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Construction
Law 2022
Philippines
Julius Cervantes, Michael Macapagal,
Ramon Miguel Bacani and Jared Amoroso
Quisumbing Torres

practiceguides.chambers.com
 PHILIPPINES
Law and Practice
Luzón

Manila Philippines
Contributed by: Mindoro
Samar
Julius Cervantes, Michael Macapagal, Ramon Miguel Bacani Palawan
Panay
Leyte
and Jared Amoroso Negros
Quisumbing Torres see p.22 Mindanao

CONTENTS
1. General p.3 5.3 Remedies in the Event of Delays p.14
1.1 Governing Law p.3 5.4 Extension of Time p.15
1.2 Standard Contracts p.4 5.5 Force Majeure p.15
1.3 COVID-19 p.4 5.6 Unforeseen Circumstances p.15

2. Parties p.5 6. Liability p.16

2.1 The Employer p.5 6.1 Exclusion of Liability p.16
2.2 The Contractor p.5 6.2 Wilful Misconduct and Gross Negligence p.16
2.3 The Subcontractors p.7 6.3 Limitation of Liability p.16
2.4 The Financiers p.8
7. Risk, Insurance and Securities p.16
3. Works p.9 7.1 Indemnities p.16
3.1 Scope p.9 7.2 Guarantees p.17
3.2 Variations p.9 7.3 Insurance p.17
3.3 Design p.10 7.4 Insolvency p.17
3.4 Construction p.10 7.5 Risk Sharing p.17
3.5 Site Access p.10
8. Contract Administration and Claims p.18
3.6 Permits p.11
8.1 Personnel p.18
3.7 Maintenance p.11
8.2 Subcontracting p.18
3.8 Other Functions p.11
8.3 Intellectual Property p.19
3.9 Tests p.12
3.10 Completion, Takeover, Delivery p.12 9. Remedies and Damages p.20
3.11 Defects and Defects Liability Period p.12 9.1 Remedies p.20
9.2 Restricting Remedies p.20
4. Price p.13
9.3 Sole Remedy Clauses p.20
4.1 Contract Price p.13
9.4 Excluded Damages p.20
4.2 Payment p.13
9.5 Retention and Suspension Rights p.20
4.3 Invoicing p.14
10. Dispute Resolution p.21
5. Time p.14
10.1 Regular Dispute Resolution p.21
5.1 Planning, Programme p.14
10.2 Alternative Dispute Resolution p.21
5.2 Delays p.14

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PHILIPPINES Law and Practice
Contributed by: Julius Cervantes, Michael Macapagal, Ramon Miguel Bacani and Jared Amoroso,
Quisumbing Torres
1. GENERAL
1.1 Governing Law
The principal laws governing the construction
market in the Philippines are as follows.
Philippine Civil Code
The Philippine Civil Code (“Civil Code”) is the
general law that governs contractual relations in
the Philippines, which include construction con-
tracts. Construction contracts are governed by
the general rule under the Civil Code that parties
are free to stipulate the terms of their agreement,
provided that these are not contrary to law, mor-
als, good customs, public order, or public policy.
Consequently, unless otherwise provided by
law or contract, a construction contract will be
governed by the provisions of the Civil Code on
Obligations and Contracts and those applicable
to contracts for a “piece of work”.
Presidential Decree No 1746 (PD 1746)
PD 1746 created the Construction Industry
Authority of the Philippines (CIAP) for the pur-
pose of regulating the construction industry in
the Philippines. PD 1746 also established the
Philippine Contractors Accreditation Board
(PCAB), the licensing body for persons seeking
to engage in construction activities in the Philip-
pines.
Republic Act No 4566 (Contractor’s Licence
Law)
The Contractor’s Licence Law requires contrac-
tors to obtain a licence from the PCAB (PCAB
Licence), and also sets out the procedure and
requirements for the issuance of such licence.
Executive Order No 1008 (Construction
Industry Arbitration Law or CIAC Law)
The CIAC Law created the Construction Indus-
try Arbitration Commission (CIAC), which has its
own CIAC Rules of Procedure. The CIAC has
3
original and exclusive jurisdiction over construc-
tion disputes arising from a contract entered into
by parties involved in construction in the Philip-
pines that contains an arbitration clause.
Republic Act No 9184 (Government
Procurement Reform Act or GPRA)
The GPRA applies to all branches of the Philip-
pine government, and to all procurement activi-
ties involving services and infrastructure pro-
jects.
The GPRA prescribes standard template con-
ditions of contract (also known as the General
Conditions of Contract and the Special Con-
ditions of Contract). It affects the overall con-
struction contract when a government project
is involved.
The GPRA also applies to foreign-funded infra-
structure projects, unless otherwise provided by
the relevant treaty, international agreement, or
executive agreement.
Republic Act No 6957, as amended by
Republic Act No 7718 (PPP Law)
The PPP Law governs public-private partnership
(PPP) infrastructure projects, specifically those
that are under the following schemes:
• build-operate-and-transfer;
• build-and-transfer;
• build-lease-and-transfer;
• build-transfer-and-operate;
• contract-add-and-operate;
• develop-operate-and-transfer;
• rehabilitate-operate-and-transfer; and
• rehabilitate-own-and-transfer.
Presidential Decree No 1096 (National
Building Code of the Philippines)
The National Building Code sets out the national
policy and the legal requirements relating to the
design, location, siting, construction, alteration,
 Law and Practice PHILIPPINES
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repair, conversion, use, occupancy, mainte-
nance, moving, demolition of, and addition to
public and private buildings and structures. It
also serves as a basis for local ordinances enact-
ed by local government units for implementation
within their respective territorial jurisdictions.
Presidential Decree No 1445 (Government
Auditing Code of the Philippines or GACP)
The GACP needs to be considered when dealing
with construction contracts involving the gov-
ernment.
The GACP specifies that the powers of the Phil-
ippine Commission on Audit (COA) extend to the
examination, audit and settlement of all debts
and claims of any sort due from or owing to the
government or any of its subdivisions, agencies
and instrumentalities. This becomes relevant
when, in the event of a dispute, a contractor
obtains a favourable judgment against the gov-
ernment.
