DRAFT SECURITY OF PAYMENT ACT
(As of 03 March 2022)
ED Santiago Ducay’s comments in Green
Atty. Anne Roa’s comments in Red
SECTION SUBJECT PROVISION
1 Short Title SECTION 1. Short Title – This Act shall be known
as the “Construction Industry Security of Payment
Act”.
2 Statement of Policy The Civil Code of the Philippines provides
and Objectives of that every person, in the exercise of his
this Act rights and in the performance of his duties,
must act with justice, give everyone his due,
and observe honesty and good faith. It is on
such principle that the basic principles of a
contract are based, as well as this Act.
This Act provides a statutory right to a person
or party to a construction contract who has
carried out works or services or has supplied
goods for a construction work, to receive
progress payment in a timely manner.
The means by which this Act facilitates progress
payment is by establishing a procedure that
involves–
COMMENT / QUERY PROPOSED REVISION / PROVISION
* Proposed amendment for consistency SEC. 1. Short Title – This Act shall be known as
In the use of “SEC.” rather than the “Construction Industry Security of Payment
“SECTION”, as adopted throughout the draft bill. and Adjudication Act” or the “SOP Law”.
* Propose to reinstate “Adjudication”
in consonance with the intent to
provide an efficient adjudication
mechanism for security of payment
to be governed by the CIAC Rules.
* For this purpose, CIAC will implement
rules of general application to allow
for ad hoc Adjudication based on
complementary contractual terms,
while retaining primary and exclusive
jurisdiction to enforce Adjudication
Determinations, whether ad hoc or
institutional, to ensure security of
payment within the purview of this
law.
Proposed revision for brevity and intent. This Act promotes the basic principles of justice
and equity in contractual relations, pursuant to
Article 19 of the Civil Code of the Philippines.
The objective of this Act is to facilitate and ensure
timely compensation of Payment Claims under a
Contract by providing a Qualified Person the
statutory right to:
(a) an entitlement to a Progress Payment;
(b) a procedure for making a Payment Claim;
(c) an efficient mechanism for the Adjudication
of an unsettled Payment Dispute; and
(d) remedies to secure the timely settlement of a
Payment Claim and the prompt payment of a
due Adjudication Determination, through:
 (a) the making of a payment claim by the person (i) the right to suspend Work or the supply of
claiming payment, and Goods or Services; and
(b) the provision of a payment schedule by the (ii) the right to access retention money by
person by whom the payment is payable, and providing an equivalent performance
(c) the referral of any disputed claim to the bond.
default nominating authority, and
(d) the payment of the progress payment so
determined.

3 Scope and (1) This Act shall apply to all construction
Application contracts executed and carried out in the
Philippines on or after [date of effectivity of
the Act].
(2) This Act shall not apply to any contract for
the carrying out of construction work at or
on, or the supply of goods or services in
relation to, any personal or residential
property.
Proposed revision for clarity and intent
to limit the benefit of the law to PCAB-
accredited Contractors and suppliers of
Goods and Services for Work executed
only by PCAB-accredited Contractors.
(1) This Act shall apply to all construction
Contracts executed and carried out wholly or
partly in the Philippines, entered into by a
Qualified Person in any territorial jurisdiction
on or after the effectivity of this Act.
(2) This Act shall not apply to any Contract
involving Work executed by a Contractor who
is not accredited by the PCAB on the effective
date of such Contract.

4 Interpretation and As used in this Act: Propose to add a provision for
Definition of Terms “Interpretation” under this heading and
to capitalize all defined terms for ease
of reference.
All other proposed amendments are
intended for brevity, precision of
language, and consistency.
Interpretation and Definition of Terms
(1) Interpretation
(a) Defined terms shall have the meaning
stated herein, unless the context requires
otherwise.
(b) Words indicating the singular also include
the plural, and words indicating the plural
also include the singular.
(2) Definition of Terms

(a) Adjudication NEW Proposed addition for clarity of intent. means the alternative dispute resolution
mechanism provided under this Act to ensure
security of payment through the expeditious
settlement of Payment Disputes arising from
unresolved Payment Claims under the Contract;

(b) Adjudication NEW Proposed addition for clarity of intent. means the Construction Industry Arbitration
Authority Commission (CIAC), which shall govern all matters
pertaining to Adjudication under this Act in
accordance with its applicable rules (CIAC Rules);

(ac) Adjudication means the payment claim under adjudication Proposed revision for precision of means the Payment Dispute under submitted for
Claim including any interest payable under this Act; language. Adjudication including any interest payable under
 this Act;

(bd) Adjudication means the determination of the adjudicators Proposed revision for precision of means the determination of the Adjudicators
Determination on a payment claim dispute; language. on an payment claim dispute Adjudication Claim;

