ADR: General Concepts

 

GENERAL CONCEPTS

 

Purposes of ADR

1.       To achieve speedy and impartial justice

2.       To declog court dockets

3.       To prepare the Philippines for ASEAN integration and globalization

Sources of Alternative Dispute Resolution

1.       The 1987 Philippine Constitution

Art. VIII, Sec. 5, par. 5 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 under-privileged. Such rules shall provide a simplified and inexpensive procedure for the speedy disposition of cases, shall be uniform for all courts of the same grade, and shall not diminish, increase, or modify substantive rights. Rules of procedure of special courts and quasi-judicial bodies shall remain effective unless disapproved by the Supreme Court.

 

2.       Civil Code

Art. 2028. A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced.

Art. 2029. The court shall endeavor to persuade the litigants in a civil case to agree upon some fair compromise.

Art. 2030. Every civil action or proceeding shall be suspended: (1) If willingness to discuss a possible compromise is expressed by one or both parties; or (2) If it appears that one of the parties, before the commencement of the action or proceeding, offered to discuss a possible compromise but the other party refused the offer. The duration and terms of the suspension of the civil action or proceeding and similar matters shall be governed by such provisions of the rules of court as the Supreme Court shall promulgate. Said rules of court shall likewise provide for the appointment and duties of amicable compounders.

Art. 2031. The courts may mitigate the damages to be paid by the losing party who has shown a sincere desire for a compromise.

Art. 2032. The court's approval is necessary in compromises entered into by guardians, parents, absentee's representatives, and administrators or executors of decedent's estates.

Art. 2033. Juridical persons may compromise only in the form and with the requisites which may be necessary to alienate their property.

Art. 2034. There may be a compromise upon the civil liability arising from an offense; but such compromise shall not extinguish the public action for the imposition of the legal penalty.

Art. 2035. No compromise upon the following questions shall be valid: (1) The civil status of persons; (2) The validity of a marriage or a legal separation; (3) Any ground for legal separation; (4) Future support; (5) The jurisdiction of courts; (6) Future legitime

Art. 2036. A compromise comprises only those objects which are definitely stated therein, or which by necessary implication from its terms should be deemed to have been included in the same. A general renunciation of rights is understood to refer only to those that are connected with the dispute which was the subject of the compromise.

Art. 2037. A compromise has upon the parties the effect and authority of res judicata; but there shall be no execution except in compliance with a judicial compromise

Art. 2038. A compromise in which there is mistake, fraud, violence, intimidation, undue influence, or falsity of documents, is subject to the provisions of Article 1330 of this Code.   However, one of parties cannot set up a mistake of fact as against the other if the latter, by virtue of the compromise, has withdrawn from a litigation already commenced.

Art. 2039. When the parties compromise generally on all differences which they might have with each other, the discovery of documents referring to one or more but not to all of the questions settled shall not itself be a cause for annulment or rescission of the compromise, unless said documents have been concealed by one of the parties.   But the compromise may be annulled or rescinded if it refers only to one thing to which one of the parties has no right, as shown by the newly-discovered documents.

Art. 2040. If after a litigation has been decided by a final judgment, a compromise should be agreed upon, either or both parties being unaware of the existence of the final judgment, the compromise may be rescinded.   Ignorance of a judgment which may be revoked or set aside is not a valid ground for attacking a compromise.

Art. 2041. If one of the parties fails or refuses to abide by the compromise, the other party may either enforce the compromise or regard it as rescinded and insist upon his original demand.

Art. 2042. The same persons who may enter into a compromise may submit their controversies to one or more arbitrators for decision.

Art. 2043. The provisions of the preceding Chapter upon compromises shall also be applicable to arbitrations.

Art. 2044. Any stipulation that the arbitrators' award or decision shall be final, is valid, without prejudice to Articles 2038, 2039, and 2040.

Art. 2045. Any clause giving one of the parties power to choose more arbitrators than the other is void and of no effect.

Art. 2046. The appointment of arbitrators and the procedure for arbitration shall be governed by the provisions of such rules of court as the Supreme Court shall promulgate.

 

3.       The Arbitration Law (RA 876)

4.       The Alternative Dispute Resolution Act of 2004 (RA 9285)

5.       Decisions of the Supreme Court of the Philippines

6.       Rules and Resolutions issued by the Philippine Supreme Court

7.       Rules and Regulations issued by administrative agencies (DOJ Circular No. 98)

8.       International laws, treaties or international agreements

9.       Jurisprudence of other countries

10.   Equity

Alternative Dispute Resolution

An alternative dispute resolution system 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 issues, which includes arbitration, mediation, conciliation, early neutral evaluation, mini-trial, or any combination thereof.

ADR Provider

ADR Provider means institutions or persons accredited as mediator, conciliator, neutral evaluator, or any person exercising similar functions in any ADR system.