There have been several instances in the past
when a CIAC award against the government
has been modified and reduced by the COA,
pursuant to its power to approve money claims
against the government. In Taisei Shimizu Joint
Venture v COA and DOTr (2020), the Supreme
Court ruled that the COA may not disregard final
and executory judgments rendered by courts
and other adjudicative bodies by disallowing any
part of such final award.
1.2 Standard Contracts
The use of standard contracts is not mandatory
in construction projects procured by a private
(ie, non-government entity) employer, and par-
ties are generally free to agree on the form that
will be used.
There have been attempts to come up with tem-
plate construction contracts for private projects
in the Philippines. For instance, the CIAP has
Quisumbing Torres
developed two sets of template contracts: (i)
CIAP Document 101, or the “General Conditions
of Contract for Government Construction”; and
(ii) CIAP Document 102, or the “Uniform Gen-
eral Conditions of Contract for Private Construc-
tion”. Although these CIAP template contracts
are rarely used, the Philippine Supreme Court
has, in some instances, considered certain pro-
visions of CIAP Document 102 as evidence of
prevailing practice in the construction industry,
and has applied these provisions in instances
where there appear to be gaps or uncertainty
in the parties’ construction contract (see Werr
Corp International v Highlands Prime, Inc, 2017).
On the other hand, for construction and infra-
structure projects procured by the Philippine
government, standard forms are normally used
that contain the clauses and terms required
under the relevant laws and regulations. For
example, in construction projects procured
by the government under the GPRA, or those
undertaken by the government in accordance
with the Build-Operate-Transfer Law (BOT Law),
standard forms are used that contain the terms
required under the relevant law and their allied
regulations. For government infrastructure pro-
jects that are funded by way of foreign grants
covered by the Official Development Assistance
Act (ODA Act), FIDIC forms are typically used.
1.3 COVID-19
The Philippines construction industry was the
fastest-growing in the Asia-Pacific region prior
to the COVID-19 outbreak, but its growth has
been severely impacted by the pandemic.
The COVID-19 pandemic has resulted in the
imposition of varying degrees of health and
safety protocols across the country. During the
first half of 2020, only essential construction pro-
jects, ie, those relating to COVID-19 facilities,
emergency works, priority public and private
infrastructure projects, as defined, and the like,
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PHILIPPINES Law and Practice
Contributed by: Julius Cervantes, Michael Macapagal, Ramon Miguel Bacani and Jared Amoroso,
Quisumbing Torres
were allowed to operate on a skeletal workforce.
As the policy direction for permissible work dur-
ing the quarantine period stabilised, public and
private construction projects eventually resumed
operations at full operating capacity, subject to
compliance with health and safety protocols.
In an effort to adapt to the circumstances, the
CIAC issued guidelines on how to conduct online
proceedings in construction arbitration proceed-
ings, which essentially require the parties to
agree to the conducting of online proceedings.
The lockdowns have likewise given rise to force
majeure claims. “Force majeure” under Philip-
pine law, pertains to events that could not be
foreseen, or though foreseen, were inevitable
(Article 1174, Civil Code). This general principle
on force majeure, however, gives way to con-
tractual stipulations by the parties.
2 . PA R T I E S
2.1 The Employer
Companies That Act as Employers
Private individuals, privately owned entities, and
government agencies and instrumentalities typi-
cally act as employers in construction projects
in the Philippines.
Rights and Obligations
The general rights and obligations of the
employer under a construction contract normally
include the following.
Rights
• To inspect the works or any portion thereof;
• to require the correction of defects due to
faulty materials, equipment, or workmanship
that may appear within a certain period upon
completion of the works;
• to stop the works or any portion thereof, if
the contractor fails to complete or correct the
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same, and to carry out or correct the work by
itself or through other contractors;
• to obtain title and ownership over all complet-
ed works, and over all materials, equipment,
tools, and supplies for which payment has
been made under the contract; and
• to request variations, in accordance with the
contract.
Obligations
• To pay the contract price;
• to provide the contractor access to and pos-
session of the site, to enable the contractor to
perform the construction works;
• to provide pertinent information regarding the
site that may be needed by the contractor in
connection with the construction works;
• to obtain relevant government permits and
licences needed for the project; and
• to obtain and maintain the relevant insurance
coverages required under the contract.
General Relations Between the Employer,
Contractor, Subcontractors and Financiers
Generally, no principal-agent, employer-employ-
ee or partnership relationship is created between
the employer, on one hand, and the contractor,
subcontractors and financiers, on the other
hand. The employer is not bound by the acts
of such parties and its relationship with them
will generally be governed by the terms of the
relevant agreements among the parties.
2.2 The Contractor
Companies That Act as Contractors
The entities that typically act as contractors in
construction projects are Philippine stock corpo-
rations that secure the appropriate licence from
the PCAB.
There are also instances where multiple contrac-
tors, each holding a PCAB licence, form an unin-
corporated joint venture (UJV) to undertake only
 Law and Practice PHILIPPINES
Contributed by: Julius Cervantes, Michael Macapagal, Ramon Miguel Bacani and Jared Amoroso,
a single specific project. In such cases, the UJV
itself must obtain its own PCAB licence.
A consortium between a PCAB-licensed con-
tractor and a non-contractor may also be formed
to undertake only a single specific project. In
such a case, the consortium itself must obtain
its own PCAB licence.
Entities that act as contractors are also normally
required by employers to satisfy certain legal,
financial and technical eligibility requirements.
Types of PCAB Licences
There are two main types of PCAB licence: a
Regular Licence and a Special Licence.
Regular Licence
Under the Implementing Rules (IRR) of the Con-
tractors’ Licence Law, a Regular Licence may
be issued only to Filipino sole proprietorships,
and to partnerships and corporations that have
at least 60% Filipino equity participation and
are organised under Philippine law. A Regular
Licence authorises the licensee to engage in
construction contracting within the field and
scope of the licence classification during the
licence’s validity, renewable annually.
