Alternative Dispute Act of 2004

Policy purpose and state approach to ADR

Section 2 declares the State policy to actively promote party autonomy and the freedom of the parties to make their own arrangements to resolve disputes.
The State shall encourage and actively promote ADR as an important means to achieve speedy and impartial justice and to de-clog court dockets.
The State shall provide means for ADR as an efficient tool and an alternative procedure for resolving appropriate cases under Section 2.
The State shall enlist active private sector participation in dispute settlement through ADR under Section 2.
The Act remains without prejudice to Supreme Court adoption of ADR systems such as mediation, conciliation, arbitration, or any combination thereof for cases pending before all courts, governed by Supreme Court-approved rules under Section 2.

Core definitions and operative terms

Section 3 defines “Alternative Dispute Resolution System” as any process other than adjudication by a presiding judge of a court or an officer of a government agency, in which a neutral third party assists in resolving issues, including arbitration, mediation, conciliation, early neutral evaluation, mini-trial, or any combination.
Section 3 defines “ADR Provider” as institutions or persons accredited as mediator, conciliator, arbitrator, neutral evaluator, or similar functions.
Section 3 recognizes party choice: rights of parties to choose nonaccredited individuals as mediator, conciliator, arbitrator, or neutral evaluator.
Section 3 defines “Authenticate” as to sign, execute, adopt a symbol, or encrypt a record to identify the authenticating party and adopt or establish the authenticity of a record or term.
Section 3 defines “Arbitration” as a voluntary dispute resolution process where arbitrators appointed in accordance with party agreement or rules under the Act resolve by rendering an award.
Section 3 defines “Award” as any partial or final decision by an arbitrator in resolving issues in a controversy.
Section 3 defines key terms including “Commercial Arbitration,” “Confidential information,” “Convention Award,” “Convention State,” “Court” (as used in Article 6 of the Model Law) as Regional Trial Court, “Court-Annexed Mediation,” “Court-Referred Mediation,” “Early Neutral Evaluation,” “Government Agency,” “International Party,” “Mediation,” “Mediator,” “Mediation Party,” “Mediation-Arbitration (Med-Arb),” “Mini-trial,” “Model Law,” “New York Convention,” “Non-Convention Award,” “Non-Convention State,” “Non-Party Participant,” “Proceeding,” “Record,” and “Roster.”

When the ADR Act applies—and when it doesn’t

Section 4 applies the Electronic Signatures in Global and E-Commerce Act and its implementing rules to proceedings contemplated in the Act.
Section 5 provides that ADR providers and practitioners have the same civil liability for acts done in the performance of their duties as public officers under Section 38, Chapter 9, Book I of the Administrative Code of 1987 (as referenced in Section 5).
Section 6 excludes specified disputes from the Act’s coverage, including:
- Labor disputes covered by Presidential Decree No. 442 (Labor Code of the Philippines), as amended, and its implementing rules;
- Matters involving the civil status of persons;
- The validity of a marriage;
- Any ground for legal separation;
- The jurisdiction of courts;
- Future legitime;
- Criminal liability; and
- Disputes which by law cannot be compromised.