(ce) Adjudication means the process of adjudication under this Proposed revision for clarity of intent. means the process of Adjudication under this
Proceedings Act; Act, which may either be ad hoc in accordance
with the terms of the Contract, or institutional
to be conducted by the CIAC, both of which must
conform with the CIAC Rules;

(df) Adjudicator refers to an individual who passed the
qualification standard and is trained and
accredited by the default nominating authority,
to adjudicate on payment dispute that has been
referred to adjudication;
The CIAC Rules shall contain the
minimum qualification requirements for
Adjudicators to accommodate selection
in accordance with contractual terms
for ad hoc Adjudication.
Refers to an a individual natural person who is
Passed the qualification standard and is trained
and accredited by the default nominating
authority, to adjudicate on payment dispute that
has been referred to adjudication qualified to
determine an Adjudication Claim based on the
CIAC Rules;

(eg) Claimant refers to the person or party who initiated the It must be stressed that only qualified refers to the Qualified Person or party who
adjudication proceedings; persons can benefit from security of initiated the Adjudication Proceedings;
payment under this Act.

(fh) Construction means an agreement under which a person or
Contract party undertakes to carry out works or services
or supply goods for another person or party for
a construction project;
Proposed revision for precision of means an a written agreement under which a
language. Qualified Person or party undertakes to carry out
the Works or the supply of Goods or Services or
supply goods for another person or party for a
construction project;

(i) Contractor NEW Proposed definition based on:
(1) PCAB Rules and Regulations
promulgated under Republic Act
No. 4566, where “Constructor” shall
have the same meaning as
“contractor” in Sec. 9(b) of Republic
Act No. 4566; and
(2) Art. 1.13 of CIAP Document 102.
means a natural or juridical person duly licensed
by the PCAB as a “Constructor”, being a
contractor or builder, subcontractor or specialty
contractor, who has undertaken to execute the
Work under the Contract;

(gj) Court refers to the appellate court;

(hk) Day means a calendar day; Proposed revision for clarity. means a calendar business day when banks are
open;

(i) default means the body authorized under section 8; Propose to delete, with “CIAC” as the means the body authorized under section 8;
 nominating
authority
(jl) Due Date means, in relation to progress payment, the date
on which the progress payment becomes due
and payable;
(km) Goods means materials or components that are to form
part of a building or structure or civil work which
requires construction or on-site installation; or
plant or materials for use in connection with the
carrying out of construction work;
(ln) Notice of means the written notice that the payment claim
Adjudication will be referred to adjudication for determination;
(o) Party NEW
(mp) Payment means a claim for progress payment by a person
Claim or party against another person or party who is
liable to make the progress payment under a
construction contract;
Adjudication Authority to ensure
security of payment under this Act.
Proposed revision for brevity.
Proposed revision for precision of
language.
Proposed revision for conciseness.
Proposed revision for clarity.
Proposed revision for conciseness.
means, in relation to progress payment, the date
on which the a Progress Payment becomes due
and payable;
means materials or components that are to form
part of a building or structure or civil the Work
which requires require construction or on-site
installation by the Contractor; or plant or
materials for use in connection with the carrying
out of construction the Work;
means the written notice that the a Payment
claim Dispute will be referred to Adjudication for
determination, which must contain:
(a) the nature and description of the Payment
Dispute including the Contract provisions to
which it relates;
(b) the remedy sought; and
(c) the pertinent supporting documents available
to the Claimant;
refers to a contracting party to a Contract,
whether as project owner, Contractor, or
supplier of Goods or Services;
The obligations of the contractors before
they are paid should also be included.
means a written claim for Progress Payment by a
Qualified Person or party against another person
or party who is liable to make the progress
payment under a construction contract the
Principal, which must state:
(a) the amount claimed calculated in accordance
with the Contract, or by reference to the
Contract if not provided for therein,
(excluding the cost of any expense, loss, or
damage arising from a breach of contract,
unless the Contract provides otherwise);
(b) the Due Date;
(c) a description of the Work, Goods or Services
 to which the Payment Claim relates; and
(d) the Contract provision under which the
Payment Claim is made or, in the absence of
any such provision, a statement that the
Payment Claim is made under this Act.

(nq) Payment means disagreement arising from a payment Proposed revision for conciseness. means a disagreement arising from a Payment
Dispute claim; Claim or any portion thereof, or the non-payment
of an approved, undisputed or settled amount of
the Payment Claim within the period prescribed
under this Act;

(r) Payment NEW Proposed revision for conciseness. means the written response of the Principal to a
Response Payment Claim, which must include:
(a) the certified amount to be paid under the
relevant Payment Claim; or
(b) if the full amount of the Payment Claim is
disapproved, or if the certified amount is less
than what is claimed, then it shall state the
reasons therefor;

(s) PCAB NEW Proposed revision for brevity. refers to the Philippine Contractors Accreditation
Board;