Special Licence
On the other hand, a Special Licence may be
issued to a joint venture, a consortium, a foreign
constructor or a project owner, and only author-
ises the licensee to engage in the construction
of a single, specific project. It must be renewed
annually for as long as the project is in progress.
The number of renewals is limited to the period
until the completion of the specific project for
which the licence was issued.
Regular Licence with Annotation – the
Quadruple-A Licence
In 2015, the IRR of the Contractor’s Licence Law
was amended to allow for the issuance of a Reg-
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ular Licence with Annotation, which is a sub-type
of Regular Licence under the Quadruple A Cat-
egory (“Quadruple-A Licence”). A Quadruple-A
Licence may be issued to a corporation organ-
ised under Philippine law, including ones that
are up to 100% foreign-owned. An applicant for
a Quadruple-A Licence must have a minimum
paid-up capitalisation of at least PHP1 billion at
the time it applies for the licence. The holder
of a Quadruple-A Licence may undertake only
specific types of vertical and horizontal projects,
each with a prescribed minimum contract value.
Recent court ruling
In a recent Supreme Court decision, PCAB v
Manila Water Company, Inc (2020), the foreign
ownership restrictions applicable to PCAB Reg-
ular Licences were declared invalid. It was held
that while the Contractor’s Licence Law author-
ises the PCAB to adopt rules to effect classi-
fication of contractors as may be necessary,
the intention is not for such law to discriminate
against foreign contractors. The classification of
contractors is limited only to the classifications
specifically provided under the Contractor’s
Licence Law, which excludes nationality-based
classification. Moreover, the court held that the
constitutional provision that limits the practice of
professions to Filipino citizens is inapplicable to
the licensing of contractors in the construction
industry.
In a 2021 Resolution, the Supreme Court denied
PCAB’s Motion for Reconsideration and the
intervention of several non-parties, and upheld
its 2020 Decision. PCAB has yet to implement
the ruling of the Supreme Court, because one
of the intervenors in the case has also filed a
Motion for Reconsideration of the 2021 Resolu-
tion, which remains pending.
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PHILIPPINES Law and Practice
Contributed by: Julius Cervantes, Michael Macapagal, Ramon Miguel Bacani and Jared Amoroso,
Quisumbing Torres
Rights and Obligations Under a Construction
Contract
The general rights and obligations of the con-
tractor under a construction contract normally
include the following.
Rights
• To receive the contract price;
• to be given access to and possession of the
site, to enable the contractor to perform the
construction works;
• to receive pertinent information regarding the
site that may be needed by the contractor in
connection with the construction works; and
• to receive an extension of time, where appli-
cable, in accordance with the terms of the
contract.
Obligations
• To perform and complete the works within
the timelines provided in the contract and, at
completion date, to hand over the sites and
the completed works to the employer;
• to perform the works using materials, goods,
equipment and methods of constructions of
the quality and standards required under the
contract;
• to provide and pay for all labour, materials,
equipment, tools, construction equipment,
and all machinery, transportation, and other
facilities and services necessary for the prop-
er execution and completion of the works;
• to obtain the permits necessary for the works
from the relevant government agencies;
• to warrant that the works conform with the
requirements of the applicable law, the con-
tract and other requirements of the employer,
and are free from hidden defects, imperfec-
tions or faults;
• to rectify or remedy any defect or deficiency
during the construction period or within a
period of time thereafter;
• to comply with all relevant labour laws apply-
ing to its employees;
7
• to ensure security and safety at the site; and
• to procure and maintain appropriate bonds
and insurance from reputable and financially
sound companies acceptable to the employ-
er.
General Relations Between the Contractor
and Employer
See 2.1 The Employer.
General Relations Between the Contractor
and Subcontractors
The contractor is normally responsible for all the
acts of its subcontractors, including any negli-
gent, wilful or reckless acts or omissions on the
part of any subcontractor, its agents or employ-
ees, as if they were the acts, negligence and
omissions of the contractor.
General Relations Between the Contractor
and Financiers
See 2.1 The Employer.
2.3 The Subcontractors
Companies That Act as Subcontractors
See 2.2 The Contractor for the kinds of entities
that typically act as contractors in construction
projects.
Rights and Obligations Under a Construction
Contract
The rights and obligations of a subcontractor
are governed, not by the construction contract
between the employer and the contractor, but
by its own agreements with the contractor. Nor-
mally, in the agreements between the contrac-
tor and the subcontractor, the subcontractor will
have the same rights and obligations as those of
the contractor under the latter’s contract with the
employer, to the extent applicable to the portion
of the works subcontracted to the contractor.
However, the contractor would not be relieved
of its obligations towards the employer with
respect to the subcontracted works.
 Law and Practice PHILIPPINES
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General Relations Between the Subcontractor
and Employer
Construction contracts may or may not allow the
contractor to subcontract the whole or a por-
tion of the works, or may require the contractor
to obtain the employer’s consent prior to such
subcontracting.
If subcontracting is allowed, it is generally the
contractor that remains liable to the employer for
all the acts of its subcontractors, including any
negligent, wilful or reckless acts or omissions
on the part of any subcontractor. It is also the
contractor, and not the employer, that is typically
responsible for the proper and timely payment of
all subcontractors.
General Relations Between the Subcontractor
and Contractor
See 2.2 The Contractor with regard to general
relations between the contractor and subcon-
tractors.
General Relations Between the Subcontractor
and Financier
Generally, no principal-agent, employer-employ-
ee or partnership relationship is created between
subcontractors and financiers. The subcontrac-
tors’ relationship with the financiers will generally
be governed by the terms of the agreements (if
any) that may exist between them.
2.4 The Financiers
Companies and/or Institutions That Act as
Financiers
For construction projects procured by a private
(ie, non-government entity) employer, the financ-
ing required by the employer and/or the con-
tractor is usually secured from private financial
institutions, such as banks.
