General ADR laws are those applicable to all forms of ADR such as but not
limited to Art. II. Sec 16, 1987 Constitution, 5 The Arbitration Law (RA No. 876) 6
and ADR Act of 2004 ( RA 9285)7
b. Special ADR laws are those that pertain to specific subject matters e.g. Local
Government Code of 1991, the Labor Code and its Implementing Rules and
Regulations and other similar laws.
2. Acts of the executive branch
3. Decisions of Supreme Court
4. International Laws
5. General Principles of law and equity.
VII. Forms of ADR
1. Arbitration. It is an arrangement for taking and abiding by the judgment of selected
persons in some disputed manner, instead of carrying it to established tribunals of justice,
and is intended to avoid the formalities, delay, expenses, and vexation of ordinary
litigation.

In its restricted sense, for purpose of ADR Act of 2004, it 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 Acts.

2. Mediation. It is 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 the dispute.

The basic distinction between arbitration and mediation is that in arbitration an arbitral
tribunal or arbitrator evaluates the evidence and the merits of the case and renders an
arbitral award based on his appreciation; whereas in mediation the parties to controversy

5
https://www.officialgazette.gov.ph/constitutions/the-1987-constitution-of-the-republic-of-the-philippines/the-
1987-constitution-of-the-republic-of-the-philippines-article-ii/#:~:text=Section%2016.,rhythm%20and%20harmony
%20of%20nature.&text=It%20shall%20protect%20the%20rights%20of%20workers%20and%20promote%20their
%20welfare.
6
https://lawphil.net/statutes/repacts/ra1953/ra_876_1953.html
7
https://www.lawphil.net/statutes/repacts/ra2004/ra_9285_2004.html
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FUNDAMENTALS OF ALTERNATIVE
DISPUTE RESOLUTION

are convinced by a mediator to settle their controversy through voluntary agreement of

the parties themselves called a “mediated settlement agreement”.
3. Conciliation. The adjustment and settlement of a dispute in a friendly, unantagonistic
manner.
4. Neutral and early neutral evaluation. It is an ADR process wherein the parties and their
lawyers are brought together to present summaries of their cases and receive a non-
binding assessment by an experienced neutral person with expertise in the subject.
5. Mini-trial. It is a structured dispute resolution method in which the merits of a case are
argued before a panel of composed of senior decision makers, with or without the
presence of a neutral third person, after which the parties seek a negotiated settlement.
6. Any combination of the foregoing. Any combination of the foregoing ADR forms,
approved by the parties, not contrary to law, good customs, morals, public order or public
policy, may be implemented.
7. Any other ADR form (Innominate ADR Form). Any arrangement agreed upon by the
parties that satisfies the requisites of ADR, complies with the essential requisites of a
valid contract and is not contrary to law, morals, good customs, public order or public
policy is an acceptable form of ADR.
VII. Forms of ADR
1. As to the number of parties. Bilateral or bi-party, or multilateral, or multi-party.
2. As to the number of issues involved. Simple or complex.
3. As to the extent of conclusion. Complete or partial.
4. As to the role of evidence in the proceedings. Evidentiary or merit-based, or Non-
evidentiary or non-merit based.
5. As to the pendency of a court case. Case-related or independent.
6. As to the applicable law. Domestic, international or foreign.
7. As to the permanence of ADR provider or practitioner. Ad hoc or institutional.
VIII. Components of ADR
1. Contending parties who are involved in a dispute or controversy.
2. Dispute or controversy which is susceptible of being subjected to ADR
3. Form of ADR which may either be arbitration, mediation, conciliation, early neutral
evaluation, mini-trial or any combination of the foregoing.
4. ADR provider or practitioner. An ADR provider is an institution or person accredited as
mediator, conciliator, arbitrator, neutral party evaluator, or any person exercising similar
functions in any ADR system. On the other hand, ADR practitioner is an individual
acting as mediator conciliator, arbitrator, neutral party evaluator who is not necessarily
accredited as an ADR provider.
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IX. Subject Matters of ADR

In line with the policy to encourage the use of ADR, in general all adversarial disputes can be
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 civil status of persons
b. The validity of Marriage or any ground for legal separation
c. The jurisdiction of the courts
d. Future legitime
e. Criminal Liability
f. In general, those, which, by law, cannot be compromised. Article 2035 of the Civil Code
of the Philippines is an example of a provision of law prohibiting compromise.

X. Seat and Venue of ADR

a. Seat of ADR is the jurisdiction under whose law the proceeding is being conducted.
b. Venue or Place of ADR is the actual site where arbitration is conducted.

XI. Basic Concepts of ADR

1. Concluding Acts or Agreements. ADR proceedings are completed upon the execution of
concluding act or agreement.

a. Arbitral Award is a partial or final decision by an arbitrator in resolving the issue in a

controversy.
b. Mediated Settlement Agreement is a contract executed by the mediating parties, with
the assistance of their respective counsel, certified by the mediator, evidencing a
successful mediation.
c. Compromise or Compromise Agreement is a contract whereby parties, by making
reciprocal concessions, avoid litigation, or put an end to one already existing.
d. Waiver or quitclaim is a statement renouncing any right or claim involved in a
controversy by one party in favor of the other.

2. ADR Providers and Practitioners

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
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FUNDAMENTALS OF ALTERNATIVE
DISPUTE RESOLUTION

3. The neutral third person in a mini-trial, neutral evaluation (neutral evaluator),

combination of ADR forms, or innominate ADR form, who, upon agreement of the
parties, is directed to render a finding assessment.
Arbitrators and arbitral tribunals do not fall under the classification of quasi-judicial
bodies since they are constituted by virtue of an arbitration agreement rather than law.
The civil liability of ADR providers and practitioners for acts done in the performance of
their duties is the same as that for public officers as provided for under Section 38 (1)
Chapter 9, Book I of the Administrative Code of 1987.

3. Preference for ADR

There is a clear preference for the use of ADR methods over court trial system. Even
before the advent of ADR Act of 2004, Article 2030 of the Civil Code of the Philippines
already instructs the court to suspend proceedings if the possibility of settlement
through the different modes of the alternative dispute resolution is present.

XII. Office for Alternative Dispute Resolution (Section 49 and 50, ADR Act; Articles 2.1,
IRR)
The Office for Alternative Dispute Resolution (OADR), attached to the Department of Justice, is
created 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 and its IRR.8

It is headed by the Executive Director appointed by the President, upon recommendation of the
Secretary of Justice.
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, 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.

8
https://lawphil.net/statutes/repacts/ra1953/ra_876_1953.html
CHAPTER 2:
FUNDAMENTALS OF ALTERNATIVE
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Group 2

Jennifer T. Pinnock
Tom Mendiguarin
Vee Jay Myron P. Mestidio