(ot) Principal refers to a person or party in a construction
contract for whom the construction work or
services is to be carried out, or to whom goods
are to be supplied;
Proposed revision for conciseness.
refers to the a person or Party in a construction
contract who is principally liable to make a
Progress Payment under the Contract, for whom
the construction Work or services is to be carried
out, or to whom the Goods or Services are to be
supplied;

(pu) Progress refers to – Proposed revision for conciseness. refers to –

Payment (1) a milestone payment under a construction (a) a milestone payment under a construction
contract, being a payment that is based on the Contract, being a payment that is based
an event or date; on an event or date;
(2) a single or one-off payment for construction (b) the final payment for construction work
work carried out, or services rendered, or Carried out, or services rendered, or goods
goods supplied, under a construction Supplied under a construction based on the
contract; and Contract, including payment of inclusive of
(3) final payment for construction work carried the final progress billing and all approved
out, or services rendered, or goods supplied claims including, but not limited to,
under a construction contract, including variations in the Work;, contract price
payment of the final progress billing and all adjustments;, escalation;, and acceleration of
approved claims including, but not limited to, Work; and
 variations in the work; contract price
adjustments; escalation; and acceleration of
work;
(v) Qualified NEW
Person
(qw) Respondent refers to the person or party on whom the notice
of adjudication is served;
(r) request for means a written request for payment of progress
payment payment
(sx) Services means –
(1) the conduct of feasibility studies, planning
service, the submission of applications or
other documents to any relevant authority,
site supervision services, professional
engineering services, or architectural, design,
surveying or quantity surveying services, in
relation to construction work;
(2) project management services in relation to
construction work;
(3) building, engineering, exterior or interior
decoration or landscape advisory services
in relation to construction work; or
(4) the provision of labor to carry out
construction work;
(ty) Work refers to all labor, materials, equipment, and
facilities provided and supplied that are necessary
to commence, complete and fulfil all obligations
called for in the Contract.
Proposed revision for clarity of intent.
Proposed revision for conciseness.
Propose to delete. A “Payment Claim”,
as defined, is sufficient for the purpose
of requesting payment.
Proposed revision for brevity.
Proposed revision for conciseness.
(c) a single or one-off or lump sum payment for
the construction Work carried out, or for the
supply of Goods or Services rendered, or
goods supplied, under a construction the
Contract upon completion.; and
refers to a PCAB-accredited Contractor, or to a
supplier of Goods or Services under a Contract
involving Work executed by a PCAB-accredited
Contractor, to whom the benefits of security of
payment under this Act applies;
refers to the person or party Principal on whom
the Notice of Adjudication is served;
means a written request for payment of progress
payment
means, in relation to the Work –
(a) the conduct of feasibility studies, planning
service, the submission of applications or
other documents to any relevant authority,
site supervision services, professional
engineering services, or architectural, design,
surveying or quantity surveyings ervices, in
relation to Construction Work;
(b) project management services in relation to
Construction work;
(c) building, engineering, exterior or interior
decoration, fit-out, or landscape advisory
services in relation to construction work; or
(d) the provision of labor to carry out
Construction work;
refers to all labor, materials, equipment, and
facilities provided and supplied that are necessary
to commence, complete and fulfil all obligations
called for in the Contract.
means the permanent works to be executed
under the Contract, including all labor,
materials, equipment, and facilities and
temporary works of every kind provided and
supplied by the Contractor or supplier of Goods
or Services that are necessary to commence,