On the other hand, for construction projects pro-
cured by the government, the financier would
normally be the government itself through
Quisumbing Torres
direct government appropriations and financ-
ing arrangements secured from private financial
institutions. Another typical source of financing
for construction projects procured by the gov-
ernment would be Official Development Assis-
tance (ODA) in the form of loans and/or grants
secured from foreign governments and/or from
international financial institutions such as the
World Bank and the Asian Development Bank.
Rights and Obligations Under a Construction
Contract
Financiers are not typically made parties to
the construction contract. However, there are
instances where the construction contract would
expressly provide that the financiers are entitled
to certain rights, such as the following:
• extensive information, auditing and inspection
rights;
• granting of a security interest over the project;
• to cure the breach on behalf of the defaulting
party; and
• to nominate a third party (which may be the
financier itself) to assume the rights of the
defaulting party.
Construction contracts do not usually provide
for obligations of financiers.
General Relations Between the Financier and
Employer
The relationship between the employer and the
financier would normally be governed not by the
construction contract, but by the financing or
other similar agreement between the employer
and the financier. However, as mentioned above,
certain rights may be granted to the financier
under the construction contract, in order to pro-
tect the financier’s financial interest in the pro-
ject.
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PHILIPPINES Law and Practice
Contributed by: Julius Cervantes, Michael Macapagal, Ramon Miguel Bacani and Jared Amoroso,
Quisumbing Torres
General Relations Between the Financier,
Contractor and Subcontractors
Normally, there would be no direct relationship
between the financier and the contractor and
subcontractors. However, as mentioned above,
certain rights may be granted to the financier
under the construction contract, in order to pro-
tect the financier’s financial interest in the pro-
ject.
3. WORKS
3.1 Scope
Typically, the scope of the works is determined by
the employer and its relevant consultants based
on the former’s requirements, and is included in
the tender documents for the project. However,
it is also common for the scope of the works to
be prepared jointly by the employer (and its rel-
evant consultants) and the contractor, and once
agreed and finalised, to be incorporated in the
construction contract.
Methods of description used for the scope of the
works include the following:
• programme of works;
• terms of reference;
• drawings (including supplementary details
and shop drawings) and specifications pre-
pared by the architect and/or other relevant
consultants; and
• project schedules and milestones.
3.2 Variations
Scope and Price of Variations Requested by
the Employer
In practice, the scope of variations requested by
the employer would typically include:
• changes in quantities or an increase in the
scope of the work of the contractor resulting
from adjustments in work drawings;
9
• extra work or alterations, additions to or
deductions from the scope of the work; and
• the need for additional or a different type of
work resulting from materially different sub-
surface conditions from those shown in the
drawings, specifications, or contract docu-
ments.
In determining the price of the variation, the val-
ue of any extra work or change is usually deter-
mined by the employer in any one or more of the
following ways:
• by a lump sum acceptable to the contractor;
• by unit prices either stipulated in the contract
or subsequently agreed upon; and/or
• by actual direct cost plus value added tax, if
any, and a fixed percentage for the contrac-
tor’s profit and overheads (eg, 15%).
Scope and Price of Variations Requested by
the Contractor
Generally, the parties may contractually agree
on the determination of the scope and price of
variations requested by the contractor.
The usual procedure adopted is that the con-
tractor proposes a variation to be adopted by
the employer. Once approved, the variation will
then be valued by the parties by agreement or
through a third party (eg, an engineer).
It must be noted that under Philippine law (Civ-
il Code, Article 1724), a contractor can only
demand an increase in the price if there is a
change in the plans and specifications under
the following conditions:
• the variation is authorised by the employer in
writing; and
• the additional price to be paid to the contrac-
tor has been determined in writing by both
parties.
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3.3 Design
It is more common in the Philippines for design
works to be separately contracted by the
employer to a design consultant. In such cases,
the construction contract will typically provide
that the employer is fully responsible for the ade-
quacy of the design. The drawings and specifi-
cations prepared by the architect or the design
consultant are normally attached to, and an inte-
gral part of, the construction contract, and must
be adhered to by the contractor in their perfor-
mance of the works. It is also usually stipulated
in construction contracts that the architect or
the design consultant shall inspect the works
to determine compliance with the drawings and
specifications. The employer may require the
rectification of works that the architect or design
consultant determines to be non-compliant.
However, there are also instances where the
employer and the contractor agree that a part
or the whole of the works shall be designed by
the contractor. In such cases, the contractor is
responsible for the adequacy of the design, and
all such responsibilities normally assigned to
the owner in relation to the design are instead
assigned to the contractor.
3.4 Construction
The contractor is generally responsible for the
performance of all the works, and their comple-
tion within the timelines provided under the con-
struction contract, and is normally expected to
supply all the materials, goods and equipment
needed for the works. It is also the contractor’s
responsibility to rectify or remedy any defect or
deficiency that may arise during the construction
period and/or within a certain period thereafter.
If allowed under the contract, the contractor
may subcontract a portion of the works. In such
cases, the contractor normally remains respon-
sible for all acts of its subcontractors, as if they
Quisumbing Torres
were the acts, negligence and omissions of the
contractor itself.
The employer, on the other hand, is generally
liable only to pay the contract price to the con-
tractor, and allow the contractor and subcon-
tractor access to the site to perform the works.
The employer is generally not involved in the
performance of the works.
3.5 Site Access
Prior to Construction
Responsibility for matters relating to the status
of the site prior to construction is normally stipu-
lated in the contract. The contract may provide
that any remedial works needed to prepare the
site for construction are included in the scope of
the contractor’s works, or that any such remedial
works shall be the responsibility of the employer
(through its other contractors) prior to the com-
mencement of the works.
However, contractors typically visit the project
site prior to the bidding and awarding of the con-
tract in order to assess the facilities that would
be needed and the difficulties that could poten-
tially attend the execution of the works. Most
contracts also require the employer to provide
the contractor with a geodetic survey and sub-
surface exploration.
The employer is normally responsible for any
violation of environmental laws and regulations
relating to the status of the site prior to con-
struction. Accordingly, any regulatory penalties
that may result from such violations would be
imposed on the employer.
Construction contracts often provide that all
archaeological finds, and other similar items
found on the site, shall be considered the prop-
erty of the employer.