Mediation rules: confidentiality, participation, and enforcement

Section 7 covers voluntary mediation, whether ad hoc or institutional, other than court-annexed; mediation includes conciliation.
Section 8 requires considering policies that promote candor of parties and mediators through confidentiality, foster prompt, economical, amicable resolution, and keep decision-making authority resting on the parties.
Section 9 establishes confidentiality principles for mediation information:
- Mediation information is privileged and confidential.
- A party, mediator, or nonparty participant may refuse to disclose and may prevent disclosure of mediation communications.
- Confidential information is not subject to discovery and is inadmissible in any adversarial proceeding, judicial or quasi-judicial.
- Evidence otherwise admissible or discoverable does not become inadmissible solely due to its use in mediation.
- Enumerated persons cannot be compelled to disclose confidential information, including the parties, mediator(s), counsel, nonparty participants, support staff hired for mediation, and any other person who obtains confidential information by reason of profession.
- Confidentiality protections continue even if a mediator fails to act impartially.
- A mediator may not be called to testify to provide information gathered in mediation.
- A mediator wrongfully subpoenaed is entitled to full cost of attorney’s fees and related expenses.
Section 10 provides waiver rules:
- A confidentiality privilege may be waived in a record or orally during a proceeding by the mediator and mediation parties.
- A nonparty participant may waive privilege by the participant’s waiver of the privilege arising from confidential information provided by the participant.
- One who discloses confidential information is precluded from asserting privilege to bar disclosure of the remainder necessary for a complete understanding.
- One who discloses in violation and causes loss or damage is entitled to damages in a judicial proceeding against the discloser.
- A person who discloses or makes representations about mediation is precluded from asserting privilege to the extent needed to respond to representations and where communication prejudices another person.
Section 11 sets exceptions to privilege where no privilege applies under Section 9:
- Where mediation communication is in an agreement evidenced by a record authenticated by all parties.
- Where information is available to the public or made in a mediation session open to the public or required by law to be open.
- Where it involves threats or statements of plans to inflict bodily injury or commit a crime of violence, intentionally used to plan, attempt, commit, or conceal an ongoing crime or criminal activity.
- Where sought to prove or disprove abuse, neglect, abandonment, or exploitation in a proceeding in which a public agency protects an individual by law; the exception does not apply when child protection matters are referred to mediation by a court or a public agency participates in child protection mediation.
- Where sought to prove or disprove claims or complaints of professional misconduct or malpractice filed against the mediator, or against a party, nonparty participant, or representative of a party based on conduct occurring during mediation.
- Where, after an in camera hearing, a court or administrative agency finds the evidence is not otherwise available, that need substantially outweighs confidentiality, and the communication is sought in:
  - A court proceeding involving a crime or felony; or
  - A proceeding to prove a claim or defense sufficient under law to reform or avoid liability on a contract arising out of the mediation.
- In these exceptions, a mediator may not be compelled to provide evidence or testify; if only part of a communication is needed for an exception, only that portion may be admitted and limited-purpose admission does not render other mediation communications admissible for other purposes.
Section 12 prohibits mediator reports:
- A mediator may not make reports, assessments, evaluations, recommendations, findings, or other communications regarding mediation to a court or authority that can rule on the dispute subject of mediation.
- The prohibition allows disclosures where mediation occurred or terminated or where settlement was reached, and as permitted under Section 13.
Section 13 regulates mediator disclosure and conflict of interest:
- Before accepting mediation, the mediator must inquire reasonably into facts likely to affect impartiality, including financial or personal interest and any existing or past relationship with parties or foreseeable participants, and must disclose such facts to mediation parties as soon as practical before accepting.
- If such facts are learned after accepting, the mediator must disclose as soon as practicable.
- On request, the mediator must disclose qualifications.
- Special qualifications are not required unless required by the mediation agreement or the mediation parties.
Section 14 governs participation in mediation:
- A party may designate a lawyer or other person to provide assistance in mediation.
- Waiver of this right must be in writing by the party waiving it.
- Waiver of participation or legal representation may be rescinded at any time.
Section 15 governs venue/place:
- Parties may agree on the place of mediation.
- If no agreement exists, the place is any place convenient and appropriate to all parties.
Section 16 on institutional mediation agreements provides:
- Institutional mediation agreements include agreement to be bound by internal mediation and administrative policies of the institution.
- Institutional rules govern the mediation and require mediator, parties, counsel, and nonparty participants to abide by such rules.
- In conflict, the provisions of the Act prevail.
Section 17 provides enforcement of mediated settlement agreements:
- Settlement agreements following successful mediation must be prepared by the parties with assistance of their respective counsel, if any, and the mediator.
- Parties and counsel must ensure completeness of terms and include adequate provisions for contingencies of breach to avoid conflicting interpretations.
- Parties and counsel, if any, must sign the settlement agreement; the mediator must certify that the mediator explained the agreement’s contents to the parties in a language they know.
- Parties may deposit the settlement agreement with the appropriate Clerk of a Regional Trial Court of the place where one of the parties resides.
- Where enforcement is needed, any party may file a petition with the same court; the court proceeds summarily to hear the petition under rules of procedure promulgated by the Supreme Court.
- Parties may agree that the mediator becomes a sole arbitrator, treating the settlement agreement as an arbitral award enforceable under Republic Act No. 876 (Arbitration Law), notwithstanding Executive Order No. 1008 for mediated dispute outside CIAC.