195 Prohibition of on Any conditional payment provision in a
Conditional construction contract in relation to payment
Payment under the construction contract is void.
For the purposes of this section, it is a conditional
payment provision when:
a) The obligation of one party to make payment
is conditional upon that party having received
payment from a third party; or
b) The obligation of one party to make payment
is conditional upon the availability of funds
or draw down of financing facilities of that
party.
56 Right to Progress A person or party to a construction contract who
Payments has undertaken to carry out work or services or
supply goods is entitled to receive in a timely
manner progress payment for work done or
services rendered or goods supplied.
(a) A request for payment shall be submitted
periodically or in a manner as specified in the
construction contract or as agreed upon by
the parties.
(b) A progress payment to which a person or
party is entitled under this Act does not
include payment for any expense, loss or
damage incurred because of a breach of a
construction contract.
(c) Unless otherwise stipulated in the
construction contract or subsequent
agreement of the parties, the progress
payment shall be made within thirty (30) days
after receipt of the request for payment,
inclusive of the period for evaluation and
issuance of certification for payment, as may
be required.
(d) In case of disagreement, such shall be
Proposed revision for clarity of intent.
Proposed revision for brevity and
conciseness, with sub-section (b)
incorporated in the definition of
“Payment Claim”.
complete and fulfill all of the Contractor’s
obligations called for in under the Contract.
Any conditional payment provision in a
Construction Contract in relation to payment
Under the construction contract is void.
For the purposes of this section, it is a conditional
payment provision exists when, in relation to a
Progress Payment, the obligation of the Principal
to make payment to a Contractor or supplier of
Goods or Services under the Contract is
conditioned upon:
(a) the Principal having received payment from a
third party; or
(b) the obligation of one party to make payment
is conditional upon the availability of funds
or draw down of the Principal’s financing
facilities of that party.; or
(c) any other prerequisite that imposes payment
on a “pay when paid” basis.
A person or Party to a construction Contract who
has undertaken to carry carried out Work or
supplied Goods or Services or supply goods is
entitled to promptly receive in a timely manner
the corresponding Progress Payment for work
done or services rendered or goods supplied
in accordance with the following procedure.:
(a) A Payment Claim shall be submitted –
(i) not later than the relevant date or expiry
of the period stated in the Contract; or
(ii) if not specified in the Contract, not later
than the relevant date or expiry of the
period agreed in writing by the Parties;
or, in the absence of any such agreement,
periodically but not more than once a
month within thirty (30) days from a
milestone date or event for milestone
payments, and within thirty (30) days
from completion of the Work or supply of
Goods or Services for the final payment
or for a single one-off or lump sum
payment.
If a previously approved Payment Claim or
 communicated in writing within seven (7)
days from receipt of the request for payment
or as stipulated in the contract or within the
period subsequently agreed upon by the
parties.
(e) The parties shall attempt for an amicable
settlement within a period of fifteen (15) days
and shall effect payment on agreed amount
within the 30-day period prescribed above,
otherwise, such disagreement or failure to
pay shall be deemed a dispute which shall be
referred to adjudication as provided in this
Act.
(f) Payment claim not paid on due date shall
earn interest computed from due date in
accordance with the 30-day regular loan rate
prevailing at the time payment is due.
any undisputed or settled portion thereof
remains unpaid as of the Due Date, such may
be included in a subsequent Payment Claim.
(b) A progress payment to which a person or
party is entitled under this Act does not
include payment for any expense, loss or
damage incurred because of a breach of a
construction contract.
(b) A Payment Response shall be made –
(i) within the period stated in the Contract;
or
(ii) if not specified in the Contract, within
ten (10) Days from receipt of the
Payment Claim by the Principal.
(c) Payment shall be made –
(i) not later than the Due Date stated in the
Contract; or
(ii) if not specified in the Contract, or if the
Due Date stated in the Contract is subject
to a conditional payment provision,
within thirty (30) Days after from receipt
of the requestfor Payment Claim by the
Principal, inclusive of the period for
evaluation, and issuance of payment
certification for payment, as maybe
required, and amicable settlement of any
Payment Dispute which, if not settled in
full, shall give rise to the obligation to pay
any undisputed amount within such thirty
(30)-Day period.
(d) In case of disagreement arising from a
Payment Claim, the Principal shall serve a
Notice of Payment Dispute upon the other
Party –
(i) within the period stated in the Contract;
or
(ii) if not specified in the Contract, within
ten (10) Days from receipt of the Payment
Claim by the Principal.
(e) The Parties shall attempt for an endeavor to
arrive at an amicable settlement of the
Payment Dispute –
(i) within the period stated in the Contract;
or
(ii) within a period of fifteen (15) Days from

67 Right to Suspend Any person or party to a construction contract
Work or Supply of has the right to suspend the works or the supply
Goods or Services of goods or services if no payment on its request
for payment is received on due date or if the
parties failed to arrive at an amicable settlement.
A written notice of suspension shall be served on
the other party, its principal, and the owner, and
such shall take effect two (2) days after it is
served.
Such party who exercises such right to suspend
is not in breach of contract and is entitled to the
following:
(a) a fair and reasonable extension of time to
complete its obligations under the contract;
(b) to recover any loss and expenses incurred
as a result of the suspension; and
(c) shall resume work or supply of goods or
services immediately upon receipt of
payment.
Proposed revision for conciseness.
service of the Notice of Payment Dispute
by the Principal and shall effect payment
on agreed amount within the 30-day
period prescribed above, otherwise, such
disagreement or failure to pay shall be
deemed a dispute which shall be referred
to adjudication as provided in this Act.;
failing which, the unsettled Payment Dispute
relating to the Payment Claim or any portion
thereof, may be referred to Adjudication
by the aggrieved Party after the Due Date.
(f) An approved Payment Claim or any
undisputed or settled portion thereof, which
is not paid on Due Date, shall earn interest
computed from such due date until full
payment, in accordance with –
(i) the terms of the Contract; or
(ii) the thirty (30)-day regular loan rate of the
Land Bank of the Philippines prevailing at
The time payment is on such Due Date.
In the event of any outstanding Payment Dispute
after the Due Date, the aggrieved Any person or
Party to a construction contract has shall have
the right to suspend the Works or the supply of
Goods or Services if no payment on its request for
payment is received on due date or if the parties
failed to arrive at an amicable settlement. A
written thereafter by serving a Notice of
Suspension shall be served up on the other party,
Its Principal, and the project owner (if the
Principal is a Contractor), and the funders (when
required under the Contract) such, which shall
take effect two (2) Days after it is served.
SuchThe suspension contemplated herein shall
not be deemed a breach of the Contract, and the
Party who exercises such right to suspend is not
in breach of contract and is shall be entitled to
the following:
(a) a fair and reasonable extension of time to
complete its obligations under the Contract;
(b) to recover any loss and expenses incurred
as a result of the suspension; and
(c) shall resume carrying out the Work or
Supplying of the Goods or Services
 immediately within two (2) Days from upon
receipt of full payment.