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Quisumbing Torres
During Construction
On the other hand, construction contracts nor-
mally provide that, while performing the works
during the construction period, the contractor is
responsible for the site and must comply with all
applicable environmental laws and regulations.
The contractor may also be held responsible for
violations under environmental laws and regula-
tions if the violation arises from its own acts or
omissions.
3.6 Permits
The following are the primary permits required
for a construction project:
• Contractor’s Licence from the Philippine Con-
tractor’s Accreditation Board;
• Environmental Compliance Certificate (and
allied permits) or Certificate of Non-Coverage
(as may be applicable) from the Department
of Environment and Natural Resources;
• zoning/locational clearance, building per-
mit (and other related permits; eg, electrical
permits, mechanical permits) and occupancy
permit, from the relevant local government
unit;
• fire safety evaluation clearance, from the
Bureau of Fire Protection;
• for projects near airports, a height clearance
permit from the Civil Aviation Authority of the
Philippines; and
• such other permits as may be required under
applicable special laws and/or regulations.
Except for the Contractor’s Licence (which the
contractor must obtain and hold in its own name),
all the permits required for the construction pro-
ject would normally be issued in the employer’s
name. However, the contract usually provides
that the contractor is responsible for obtaining
such permits for and on behalf of the employer.
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3.7 Maintenance
The maintenance of the works is normally gov-
erned by a contract between the employer and
another service provider. The maintenance con-
tract is typically separate from the construction
contract, but there are also instances where the
construction, operation and maintenance of the
project are integrated in a single contract (eg, in
public-private partnership projects between the
government and private proponents that involve
the construction, operation and maintenance of
infrastructure facilities).
The scope of operation and maintenance works
varies depending on the type of project involved,
and is generally dependent on the agreement of
the parties. However, the scope of maintenance
works usually involves the regular scheduled
maintenance of the works, day-to-day admin-
istration, management, upkeep, repairs, over-
hauls, improvements and replacements that are
necessary for the safe and proper operation of
the works.
The construction contract may provide that the
manual for the maintenance works shall be pre-
pared by the contractor and turned over to the
employer on completion of the construction.
3.8 Other Functions
Other functions in the construction process are
usually contracted by the employer to third par-
ties.
Operational services are usually covered by a
separate agreement between the employer and
an operation and maintenance service provider
(which may or may not be the contractor). See
3.7 Maintenance.
Financing arrangements are also usually cov-
ered by a separate financing agreement and
are independent of the construction. However,
the financier may also be provided with certain
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rights (see 2.4 The Financiers), which may be
exercised in accordance with the terms of the
construction contract.
The transfer of the project from the contractor to
the employer is normally governed by the terms
of the construction contract.
3.9 Tests
Upon completion of the works, the contrac-
tor will normally request the employer to con-
duct an inspection. The employer (through its
relevant consultants) may conduct tests, at its
own expense, to determine whether the con-
tractor has satisfactorily completed the works
in accordance with the contract and the employ-
er’s instructions.
If the tests reveal that the contractor has not sat-
isfactorily completed the works, it would be the
contractor’s responsibility to promptly replace
or repair the works at its own expense. In such
cases, the contractor would also typically shoul-
der the expenses that will be incurred to conduct
further tests until the works are satisfactorily
completed.
If the tests determine that the works have already
been satisfactorily completed, the employer
will certify such completion in accordance with
mechanics set out in the construction contract.
3.10 Completion, Takeover, Delivery
The contracts would provide separate mile-
stones for Substantial Completion and Final
Completion. Substantial Completion typically
entails completion of at least 95% of the works,
which already allows the employer to use the
site. Final Completion refers to the completion
of all the works under the contract.
Substantial Completion
If the contractor determines that it has met Sub-
stantial Completion, it will request the employer
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to inspect the works. If the employer finds that
Substantial Completion has indeed been met, it
will issue a Certificate of Substantial Completion.
If the employer finds that Substantial Comple-
tion has not been met, it will notify and allow the
contractor to perform the works necessary to
achieve Substantial Completion.
After issuance of the Certificate of Substantial
Completion, the works and the site would be
turned over to the employer.
Final Completion
If the contractor determines that it has met
Final Completion, it will request the employer
to inspect the works. If the employer finds that
Final Completion has indeed been met, it will
issue a Certificate of Final Completion. If there
are any defective of non-compliant works, the
employer may issue a “punch list” identifying
such works. Upon the contractor’s completion
of the punch list to the employer’s satisfaction,
the employer will issue the Certificate of Final
Completion.
3.11 Defects and Defects Liability
Period
The construction contract usually provides for
a defects liability period where the contractor
can be held liable for defects in the works upon
notice by the employer. Typically, the defects
liability period would be for a period of one year
counted from Substantial or Final Completion.
In the event that defects are discovered during
the defects liability period, the employer may
require that the defects be remedied at the sole
cost of the contractor. If the contractor fails to
remedy the defects, the employer may (i) rem-
edy the defects or request another party to do
so, and (ii) claim from the warranty security or
retention an amount to defray the costs for such
rectification.
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Quisumbing Torres
In the absence of any contractual stipulation,
the defects liability period under the Civil Code
(Article 1723) applies.
• The engineer or architect who drew up the
plans and specifications for a building is
liable for damages if within 15 years from the
completion of the structure, the same should
collapse by reason of a defect in those plans
and specifications, or due to the defects in
the ground.
• The contractor is responsible for damages if
the edifice falls, within 15 years, on account
of defects in the construction or the use of
materials of inferior quality furnished by the
contractor, or due to any violation of the
terms of the contract.
Actions under either of the above must be
brought within ten years following the collapse
of the building.
The Civil Code does not provide for a period
within which to report discovered defects after
the initial defects liability period.
4. PRICE
4.1 Contract Price
The contract price is typically expressed as a
lump sum or a fixed amount in the contract, sub-
ject only to adjustments as may be needed in
case of variations, and as may be agreed upon
by the parties. The contract price would already
consider all costs and expenses that the con-
tractor may incur for the proper execution, com-
pletion and performance of the works.
