CHAPTER XII:
CONSTRUCTION DISPUTE ARBITRATION
ALTERNATIVE DISPUTE RESOLUTION
ATTY. DAVID BALLESTEROS
CONSTRUCTION DISPUTE
CONSTRUCTION
- refers to all on-site works on buildings or alternating
structures, from land clearance through completion including
excavation, erection and assembly and installation of
components and equipment.
CONSTRUCTION DISPUTE
- include “those between or among parties to, or who are
otherwise bound by, an arbitration agreement, directly or by
reference, whether such parties are project owner,
contractor, subcontractor, fabricator, project manager,
design professional, consultant, quantity surveyor,
bondsman or issuer of an insurance policy in a construction
project.” (CIAC REVISED RULES)
CONSTRUCTION ARBITRATION UNDER THE ADR
ACT OF 2004
ADR Act of 2004 not only affirmed the original and exclusive
jurisdiction of the CIAC over construction disputes, but also
strengthened it which include “those between or among parties
to, or who are otherwise bound by, an arbitration agreement,
directly or by reference, whether such parties are project owner,
contractor, subcontractor, fabricator, project manager, design
professional, consultant, quantity surveyor, bondsman or issuer
of an insurance policy in a construction project”, and even if the
arbitration is commercial in character.
Request for the dismissal of action and the referral to the CIAC
for arbitration shall be made through a VERIFIED MOTION which
shall contain:
a. Statement showing that the dispute is a construction
dispute;
b. Accompanied by proof of the existence of the
arbitration agreement unless it is already part of the
records of the case;
c. Contain a notice of hearing.
Note: An order dismissing the case and referring the dispute to
arbitration by the CIAC is immediately executory.
THE CONSTRUCTION INDUSTR Y ARBITRATION
COMMISSION (CIAC)
CONSTRUCTION INDUSTR Y ARBITRATION LAW
(EXECUTIVE ORDER NO. 1008)
- a quasi-judicial agency accorded with the jurisdiction to
resolve disputes arising from contracts involving
construction in the Philippines.
CONSTRUCTION INDUSTR Y ARBITRATION
COMMISSION (CIAC)
- an agency under the Construction Industry Authority of the
Philippines (CIAP) and administratively attached to the
Department of Trade and Industry;
- consists of a Chairman and two (2) members.
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POLICY AND OBJECTIVE OF THE CIAC
- To provide a fair and expeditious settlement of construction
disputes through a non-judicial process which ensures
harmonious and friendly relations between or among the parties.
- Created in recognition of the construction industry’s contribution
to national development goals.
FUNCTIONS OF THE CIAC
a. To formulate and adopt an arbitration program for the
construction industry;
b. To enunciate policies and prescribe rules and procedures for
construction arbitration;
c. To supervise the arbitration program, and exercise such
authority related thereto as regards the appointment,
replacement or challenging of arbitrators; and
d. To direct its officers and employees to perform such functions
as may be assigned to them from time to time.
NATURE AND CHARACTER OF THE CIAC
- It is a quasi-judicial agency or body defined as an organ of
government other than a court and other than a legislature,
which affects the rights of private parties through either
adjudication or rule-making.
- To adjudicate claims and/or determine rights in accordance with
procedures set forth in E.O. No. 1008 is the CIAC’s primary
function.
• First Rules of Procedure Governing Construction was
promulgated in August 1988.
• Latest Revised Rules of Procedure Governing Construction
Arbitration was approved on November 19, 2005 and took effect
on December 15, 2005, fifteen (15) days after its publication.
JURISDICTION OF THE CIAC
• The jurisdiction of the CIAC is conferred by E.O. No. 1008
- it has exclusive and original jurisdiction over disputes
arising from, or connected with, contracts, entered into by
parties involved in construction in the Philippines, whether
the dispute arises before or after completion of the contract,
or after the abandonment or breach thereof;
- may involve government or private contracts
• The doctrine of primary jurisdiction dictates prior recourse to the
CIAC for construction disputes. The same doctrine precludes
courts from resolving construction disputes over which jurisdiction
has been initially lodged with the CIAC by reason of its special
knowledge, experience and services to determine technical and
intricate matters of fact.
• CIAC’s findings of fact, are generally accorded great respect, if not
finality, by the courts.
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• Two (2) acts which vest the CIAC with jurisdiction over
construction dispute:
- Presence of an arbitration clause in a construction
contract; and
- Agreement of the parties to submit the dispute to the
CIAC.
• CIAC may continue with the arbitration even though only
one of the parties requested for the arbitration, or even both
parties have withdrawn their consent to arbitrate.
• Arbitration agreement or a submission to arbitration must
be in writing but it need not be signed by the parties, if the
intent is clear. Agreement may be in form of exchange
letters sent by post or telefax, telexes, telegrams, e-mail or
any other modes of communication.
RULES OF PROCEDURE I N THE CIAC
The arbitral tribunal of the CIAC is mandated to “act according
to justice an equity and merits of the case, without regard to
technicalities or legal forms and need not be bound by any
technical rule of evidence.
PROCEDURAL RULES IN THE CIAC
1. Complaint/request for arbitration
The initiatory pleading is a complaint or request for