78 Payment Disputes Any disagreement or dispute arising from a Proposed revision for conciseness. Any disagreement or Payment Dispute arising
Submitted for payment claim shall be referred to adjudication from a payment claim shall be referred to that
Adjudication under the jurisdiction of the default nominating remains outstanding after the Due Date shall
Right to authority as conferred by this Act. entitle the aggrieved Party to refer the same to
Adjudication Adjudication under the jurisdiction of the default
Nominating authority as conferred by this Act.

89 Default This Act assigns to the Construction Industry Proposed revision for clarity of intent. This Act assigns to the Construction Industry
Nominating Arbitration Commission (CIAC) the functions, Arbitration Commission (CIAC) the functions,
Authority duties, and responsibilities of the default duties, and responsibilities of the default
SOP Law nominating authority which shall have nominating authority which shall have
Adjudication jurisdiction over disputes arising from payment jurisdiction over disputes arising from payment
Authority claims under a construction contract executed claims under a construction contract executed
and carried out in the Philippines. and carried out in the Philippines.
The CIAC shall have sole and exclusive jurisdiction
over all matters pertaining to Adjudication under
this Act, and shall implement the applicable
CIAC Rules for this purpose, including but not
limited to:
(1) setting qualification requirements for the
accreditation and appointment of
Adjudicators;
(2) maintaining a roster of accredited
Adjudicators;
(3) providing training programs for Adjudicators;
(4) exercising the authority to appoint and
replace Adjudicators in institutional
Adjudication Proceedings, and as the default
nominating authority for ad hoc Adjudication
Proceedings;
(5) providing administrative support in the
conduct of Adjudication Proceedings;
(6) imposing an effective mechanism for the
enforcement of payment obligations arising
from ad hoc or institutional Adjudication
Determinations, including requiring deposits
and holding the same in escrow to secure the
prompt payment of any such monetary
obligations;
(7) determining and collecting Adjudication costs,
fees and charges for the performance of its
duties under this Act; and
(8) performing such other functions as may be

9 Powers and The CIAC, as the default nominating authority,
Functions of shall perform, among others as may be conferred
the Default by law, the following:
Nominating
Authority (a) Formulate and prescribe rules and regulations
for the adjudication of payment claims and
disputes arising from a construction contract
and for enforcement of the determination
by the adjudicators;
(b) Set qualification and competency standard
and criteria for selection and accreditation
of adjudicators;
(c) Establish and maintain a register of accredited
adjudicators and provide training programs
for them;
(d) Exercise such authority to appoint and
replace adjudicators;
(e) Provide administrative support for the
conduct of adjudication proceedings;
(f) Exercise such authority to determine and
collect fees, costs of adjudication, and other
charges as may be necessary in the
performance of its functions and
responsibilities under this Act;
(g) Receive and hold any fees and expenses
deposited by the parties on behalf of an
adjudicator including the fees for an expert,
as well as the deposit representing the
amount due and payable under the
Adjudication Determination in the event the
dispute is referred to arbitration or to the
Court for final determination/resolution;
(h) Any function necessary for the efficient
conduct of the adjudication proceedings.
1410 Adjudication The adjudication proceedings shall commence
Proceedings after the acceptance of appointment by the
adjudicator/s and shall be conducted in a manner
as may be prescribed by the CIAC.
Propose to delete and incorporate
CIAC’s powers and functions in the
provision declaring CIAC as the
Adjudication Authority for unresolved
Payment Disputes that have ripened
into Adjudication Claims under this Act.
Proposed revision for clarity of intent.
QUERY: When does an Adjudication
Proceeding commence? Is it upon
initiation by service of the Notice of
Adjudication; or only upon acceptance
of appointment by the Adjudicator(s)?
necessary for the proper discharge of its
powers and authority under this Act.
The CIAC, as the default nominating authority,
shall perform, among others as may be conferred
by law, the following:
(a) Formulate and prescribe rules and regulations
for the adjudication of payment claims and
disputes arising from a construction contract
and for enforcement of the determination
by the adjudicators;
(b) Set qualification and competency standard
and criteria for selection and accreditation
of adjudicators;
(c) Establish and maintain a register of accredited
adjudicators and provide training programs
for them;
(d) Exercise such authority to appoint and
replace adjudicators;
(e) Provide administrative support for the
conduct of adjudication proceedings;
(f) Exercise such authority to determine and
collect fees, costs of adjudication, and other
charges as may be necessary in the
performance of its functions and
responsibilities under this Act;
(g) Receive and hold any fees and expenses
deposited by the parties on behalf of an
adjudicator including the fees for an expert,
as well as the deposit representing the
amount due and payable under the
Adjudication Determination in the event the
dispute is referred to arbitration or to the
Court for final determination/resolution;
(h) Any function necessary for the efficient
conduct of the adjudication proceedings.
The adjudication proceedings shall commence
after the acceptance of appointment by the
adjudicator/s and shall be conducted in a manner
as may be prescribed by the CIAC.
A Claimant shall initiate ad hoc or institutional
Adjudication Proceedings by serving a Notice of