Cost-Plus Contracts
Cost-plus contracts are also regularly used in
the Philippines, particularly in instances where
the scope of the works has not been clearly
defined. The variations of cost-plus contracts
13
that are typically used are cost plus fixed per-
centage, and with lesser frequency, cost plus
fixed fee.
Milestone Payments
It is also common for construction contracts to
provide for milestone payments. Each milestone
payment is usually subject to verification or test-
ing by the employer prior to payment. Contracts
also often provide for a down payment, normally
upon delivery of the performance bond required
under the contract and after the necessary per-
mits and licences have been obtained from the
relevant government agencies. Full payment of
the contract price is made upon Final Comple-
tion, subject to any agreement relating to any
retention amount.
4.2 Payment
Parties are free to stipulate the conditions of
late or non-payment, which may include the
payment of interest or penalties, and may also
constitute a ground for the suspension of work
or termination of the contract.
The following measures are typically applied in
case of late or non-payment:
• within an agreed period after a receipt of
request for payment from the contractor, the
employer shall pay the amount as certified;
• where the employer fails to pay the amount
due on time, the employer shall pay, in addi-
tion to the amount due, interest thereon;
• a delay in the payment of any progress billing
shall automatically extend the Completion
Time by a period equal to the delay;
• the contractor has the right to suspend work
or terminate the contract upon written notice
to the employer, if the employer fails to pay
the contractor the approved request for pay-
ment; and/or
• if the contractor incurs a delay in the mobi-
lisation and/or in the progress of the work
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for reasons attributable to the employer, the
contractor may be entitled to a claim for extra
cost, and delay in said payment shall entitle
the contractor to an extension of time and to
payment of interest.
Advance payments, delayed payments and/or
interim payments are schemes that are gener-
ally used and may be stipulated in construction
contracts. For instance, the parties may mutu-
ally agree on the amount of advance payment
to be made by the employer, subject to the con-
tractor’s posting of a surety bond of equivalent
amount to guarantee repayment. The advance
payment is used for mobilisation, purchase of
materials, etc.
4.3 Invoicing
The particular means and form of invoicing are
not normally provided in the contract. However,
in milestone payments, approval by the employer
is generally required before the contractor may
issue invoices to the employer for the particular
payment.
5. TIME
5.1 Planning, Programme
Generally, the plans, schedules and milestones
are arranged and determined by the employer,
and finalised and incorporated into the contract
upon agreement with the contractor. Inputs from
the architect and the employer’s other consult-
ants may also be taken into account in preparing
the plans, schedules and milestones.
In some instances, the contract may also pro-
vide that the contractor should prepare a con-
tractor’s plan, consistent with the scope of the
work and the requirements of the employer, for
approval by the employer. Once approved, the
contractor’s plan is binding between the parties,
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and the works would need to be performed in
accordance with its terms.
In either case, any amendment to the plans,
schedules and milestones requires approval by
the employer and the contractor.
The completion of milestones is subject to
verification and testing (see 3.9 Tests and 3.10
Completion, Takeover, Delivery). Milestone
certificates would also usually be issued by the
employer to evidence the completion of mile-
stones.
5.2 Delays
In relation to delay in payments, see 4.2 Pay-
ment.
Parties are free to stipulate what constitutes a
delay in performance and the effects of the delay
on the respective obligations of the parties.
A party is generally required to notify the other
party that the latter is causing a delay. This is
consistent with Article 1169 of the Civil Code,
which states that those obliged to deliver or
do something incur a delay from the time the
demand is made. However, demand is not nec-
essary for the delay to exist when the law or obli-
gation expressly so declares, such as express
stipulation in the agreement as to the contract
key dates or timeline. Nevertheless, a notifica-
tion requirement is common practice in order to
determine the period from which an extension of
time or additional cost claim shall be based, if
any. After notification, the claiming party is gen-
erally required to substantiate the impact of the
delay and its corresponding entitlement to an
extension of time and/or additional cost claim.
5.3 Remedies in the Event of Delays
The employer would typically be entitled to the
payment of liquidated damages and other con-
sequential costs (which may be collected from
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Quisumbing Torres
the performance bond) in the event of delay by
the contractor. Substantial delay may also be
cause for the employer to terminate the con-
struction contract.
5.4 Extension of Time
In practice, if the contractor is obstructed or
delayed in the completion of the work by reasons
not attributable to the contractor (ie, employer’s
action, neglect, delay or fault; third-party strikes
or lockouts; an act of God or force majeure; etc),
the contractor is entitled to an equitable adjust-
ment of the completion time.
The contractor must, within a period specified
under the contract, notify the employer. In turn,
the employer must, within a similar specified
period, give the contractor an equitable adjust-
ment of the completion time, subject to the
employer’s determination as to the period. If the
contractor and the employer cannot agree on
the proposed period, the contract may provide
mechanisms to settle the dispute. The parties
may also stipulate that the employer’s failure
to reply to the contractor may be deemed as
approval by the employer of the adjustment
requested by the contractor.
5.5 Force Majeure
Under the principle of force majeure (also known
as fortuitous events) in Philippine law, no person
is responsible for events that could not be fore-
seen or that, although foreseen, were inevita-
ble. The most common force majeure events in
construction contracts in the Philippines include:
war, riot, sabotage, acts of terrorism, insurrec-
tions, acts of public enemies; strike, industrial
dispute, blockade, labour dispute, lockout; fire,
explosion, flood, typhoon, tornado, epidemic
or pandemic, earthquakes, or other natural dis-
asters; export or import restrictions; closing of
harbours, docks, canals, or other assistance to
or adjuncts of the shipping or navigation of or
15
within any place; rationing or allocation, whether
imposed by law, decree, or regulation; etc.
Nonetheless, parties are free to contractually
limit or exclude certain circumstances from
being qualified as force majeure events.
5.6 Unforeseen Circumstances
Unforeseen circumstances may be in the follow-
ing forms: fortuitous events, as discussed under
5.5 Force Majeure, legal or physical impossi-
bility, or difficulty beyond the contemplation of
the parties. The provisions of the Civil Code are
deemed written into the contract. Unless the
parties stipulate otherwise, the provisions of the
Civil Code will govern.