Other ADR forms and referral agreements

Section 18 allows parties to refer one or more issues arising in a dispute or during its pendency to other ADR forms, including:
- Evaluation of a third person;
- Mini-trial;
- Mediation-arbitration; or
- Any combination of these.
Use of other ADR forms is governed by Chapter 2 unless combined with arbitration, in which case it is governed by Chapter 5.

International commercial arbitration under Model Law

Section 19 provides that international commercial arbitration is governed by the Model Law on International Commercial Arbitration adopted by UNCITRAL on 21 June 1985, under UN Document A/40/17 and recommended for enactment by General Assembly Resolution No. 40/72 approved on 11 December 1985, with the Model Law attached as Appendix “A.”
Section 20 directs that interpretation of the Model Law must consider its international origin and the need for uniformity, and permits resort to the travaux preparatories and the Secretary-General’s report dated 25 March 1985 titled “International Commercial Arbitration: Analytical Commentary on Draft Text … A/CN.9/264.”
Section 21 defines commercial arbitration as covering matters arising from all relationships of a commercial nature, whether contractual or not, including specified transaction types such as trade supply/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 industrial/business cooperation, and carriage of goods or passengers by air, sea, rail, or road.
Section 22 allows representation by any person of a party’s choice in international arbitration conducted in the Philippines, but bars a representative (unless admitted to practice law in the Philippines) from appearing as counsel in any Philippine court or quasi-judicial body.
Section 23 establishes confidentiality of arbitration proceedings:
- Arbitration proceedings, records, evidence, and the arbitral award are confidential and not published except with party consent or for limited disclosure to a court where resort to court is allowed.
- Courts may issue protective orders to prevent disclosure of secret processes, developments, research, and other sensitive information where the applicant shows material prejudice by authorized disclosure.
Section 24 requires court referral to arbitration:
- If an action is brought in a matter covered by an arbitration agreement, the court must refer the parties to arbitration if at least one party requests not later than the pre-trial conference, or both parties request thereafter, unless the court finds the arbitration agreement is null and void, inoperative, or incapable of being performed.
Section 25 provides interpretation favoring arbitration and allows referral of parties bound by an arbitration agreement even when civil action continues for parties not bound.
Section 26 defines “Appointing Authority” under the Model Law:
- It is the person or institution named in the arbitration agreement, or the regular arbitration institution under the rules agreed upon.
- If institutional rules govern and parties did not agree otherwise, parties are deemed to have agreed to the rules’ appointment procedure.
- In ad hoc arbitration, default appointment is by the National President of the Integrated Bar of the Philippines (IBP) or the duly authorized representative.
Section 27 provides functions of the appointing authority:
- Model Law functions in Articles 11(3), 11(4), 13(3), and 14(1) are performed by the Appointing Authority.
- If the Appointing Authority fails or refuses to act within thirty (30) days from request receipt, the applicant may renew the application with the Court.
Section 28 grants interim measures of protection:
- A party may request a court interim measure before the tribunal is constituted; after constitution, requests go to the arbitral tribunal, or to the court to the extent the tribunal has no power or cannot act effectively.
- The arbitral tribunal is deemed constituted when the sole arbitrator or third arbitrator has accepted nomination and written communication has been received by the requesting party.
- Provisional relief may prevent irreparable loss or injury, provide security, produce/preserve evidence, or compel appropriate acts/omissions.
- Orders may be conditioned on security or specified acts/omissions.
- Interim relief requires a written application transmitted by reasonable means, detailing precise relief, parties, grounds, and evidence.
- Orders are binding on the parties.
- Parties may seek court assistance in implementing/enforcing tribunal interim measures.
- Noncompliance exposes the non-complying party to all damages resulting from noncompliance, including expenses and reasonable attorney’s fees paid to obtain judicial enforcement.
Section 29 expands interim measures by the tribunal:
- At a party’s request, and unless agreed otherwise, the tribunal may order interim measures necessary, following Section 28 rules.
- The tribunal’s interim measures may include preliminary injunction, appointment of receivers or detention, and preservation/inspection of property subject of dispute.
- Either party may seek court assistance to implement/enforce tribunal interim measures.
Section 30 sets place of arbitration:
- Parties may agree on place; absent agreement, the place is Metro Manila, unless the arbitral tribunal decides otherwise considering circumstances and convenience of the parties.
- The tribunal may meet anywhere it considers appropriate for consultation among members, hearings, or inspections.
Section 31 governs language:
- Parties may agree on language(s); absent agreement, international arbitration uses English, domestic arbitration uses English or Filipino, unless the arbitral tribunal determines otherwise.
- Agreements/determinations apply to written statements, hearings, and awards/decisions/tribunal communications.
- The tribunal may order documentary evidence to be accompanied by translations into agreed or determined language(s).