1011 Notice of Any person or party to a construction contract
Adjudication may, after the expiry of the period the payment
claim is supposed to be due and payable or
after the expiry of the 15-day period within which
the parties shall settle the dispute amicably as
contemplated under Sec. 5(e), initiate the
submission of a payment dispute to adjudication
under the jurisdiction of the CIAC by serving on
the person or party concerned a written notice of
adjudication and submitting to the CIAC its
request for adjudication in the form and manner
as may be prescribed.
1112 Costs of All expenses of the adjudication, including the
Adjudication fees of the adjudicators, all incidental expenses
and other related charges which may be imposed
by the CIAC, shall be computed and paid in
accordance with the schedule of fees as may be
prescribed.
1213 Adjudicators One or more adjudicators may settle a payment
dispute who shall be appointed in accordance
with the rules as may be prescribed by the CIAC.
Aren’t Adjudicators appointed only
upon acceptance?
Proposed revision for brevity and
clarity of intent.
Proposed revision for brevity.
Proposed revision for brevity and
clarity of intent.
Adjudication as a condition precedent.
Ad hoc Adjudication Proceedings shall be
conducted in accordance with the applicable
provisions of the Contract that conform with
the CIAC Rules; otherwise, institutional
Adjudication by the CIAC shall apply.
The Adjudication Proceedings shall be conducted
in the manner prescribed in this Act and in
accordance with the CIAC Rules.
Any person or party to a construction contract
may, after the expiry of the period the payment
claim is supposed to be due and payable or
after the expiry of the 15-day period within which
the parties shall settle the dispute amicably as
contemplated under Sec. 5(e), initiate the
submission of a payment dispute to adjudication
under the jurisdiction of the CIAC by serving on
the person or party concerned a written notice of
adjudication and submitting to the CIAC its
request for adjudication in the form and manner
as may be prescribed.
The Claimant shall serve a Notice of Adjudication
upon the Respondent, the project owner (if the
Respondent is a Contractor), and the funders
(when required under the Contract):
(a) within the period stated in the Contract; or
(b) if not specified in the Contract, within fifteen
(15) Days from the Due Date of the Progress
Payment or portion thereof which is the
subject of the Adjudication Claim.
All costs, charges, and incidental expenses of the
Adjudication, including the Adjudicator’s fees,
shall be computed and paid in accordance with
the schedule of fees as maybe prescribed or
assessed by the CIAC.
One or more adjudicators may settle a payment
dispute who shall be appointed in accordance
with the rules as may be prescribed by the CIAC.
 Adjudicators shall be men of distinction in whom
the stakeholders of the construction industry and
the government can have confidence and are
available to render services when called to
adjudicate. They shall possess the competence,
integrity, and leadership qualities to resolve
payment disputes expeditiously and equitably.
They shall be given fees for each payment
dispute they settled.
The adjudicators shall come from different
professions. They may include engineers,
architects, construction managers, engineering
consultants, and businessmen familiar with the
construction industry and lawyers who are
experienced in construction disputes.
13 Adjudicators The adjudicators shall not be civilly liable for acts
Exempt from done in the performance of their official duties
Civil Liability for except in a clear showing of bad faith, malice, or
Official Acts gross negligence as provided in Sec. 38 (1),
Chapter 9, Book 1 of the Administrative Code of
1987 (Executive Order No. 292, signed on July 25,
1987).
QUERY: Is an Adjudicator deemed a
public officer within the purview of the
Administrative Code of the Philippines?
Is there employment by the State upon
inclusion in the roster of pre-qualified
Adjudicators by the CIAC? What about
Adjudicators appointed through the ad
hoc selection process who are not in
the roster of pre-qualified CIAC
Adjudicators?
Propose to incorporate the intent of
exemption from civil liability in the
discharge of duties as Adjudicators
under the preceding section on
“Adjudicators”.
Adjudicators shall be men of distinction in whom
the stakeholders of the construction industry and
the government can have confidence and are
available to render services when called to
adjudicate. They shall possess the competence,
integrity, and leadership qualities to resolve
payment disputes expeditiously and equitably.
They shall be given fees for each payment
dispute they settled.
The adjudicators shall come from different
professions. They may include engineers,
architects, construction managers, engineering
consultants, and businessmen familiar with the
construction industry and lawyers who are
experienced in construction disputes.
An Adjudication Claim shall be determined by
one (1) or three (3) Adjudicators to be selected
based on the qualification requirements and
appointed in the manner prescribed under
the CIAC Rules.
The CIAC is appointed as the default nominating
authority for Adjudicators in any ad hoc