Under the Civil Code, a debtor in obligation to
perform a service will be released when the obli-
gation becomes legally or physically impossible
without any fault on the part of the obligor. Legal
impossibility refers to instances where an act is
prohibited or prevented by law, while a physical
impossibility is where an act can no longer be
accomplished by reason of its nature.
As for difficulty beyond the contemplation of the
parties, the Civil Code provides that when the
service has become so difficult as to be mani-
festly beyond the contemplation of the parties,
the obligor may also be released from the obliga-
tion, in whole or in part. The scenario contem-
plated includes exceptional changes in circum-
stances, taking into account the risks assumed
by the parties at the inception of the contract.
Unforeseen circumstances may be classified
as force majeure or a change in legislation that
would entitle the contractor to an extension of
time, and/or additional cost, depending on the
circumstances and the ability of the contractor
to substantiate its claims.
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6. LIABILITY
6.1 Exclusion of Liability
Liability for future fraud cannot be contractu-
ally excluded under mandatory law (Civil Code,
Article 1171). In addition, limitation of liability for
gross negligence and wilful misconduct may be
considered void, as it is contrary to public policy.
6.2 Wilful Misconduct and Gross
Negligence
Wilful misconduct and gross negligence are gov-
erned by the Civil Code provisions on tort. Gross
negligence has been interpreted by the Supreme
Court to be the “want of even slight care and
diligence” and “such entire want of care as to
raise a presumption that the person in fault is
conscious of the probable consequences of
carelessness, and is indifferent, or worse, to the
danger of injury to person or property of others”.
Under Article 2176 of the Civil Code, whoever
by act or omission causes damage to another,
there being fault or negligence, is obliged to pay
for the damage done. Meanwhile, in addition to
actual damages, a party that acts with gross
negligence may also be liable for exemplary
damages under Article 2231 of the Civil Code.
As explained in 6.1 Exclusion of Liability, limi-
tation of liability for gross negligence and wilful
misconduct may be considered void.
6.3 Limitation of Liability
Parties may contractually limit their liability. Typi-
cally, limitations on liability expressly pertain to
the liabilities of the contractor in general under
the contract. Parties also usually agree to limit
liabilities for certain types of consequential dam-
ages, such as lost profits. In these cases, parties
typically agree that these damages cannot be
claimed by one party against another, subject
to statutory limits on limitations of liability (eg,
fraud, gross negligence). When contracts pro-
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vide for a limitation of liability, the cap is usu-
ally set at an amount equivalent to the contract
price, or an agreed percentage of the contract
price.
In addition, in the absence of any agreement to
the contrary, parties are also generally not liable
for events of force majeure.
However, it is not possible to limit liability if it
arises from a fraudulent act or an act consti-
tuting gross negligence or wilful misconduct.
Such a stipulation would be considered void, as
explained in 6.1 Exclusion of Liability.
7. RISK, INSURANCE AND
SECURITIES
7.1 Indemnities
Indemnities are normally used to limit risk in
construction contracts. Typically, indemnities
are given by the contractor to the employer for
the following:
• the failure of the contractor or subcontrac-
tors to perform their obligations pursuant to
the contract or in accordance with applicable
laws and regulations;
• the failure of the contractor to complete the
works within the agreed period;
• the contractor’s or subcontractor’s negli-
gence, errors, omissions, negligent supervi-
sion, and negligent construction administra-
tion;
• breach of warranties and of confidentiality
obligations under the contract;
• infringement or violation of the intellectual
property rights of third persons;
• death, disease or injury to the contractor’s or
subcontractor’s employees, or damage to any
property arising from the construction works,
which are attributable to the contractor;
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Quisumbing Torres
• employment-related claims of the contractor’s
employees;
• unpaid bills for labour and materials; and
• damage caused by the contractor or its
employees to any property of the employer
and the adjoining property.
7.2 Guarantees
The contractor generally guarantees the works
performed in the contract against defects in
workmanship and material for a certain period of
time counted from the completion of the works.
The guarantees usually include:
• that the works conform to the requirements
of applicable law, the contract, and the rel-
evant requirements of the employer, and that
the same shall be free from hidden defects,
imperfections, or faults;
• that all materials, facilities and equipment
used in the works (if supplied by the con-
tractor) are standard products of trade and
comply with the standards provided in the
contract, and are free from defects; and
• that all civil works and installation of materi-
als, facilities and equipment are carried out
in a workmanlike manner according to the
standards provided in the contract or sound
professional practices.
A certain amount of the contract price may also
be subject to retention by the employer after
completion of the works, which will cover any
violation of warranties within the warranty peri-
od. Alternatively, the contractor may be required
to deliver a warranty security (eg, a bond or letter
of credit) to the employer, which shall remain in
force until the warranty period expires.
7.3 Insurance
Construction contracts often require the con-
tractors to obtain and maintain insurance poli-
cies from reputable and financially sound insur-
17
ance companies acceptable to the employer.
The policies required normally include:
• contractor’s all-risk insurance – against all
risks, including fire, earthquake, typhoon, hur-
ricane, windstorm, any other similar perils, or
any other cause;
• third-party liability insurance – against all
claims for bodily or personal injury, death
and/or damage to property;
• professional liability insurance – against loss-
es suffered from negligence, wrong advice
and other similar acts of advisers; and
• automobile liability insurance – against bodily
injury, death and property damage arising
from owned, non-owned and hired vehicles.
7.4 Insolvency
The insolvency of a party is normally considered
an event of default that would entitle the other
party to terminate the contract, in accordance
with the terms of the contract. This remedy is
usually afforded to both the employer and con-
tractor.
In the event of insolvency of the employer, the
contractor is also usually given the right to cease
all work immediately.
7.5 Risk Sharing
Risks arising from the construction works are
generally the responsibility of the contractor.