Domestic arbitration scope and incorporated Model Law provisions

Section 32 states domestic arbitration is governed by Republic Act No. 876 (Arbitration Law), as amended by Chapter 5, and defines domestic arbitration as an arbitration that is not international as defined in Article 1(3) of the Model Law.
Section 33 applies specified Model Law Articles to domestic arbitration: Articles 8, 10, 11, 12, 13, 14, 18 and 19, and applies specified provisions from international arbitration chapter: Sections 22 to 31 of Chapter 4 to domestic arbitration.

Construction arbitration rules and CIAC jurisdiction

Section 34 governs arbitration of construction disputes under Executive Order No. 1008 (Construction Industry Arbitration Law).
Section 35 covers construction disputes within CIAC’s original and exclusive jurisdiction:
- It includes disputes between or among parties bound by an arbitration agreement, directly or by reference, including project owner, contractor, subcontractor, fabricator, project manager, design professional, consultant, quantity surveyor, bondsman, or issuer of an insurance policy in a construction project.
- CIAC continues to exercise original and exclusive jurisdiction even if the arbitration is “commercial” under Section 21.
Section 36 allows mediator-arbitrator crossover by written agreement:
- An arbitrator may act as mediator by written agreement of the parties, and a mediator may act as arbitrator by written agreement.
- Parties may agree that after successful mediation, the mediator issues the settlement agreement as an arbitral award.
Section 37 authorizes appointment of foreign arbitrator in construction disputes by CIAC rules:
- CIAC must promulgate rules to allow a foreign arbitrator as co-arbitrator or chairman where a person has not been previously accredited by CIAC.
- The conditions are:
  - The dispute is a construction dispute where one party is an international party;
  - The person agrees to abide by CIAC arbitration rules and policies;
  - The person is co-arbitrator upon nomination of the international party, or is the common choice of the two first-appointed CIAC accredited arbitrators, one nominated by the international party; and
  - The foreign arbitrator must be of different nationality from the international party.
Section 38 makes certain provisions applicable to construction arbitration:
- Section 17(d) of Chapter 2, and Sections 28 and 29 of the Act apply to construction arbitration.
Section 39 requires court dismissal and CIAC referral:
- A Regional Trial Court must dismiss a construction dispute filed before it, and refer parties to CIAC arbitration, when the court becomes aware not later than the pre-trial conference that the parties entered into an arbitration agreement, unless both parties, assisted by counsel, submit a written agreement to resolve the dispute in court rather than CIAC.