Adjudication where the selection process based
on the Contract is deficient or inadequate.
Adjudicators shall not be held civilly liable for
lawful acts done in the performance of their
duties, except in a clear showing of bad faith,
bribery, fraud, or gross negligence.
The adjudicators shall not be civilly liable for acts
done in the performance of their official duties
except in a clear showing of bad faith, malice, or
gross negligence as provided in Sec. 38 (1),
Chapter 9, Book 1 of the Administrative Code of
1987 (Executive Order No. 292, signed on July 25,
1987).
1514 Confidentiality Any person or party to an adjudication
of Adjudication proceedings including an adjudicators, shall not
Proceedings disclose to any person, except for the principal or
the owner, any information; statement; and
document created or made for the purpose of the
adjudication, except with the consent of the
parties; or when the disclosure is necessary for
the enforcement of the Adjudication
Determination or any proceedings before a Court
or any other dispute resolution proceedings; or if
the information is already in the public domain.
Any person who violates shall be subject to the
sanctions as may be prescribed or initiated by the
CIAC, which shall include administrative/
disciplinary and/or suspension or disbarment
action if the violator is a lawyer.
1615 Adjudication The determination of the adjudicators on the
Determination payment claim shall be rendered promptly
within fifteen (15) days from commencement of
the adjudication proceedings or within such
period as may be prescribed by the CIAC, which
shall be made in writing in the prescribed format
containing, among others, the following:
(1) reasons for such determination;
(2) the time and manner the sum due is payable;
(3) the cost of adjudication, which should include
the fees and expenses to the adjudicator/s
and the fees paid to the CIAC; and the
determination on which of the parties should
bear the costs and in what proportion should
it be shared by the parties.
The adjudicator shall, motu propio or upon
request of a person or party to adjudication,
correct the Adjudication Determination on any of
the following grounds:
Proposed revision for brevity.
Proposed revision for clarity and
conciseness.
Any person or party to an adjudication
proceedings including an adjudicators, shall not
disclose to any person, except for the principal or
the owner, any information; statement; and
document created or made for the purpose of the
adjudication, except with the consent of the
parties; or when the disclosure is necessary for
the enforcement of the Adjudication
Determination or any proceedings before a Court
or any other dispute resolution proceedings; or if
the information is already in the public domain.
Any person who violates shall be subject to the
sanctions as may be prescribed or initiated by the
CIAC, which shall include administrative/
disciplinary and/or suspension or disbarment
action if the violator is a lawyer.
The confidentiality of Adjudication Proceedings
and all matters taken up therein shall be
maintained at all times by the parties thereto,
including the Adjudicator, with the exception of
permitted disclosures in accordance with the
CIAC Rules.
Any person who violates this confidentiality
requirement shall be meted the corresponding
sanctions prescribed by the CIAC Rules.
The Adjudication Determination of the
adjudicators on the payment claim shall be
rendered promptly within fifteen (15) Days
from commencement of the Adjudication
Proceedings and appointment of the
Adjudicator(s), or within such longer period as
may be prescribed by allowed under the CIAC
Rules, which and shall be made in writing
In the prescribed format containing, among
Others at least, the following:
(a) the reasons for such determination;
(b) the time and manner the any sum due is
payable; and
(c) the final cost of Adjudication, which should
include the fees and expenses to the
adjudicator/s and the fees paid to the CIAC;
and the determination on which of the
parties who should bear the such costs and,
or in what proportion it should it be shared
 (a) an evident miscalculation of the figures, a
typographical or arithmetical error; or
(b) an evident mistake in the description of any
person, party, date, or amount.
1716 Finality of The determination of the adjudicators is binding
Adjudication upon the parties, unless –
Determination
(a) it is set aside by the Court on any of the
following grounds:
(1) the adjudicator committed fraud or
bribery;
(2) there has been a denial of due process;
(3) the adjudicator has not acted
independently or impartially; or
(4) the adjudicator has acted in excess of
his/her jurisdiction;
(b) the subject matter of the determination is
settled by a written agreement between the
parties; or
(c) the dispute is finally decided by arbitration or
the Court.
Any person or party to adjudication may
commence proceedings to set aside the
Adjudication Determination or refer the dispute
to arbitration for final determination.
In that case, the person or party who was
held liable to pay under the Adjudication
Determination shall deposit to the CIAC the full
amount due and payable in such manner as may
be prescribed by the CIAC, pending final
resolution of the dispute.
Proposed revision for conciseness.
