For the past decades, many laws have been enacted by our Congress seeking to resolve disputes through mediation, conciliation, arbitration, or a combination thereof to achieve speedy and impartial justice, instead of going through the tedious process of litigating one’s cause via formal suits.

Relative to the state policy of exploring an alternative forum in resolving legal battles as an effective means of declogging court dockets, the latest law that was passed was Republic Act (RA) 9285, otherwise known as the Alternative Dispute Resolution (ADR) Act of 2004.

With respect to resolving cases involving taxes, however, we have yet to see a specific law or body of rules as extensive as the ADR Act of 2004.

Initially, what was introduced was the Amended 2005 Revised Rules of the Court of Tax Appeals (CTA), which took effect on March 20, 2005. In particular, Section 5 (a) distinctly provided for the inclusion of a statement in the pretrial brief of tax litigants regarding the referral to mediation, arbitration or other modes of ADR of the civil tax cases.

Nearly six years after, a promising development has emerged. On January 18, 2011, the Supreme Court en banc issued a resolution, which, upon the recommendation of the Philippine Judicial Academy (Philja), approved the interim guidelines for implementing mediation in the CTA.

The interim guidelines discuss the coverage of the mediation and also provide for the cases that are not covered. Any question relating to the coverage has to be resolved by the full Court or in the division where the case is pending.

And who are qualified to become mediators? As specified in the guidelines, they may be retired justices and judges, retired revenue and customs officials, senior law practitioners, senior certified public accountants, or senior licensed custom brokers, all with at least five years of experience in the field of taxation or customs law, with creative problem-solving and human-relations skills. Nonetheless, they have to undergo orientation or training and internship practice conducted by the PMCO of the Philja.

The guidelines provide that “during the initial appearance before the Philippine Mediation Center [PMC]-CTA, the parties shall choose their mediator/s from among the accredited mediators of the CTA.”

And “if the parties fail to choose their mediator/s, the chairperson of the PMC-CTA shall choose the mediator/s for the parties in accordance with the guidelines of the Philippine Mediation Center Office [PMCO]. The mediator selected by the parties may decline the appointment or ask to be relieved on the ground of actual or perceived conflict of interest, or any other valid ground, subject to the approval of the chairperson.” It should be noted, though, that no similar provision is provided with respect to a mediator chosen by the chairman of the PMC-CTA. Assuming a conflict of interest arises, what happens then?

There is a continuing obligation throughout the mediation process for the mediator to disclose any circumstance that may create or give the appearance of a conflict of interest or any instance that may be perceived as affecting the mediator’s impartiality and independence. Evidently, this provision is intended to ensure that the handling mediator is objective and does not give undue favor to any of the litigants.

Referral to mediation shall be made after the filing of the comment in cases pending with the full Court and before or during the pretrial for cases pending with the Court in division. However, where the parties fail to reach a settlement, the PMC-CTA shall return the case to the Court. The PMC-CTA shall then transmit to the Court the mediator’s report within five days from the termination of the mediation proceedings indicating the reason.

It must be emphasized, however, that any agreement reached in the mediation shall be subject to the approval by the CTA and to the limitations under Section 204 of the 1997 NIRC and Section 2316 of the TCCP. Hence, the parties do not have a carte blanche in stipulating whatever they like in their agreement.

Like any other mediation proceedings, any or all matters discussed or communications made and documents presented before the PMC-CTA or during the mediation conferences shall be privileged and confidential, and the same shall be inadmissible as evidence for any purpose in any other proceedings. 

Based on the provisions of the interim guidelines, it is apparent that there is still a room for improvement and its efficiency still remains to be tested; nevertheless, there is sufficient basis to embrace the recent development with optimism. With the advent of efficient mediation, the resolution of tax cases is expedited, thereby
benefiting both the judiciary, as well as the party-litigants.

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The author is a junior associate of Du-Baladad and Associates Law Offices, a member firm of World Tax Services Alliance. The article is for general information only and is not intended, nor should be construed, as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported therefore by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or call 403-2001, local 360.