Judicial review, enforcement, and court processes

Section 40 governs domestic award confirmation:
- Confirmation of a domestic arbitral award follows Section 23 of Republic Act No. 876.
- A confirmed domestic arbitral award is enforced like final and executory Regional Trial Court decisions.
- The Supreme Court’s rules govern confirmation proceedings.
- A CIAC arbitral award need not be confirmed by the Regional Trial Court to be executory as provided in Executive Order No. 1008.
Section 41 governs vacation of awards:
- A party may question a domestic arbitral award only before the appropriate Regional Trial Court on grounds enumerated in Section 25 of Republic Act No. 876.
- Any other ground raised is disregarded by the Regional Trial Court.
Section 42 governs New York Convention awards:
- Recognition and enforcement of awards covered by the New York Convention is governed by it.
- The application for recognition/enforcement is filed with the Regional Trial Court under Supreme Court-provided procedural rules.
- The applicant must file the original or authenticated copy of the award and the arbitration agreement; if not in a language specified, the applicant must provide a duly certified translation.
- The applicant must establish the country where the award was made is a party to the New York Convention.
- If an application for rejection or suspension is made, the Regional Trial Court may vacate its decision if it considers proper.
- The court may order security upon application of the party claiming recognition/enforcement.
Section 43 governs non-New York Convention foreign awards:
- Recognition and enforcement follow Supreme Court procedural rules.
- The court may recognize and enforce a non-convention award as a convention award based on comity and reciprocity.
Section 44 provides classification after foreign confirmation:
- A foreign arbitral award confirmed by a foreign country court is recognized and enforced as a foreign arbitral award, not as a foreign court judgment.
- Once confirmed by the Regional Trial Court, it is enforced like final and executory Philippine court decisions.
Section 45 limits opposition grounds for foreign awards:
- A party may oppose recognition/enforcement of a foreign arbitral award only on grounds enumerated in Article V of the New York Convention; other grounds are disregarded.
Section 46 provides appeal and counterbond:
- Decisions of the Regional Trial Court confirming, vacating, setting aside, modifying, or correcting an arbitral award are appealable to the Court of Appeals under Supreme Court procedural rules.
- A losing party appealing confirmation must post a counterbond executed in favor of the prevailing party equal to the amount of the award, under Supreme Court rules.
Section 47 provides venue and jurisdiction:
- Applications for recognition/enforcement of arbitration agreements, vacation/setting aside/correction/modification of awards, and applications for court arbitration assistance/supervision are special proceedings filed with the Regional Trial Court in one of these places:
  - Where arbitration proceedings are conducted;
  - Where the asset to be attached or levied upon, or the act to be enjoined, is located;
  - Where any party resides or has its place of business; or
  - In the National Judicial Capital Region, at the option of the applicant.
Section 48 provides notice timing:
- In special proceedings for recognition/enforcement, the court must send notice to parties at their arbitration addresses of record or last known addresses if service fails.
- Notice must be sent at least fifteen (15) days before the initial hearing date.

Office for Alternative Dispute Resolution: creation and functions

Section 49 creates the Office for Alternative Dispute Resolution as an attached agency to the Department of Justice, with a Secretariat headed by an Executive Director.
The Executive Director is appointed by the President of the Philippines.
The Office objectives are to:
- Promote, develop, and expand ADR use in private and public sectors; and
- Assist government monitoring, study, and evaluation of ADR use and recommend to Congress statutory changes to develop, strengthen, and improve ADR practices according to world standards.
Section 50 grants the Office powers and functions to:
- Formulate standards for training of ADR practitioners and service providers;
- Certify ADR practitioners and ADR service providers who underwent the Office-provided professional training;
- Coordinate development, implementation, monitoring, and evaluation of government ADR programs;
- Charge fees for its services; and
- Do acts necessary to carry into effect the Act.

IRR, appropriations, Katarungang Pambarangay, and legal housekeeping

Section 51 requires that the amount necessary to carry out the Act is included in the General Appropriations Act of the year following enactment.
Section 52 requires IRR issuance through a DOJ-convened Committee:
- The Secretary of Justice must convene the Committee within one (1) month after Act approval.
- The Committee includes representatives from the Department of Justice, Department of Trade and Industry, Department of the Interior and Local Government, the President of the Integrated Bar of the Philippines, a representative from the arbitration profession, a representative from the mediation profession, and a representative from ADR organizations.
- The Committee must submit the IRR to the Joint Congressional Oversight Committee for review and approval within three (3) months after convening.
- The Joint Oversight Committee consists of the Chairman of the Senate Committee on Justice and Human Rights, the Chairman of the House Committee on Justice, and one (1) member each from the Majority and Minority of both Houses.
- The Oversight Committee becomes functus officio upon approval of the IRR.
Section 53 provides that the Act is not interpreted to repeal, amend, or modify the jurisdiction of the Katarungang Pambarangay under Republic Act No. 7160 (Local Government Code of 1991).
Section 54 repeals, amends, or modifies inconsistent laws, decrees, executive orders, rules, and regulations accordingly.
Section 55 provides separability: any unconstitutional or invalid portion does not affect the force and effect of remaining provisions.