by the parties Claimant and the Respondent.
The Adjudicator(s) shall, motu propio or upon
request of a person or party to Adjudication,
correct the Adjudication Determination on any of
the following grounds:
(a) an evident miscalculation of the figures, a
typographical or arithmetical error; or
(b) an evident mistake in the description of any
person, party, date, or amount.
The Adjudication Determination of the
Adjudicators is shall be binding upon the
Parties Claimant and Respondent, unless –
(a) it is set aside by the Court on any of the
following grounds:
(1) the an Adjudicator committed bad faith,
Fraud,or bribery, or gross negligence;
(2) there has been a denial of due process;
(3) the an Adjudicator has not acted
independently or impartially; or
(4) the an Adjudicator has acted in excess of
his/her jurisdiction;
(b) the subject matter of the determination
Adjudication Claim is was settled by a written
agreement between of the parties Claimant
and Respondent prior to finality of the
Adjudication Determination; or
(c) the dispute Adjudication Claim subject of the
Adjudication Determination is finally
subsequently decided by arbitration or the
Court.
The Any person or party to against whom the
Adjudication Determination was made may
commence proceedings in Court to set aside the
Adjudication Determination, or refer the dispute
to arbitration for final determination.
In that any such case, the person or party who
was held liable to pay under the Adjudication
Determination shall deposit to the CIAC the full
amount due and payable in such the manner as
may be prescribed by, and for proper disposition
in accordance with, the CIAC Rules, pending final
resolution of the dispute by the Court or arbitral
body.
1817 Execution and The Adjudication Determination is executory
Enforcement of immediately upon receipt thereof by the parties
Adjudication which shall be enforced on motion of any of the
Determination parties in accordance with the rules as may be
prescribed by the CIAC.
Where a party fails to pay the whole or any part
of the adjudicated amount, the aggrieved party
is entitled to any of the following:
(a) apply for an enforcement of the Adjudication
Determination as if it were a judgment debt;
or
(b) exercise lien on goods supplied under the
construction contract that are unfixed and
which have not been paid for; or
(c) request payment directly from respondent’s
principal.
Any such amount paid by the principal under this
section shall be treated as payment for any
amount due or may be due to the respondent
under the construction contract.
The remedies provided in this Act are without
prejudice to other rights and remedies available
in the construction contract or those provided
by law.
2018 Separability Clause The provisions of this Act are declared to be
separable, and if any provision on the application
hereof is held invalid or unconstitutional, the
validity of the remaining provision not otherwise
affected shall remain in full force and effect.
2119 Repealing Clause All provisions of existing laws contrary to or
inconsistent herewith are hereby repealed or
modified accordingly.
Proposed revision for conciseness and
clarity of intent.
Proposed revision for brevity.
Proposed revision for clarity of intent.
The Adjudication Determination is shall be
immediately executory immediately upon receipt
thereof by the parties Claimant and Respondent,
which and shall be enforced on motion of any
either of the parties them in accordance with the
rules as may be prescribed by the CIAC Rules.
Where a party fails to pay the whole or any part
of the adjudicated amount, the aggrieved party
is shall be entitled to any of the following:
(a) apply for an enforcement of the Adjudication
Determination with the CIAC as if it were a
judgment debt; and
(b) avail of payment from the retention money
upon submission of a performance bond in
accordance with the CIAC Rules; or
(c) exercise a lien on the Goods or Services
supplied under the construction Contract
that are unfixed and which have not been
paid for; or
(d) request payment directly from respondent’s
Principal the project owner or funders, as
applicable.
Any such amount paid out of the retention
money, or by the principal project owner or any
of the funders under this section, shall be treated
as payment for any amount due or may be due to
the Respondent under the construction Contract.
The remedies provided in this Act are without
prejudice to other rights and remedies available
in the construction Contract or those provided
by under the law.
The provisions of this Act are declared to be
separable, and if any provision on the application
hereof is held invalid or unconstitutional, the
validity of the remaining provision not otherwise
affected shall remain in full force and effect.
If any provision of this Act is held unconstitutional,
the other provisions shall not be affected thereby.
All provisions of existing laws contrary to or
inconsistent herewith are hereby repealed or
modified accordingly.
All contrary provisions of existing Contracts
eligible for security of payment under this Act
 are deemed superseded by this Act.

2220 Effectivity Clause This Act shall take effect fifteen (15) days after
its publication in the Official Gazette or in a
newspaper of general circulation.