arbitration which must be filed with the Secretariat of CIAC.
The complaint or request for arbitration must allege the
existence of the arbitration agreement or subsequent
submission.
2. Answer
Within 3 days from such filing, the Secretariat shall transmit
to the respondent a request for his answer attaching a copy
of the complaint and supporting documents. Without
prejudice to extensions of time if warranted, the respondent
has 15 days from receipt of the request for arbitration or
complaint within which to file his answer.
3. Reply
The claimant may file a reply to the counterclaim within 15
days from the date of receipt of the answer with
counterclaim.
4. Appointment and acceptance of arbitrators
1 or 3 arbitrators may be appointed to settle a dispute
depending on the agreement of the parties, or discretion of
the CIAC if there is no such agreement. (enter) If there is
one common nominee, he shall be appointed together with
the two others from the list submitted by the parties. If there
are 2 common nominees, the CIAC shall appoint them, if
there are 3 common nominees, all of them shall be
appointed. (enter) Unless there are 3 common nominees,
within 15 days from their appointment, the two arbitrators
first chosen shall select the third arbitrator. Otherwise, CIAC
shall, within 15 days thereafter, appoint a third member.
5. Challenge to arbitrators
The challenge shall be based on the following grounds:
a. Relationship by blood or marriage within the sixth
degree of either party to the controversy, or the
counsels within the fourth degree, computed
according to rules of civil law;
b. Financial, fiduciary or other interest in the
controversy;
c. Partiality or bias;
d. Incompetence, or professional misconduct; and
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e. Other just and valid reasons affecting independence,
integrity, impartiality and interest.
6. Preliminary conference and terms of reference
The arbitrator shall set the case for preliminary conference, similar
to a pre-trial not later than 15 days after their appointment.
7. Arbitration proceedings
a. Venue date and time. Shall be mutually agreed upon by the
parties and the arbitral tribunal. In case of disagreement, the
choice of venue by the arbitral tribunal shall prevail.
b. Quorum. In arbitration with 3 arbitrators, 2 members of the
arbitral tribunal shall comprise a quorum for the purpose of
conducting a hearing.
c. Presentation of evidence. The arbitral tribunal shall at all times
adopt the most expeditious procedure for the introduction of
evidence.
d. Draft decision or final memorandum. If any or both parties so
desire, they may submit not later than 10 calendar days from
the termination of the hearing, their draft decision or final
memorandum of arguments.
e. Closing of the hearings. After submission of the draft decision
or the final memorandum, the proceedings shall be deemed
closed.
8. Award
The award shall be rendered promptly by the arbitral tribunal within
30 days from the time the case is submitted for resolution but not
more than 6 months from the date of signing of the TOR, or in the
absence of a TOR, not more than 6 months from the date of last
preliminary conference called for the purpose of finalizing or
signing the TOR. There shall be no extension of this period unless
approved by the CIAC.
9. Execution of the award
The arbitral tribunal, or the remaining members thereof, or, if there
are none, the CIAC itself, shall, motu proprio or upon motion of the
prevailing party, issue a writ if execution of a final and executory
decision, order or award requiring any sheriff or proper officer to
execute said decision, order or final award.
JUDICIAL REVIEW OF CIAC DECISIONS
- A petition for review from a final award of the CIAC may be taken
by any of the parties to the Court of Appeals within fifteen (15)
days from receipt thereof in accordance with Rule 43 of the 1997
Rules of Civil Procedure.
- This petition is based on errors of fact, law or mixed fact and law.
- The petition shall not stay the execution of the final award unless
the Court of Appeals issues a temporary restraining order and/or
a writ of preliminary injunction.
- The availability of a petition for review under Rule 43 precludes
the remedy of a petition for certiorari under Rule 65, and the
filing of an erroneous petition for certiorari will not toll the 15-day
period to file a petition for review.
Note: Generally, in the absence of any showing of grave abuse
of discretion, courts must sustain the factual findings of the CIAC
arbitrator in accordance with established principle that the
determination of certain questions of fact falling within the
technical expertise of an administrative agency, must be
accorded great respect, if not finality by the courts.
COSTS OF ARBITRATION
Sec. 5 Art. XV of the Rules of Procedure Governing Construction
Arbitration
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DECISION AS TO COST OF ARBITRATION

In the case of non-monetary claims or where the parties agreed

that the sharing of fees shall be determined by the Arbitrator(s),
the award shall, in addition to dealing with the merits of the case,
fix the cost of arbitration, and/or decide which of the parties shall
bear the cost(s) or in what proportion the cost(s) shall be borne
by each.
Rule 142 of the Revised Rules of Court of the Philippines
Section 1. Costs ordinarily follow the result of suit

Unless otherwise provided in these rules, costs shall be allowed

to the prevailing party as a matter of course, but the court shall
have the power for special reasons, to adjudge that either party
shall pay the cost of an action, or that the same shall be divided,
as may be equitable.

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