Forms of ADR

1.       Conciliation

2.       Mediation

3.       Arbitration

4.       Early neutral evaluation;

5.       Mini-trial

6.       Mediation-arbitration

7.       A combination thereof

8.       Any other ADR form

Conciliation

·         Is the adjustment and settlement of a dispute in a friendly, unantagonistic manner; used in courts before trial with a view towards avoiding rial and in labor disputes before arbitration

·         A process in which a neutral third party conveys information between parties and attempts to improve direct communication between them

Mediation

·         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

Arbitration

·         A voluntary dispute resolution process in which one or more arbitrators, appointed in accordance with the agreement of the parties, or rules promulgated in pursuant to this Act, resolve a dispute by rendering an award

Early Neutral Evaluation

·         An ADR process wherein parties and their lawyers are brought together early in a pre-trial phase to present summaries of their cases and receive a nonbinding assessment by an experienced, neutral person, with expertise in the subject in the substance of the dispute

Mini-trial

·         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

Mediation-Arbitration (Med-Arb)

·         A step dispute resolution process involving both mediation and arbitration

What cannot be subject of ADR

1.       Labor disputes covered by the Labor Code

2.       The civil status of persons

3.       Validity of marriage

4.       Any ground for legal separation

5.       Jurisdiction of courts

6.       Future legitime

7.       Criminal liability

8.       Those disputes which by law cannot be compromised

9.       Disputes referred to court-annexed mediation

General Principles Governing ADR

1.       Party autonomy

Ø  Parties are free to make their own arrangements to resolve their disputes

2.       Liberal interpretation in favor of ADR

Ø  In interpreting the ADR Act, the court shall have due regard to the policy of the law in favor of arbitration

Ø  In situations where no specific rule is provided under the Special ADR Rules, the court shall resolve such matter summarily and be guided by the spirit and intent of the Special ADR Rules and the ADR Laws

Ø  If there is an interpretation that would render effective an arbitration clause for purposes of avoiding litigation and expediting resolution of the dispute, that interpretation shall be adopted

Ø  If the arbitration clause is susceptible of an interpretation that covers the asserted dispute, an order to arbitrate should be granted, and any doubt should be resolved in favor of arbitration

3.       Competence-competence principle

Ø  The arbitral tribunal may initially rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement or any condition precedent to the filing of a request for arbitration

4.       Principle of separability

Ø  A decision that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause

Ø  An arbitration agreement is independent of the main contract

Ø  The arbitration agreement is to be treated as a separate agreement and the arbitration agreement does not automatically terminate when the contract of which it is part comes to an end.

Ø  The provision to submit to arbitration any dispute arising therefrom and the relationship of the parties is part of that contract and is itself a contract.

Ø  Denotes that the invalidity of the main contract, also referred to as the “container” contract, does not affect the validity of the arbitration agreement

5.       Confidential nature of ADR proceedings

Ø  Information obtained through mediation is privileged and confidential

Ø  arbitration proceedings, including the records, evidence and the arbitral award, are confidential and shall not be published

Ø  Includes the following:

(1)    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

(2)    An oral or written statement made or which occurs during mediation or for purposes of considering, conducting, participating, initiating, continuing of reconvening mediation or retaining a mediator

(3)    Pleadings, motions manifestations, witness statements reports filed or submitted in an arbitration or for expert evaluation

Ø  Confidential information shall not be subject to discovery and shall be inadmissible in any adversarial proceeding, whether judicial or quasi-judicial

Ø  The following persons involved or previously involved in a mediation may not be compelled to disclose confidential information during mediation:

(1)    The parties to the dispute

(2)    The mediator or mediators

(3)    The counsel for the parties

(4)    The nonparty participants

(5)    Any persons hired or engaged in connection with the mediation as secretary, stenographer, clerk or assistant

(6)    Any other person who obtains or possesses confidential information by reason of his/her profession

Ø  Exceptions to confidentiality:

(1)    In an agreement evidenced by a record authenticated by all parties to the agreement

(2)    Available to the public or that is made during a session of a mediation which is open, or is required by law to be open, to the public

(3)    A threat or statement of a plan to inflict bodily injury or commit a crime of violence

(4)    Internationally used to plan a crime, attempt to commit, or commit a crime, or conceal ongoing crime or criminal activity

(5)    Sought or offered to prove or disprove abuse, neglect, abandonment, or exploitation in a proceeding in which a public agency is protecting the interest of an individual protected by law; but this exception does not apply where a child protection matter is referred to mediation by a court or a public agency participates in the child protection mediation

(6)    Sought or offered to prove or disprove a claim or complaint of profession misconduct or malpractice filed against mediator in a proceeding

(7)    Sought or offered to disprove a claim of complaint of professional misconduct of malpractice filed against a party, nonparty participant, or representative of a party based on conduct occurring during a mediation

Ø  After a hearing in camera, a court or administrative agency may find that confidentiality does not apply to information when the following requirements are met:

(1)    The party seeking discovery of the proponent of the evidence has shown that the evidence is not otherwise available

(2)    There is a need for the evidence that substantially outweighs the interest in protecting confidentiality

(3)    The mediation communication is sought or offered in:

a.       A court proceeding involving a crime or felony; or

b.       A proceeding to prove a claim or defense that under the law is sufficient to reform or avoid a liability on a contract arising out of the mediation

Office for Alternative Dispute Resolution

·         An attached agency to the DoJ, which aims to promote, develop and expand the use of ADR in the private and public sectors, to assist the government to monitor, study and evaluate the use by the public and private sector of the ADR, and recommend to Congress needful statutory changes to develop, and to strengthen and improve ADR practices in accordance with world standards

·         Powers and Functions

(1)    To formulate standards for the training of the ADR practitioners and service providers

(2)    To certify that such ADR practitioners and ADR service providers have undergone the professional training provided by the office

(3)    To coordinate the development, implementation, monitoring, and evaluation of government ADR programs

(4)    To charge fees for their services

(5)    To perform such acts as may be necessary to carry into effect the provisions of this act