In line with this, contracts usually provide that
the contractor is fully responsible for the care
of the works from the commencement of the
works until handover to the employer, at which
time the responsibility for the care of the works
would pass to the employer. However, even after
handover to the employer, the contractor would
still normally be liable for any loss or damage
caused by its actions, and for loss or damage
that may be the result of a previous event for
which the contractor was liable.
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Risks that may possibly be shared by the par-
ties would include force majeure and unforeseen
circumstances (refer to 5.5 Force Majeure and
5.6 Unforeseen Circumstances). The parties
would typically provide that losses or damages
arising out of force majeure or unforeseen cir-
cumstances shall not be the responsibility of the
contractor.
8. CONTRACT
A D M I N I S T R AT I O N A N D
CLAIMS
8.1 Personnel
Party Responsible for Personnel
The contractor would usually be responsible for
providing and paying for all labour and manpow-
er needed for the performance and completion
of the works, and for ensuring that all relevant
labour laws applying to its employees are com-
plied with.
The contractor would also be required to imple-
ment an appropriate construction safety and
health programme at the contract site and
require all its employees to obey all applicable
laws and regulations concerning safety at work.
Consequently, contracts often provide that the
employer should not be answerable or account-
able for the payment of wages, all applicable
workers’ compensation, disability and other
employment benefits, and any liabilities relating
to the employment of the contractor’s employ-
ees.
Employment Arrangements
Workers in the construction industry are usually
engaged on project employment. Nevertheless,
such workers may also be engaged under other
types of employment such as on a regular, cas-
ual, fixed-term, or piece-work basis.
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Depending on the specific type of employment
under which the worker is engaged, employ-
ment contracts normally provide for the effec-
tive date/duration of the employment relation-
ship, the compensation and benefits granted to
the employee, the reporting structure and work
schedule, job description, rules on employment
termination, and other company rules and poli-
cies affecting the employee.
8.2 Subcontracting
Contracting and subcontracting are legally
permitted and are usual market practice in the
construction industry. Construction projects
are normally farmed out to contractor compa-
nies and, subject to the agreement between the
employer and the contractor, portions or phases
of the project may be further subcontracted to
another entity.
In a contracting/subcontracting arrangement,
workers of the contractor/subcontractor are
assigned and/or deployed to the project to per-
form the work under the construction contract/s.
For a contracting arrangement to be valid and
for the contractor to be considered a legitimate/
independent contractor, the following conditions
must be satisfied:
• the contractor is engaged in a distinct and
independent business and undertakes to per-
form the job/work on its own responsibility,
according to its own manner and method;
• the contractor has substantial capital to carry
out the job on its own account, manner and
method, and investment in the form of tools,
equipment, machinery and supervision;
• the contractor is free from control and/or
direction of a principal in all matters connect-
ed with the performance of the work except
as to the result thereof; and
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Quisumbing Torres
• a service agreement ensures compliance with
all the rights and benefits of the contractor’s
employees under labour laws.
Furthermore, the elements of an employment
relationship should not be present between the
employer and the contractor’s employees, par-
ticularly:
• selection and engagement of the individual;
• payment of wages to the individual;
• power to dismiss or impose other disciplinary
action on the individual; and
• power to control the individual with respect to
the means and method by which the work is
to be accomplished (“control test”).
The most important element to determine the
existence of an employer-employee relationship
is the so-called “control test”. The presence of
such power of control will indicate an employ-
ment relationship, while its absence indicates
an independent contracting relationship. Even
though no actual control is exercised, there
can still be an employment relationship if there
is a right to exercise control. Thus, the princi-
pal should be interested only in the results of
the performance of the agreed services by the
contractor’s employees. The absence of such
control should be evident both in the agreement
with the contractor and in the day-to-day inter-
action between the principal and the contrac-
tor’s employees.
8.3 Intellectual Property
Intellectual property (IP) clauses typically found
in construction contracts in the Philippines
include:
• a comprehensive description of “intellectual
property” should include trade marks, copy-
rights, designs, patents, or other IP recog-
nised anywhere in the world;
19
• delineation of the IP to be retained by the
contractor and employer, usually for IP
developed before and after the construction
engagement;
• granting of permission to use pre-existing IP
or IP retained by parties, without payment
(due to strict “technology transfer agree-
ment” regulations, “licensing” of IP is usually
avoided);
• an agreement concerning ownership of jointly
developed IP;
• an agreement concerning ownership of modi-
fications of IP;
• the confidential treatment of all IP disclosed
and shared between the contractor and
employer;
• the automatic assignment of IP created dur-
ing engagement;
• a provision requiring execution of neces-
sary documents to effect/complete/formalise
record assignments of IP;
• a provision to co-operate in enforcement of
assigned IP;
• an agreement to subsequently assign IP that
may not be covered by provisions on auto-
matic assignment;
• a waiver of moral rights, except where such
waiver shall permit another:
(a) to use the name of the author, or the title
of their work, or otherwise make use of
their reputation with respect to any ver-
sion or adaptation of their work which,
because of alterations therein, would
substantially injure the literary or artistic
reputation of another author; or
(b) to use the name of the author with re-
spect to a work they did not create; and
• provisions as to the ownership of IP rights in
feedback.
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9. REMEDIES AND
DAMAGES
9.1 Remedies
Philippine general contract law states that in the
event of a breach of contract, the injured party
may choose between fulfilment of the obligation,
otherwise referred to as “specific performance”,
and the rescission of the obligation (if the breach
is substantial), with the payment of damages in
either case. The law further provides that those
who, in the performance of their obligations, are
guilty of fraud, negligence or delay, and those
who in any manner contravene the intention
behind such obligation, are liable for damages.
The remedies of specific performance, rescis-
sion and damages are available to all relevant
parties in a construction contract. Nevertheless,
the parties may contractually agree to limit or
expand the available remedies of the parties.
Aside from the statutory remedies, parties typi-
cally agree that the following remedies are avail-
able in case of breach:
• payment of liquidated damages by the con-
tractor, in case of delay;
• suspension of work by the contractor in case
of the employer’s breach, in which case the
contractor is entitled to an equitable adjust-
ment of the completion time and/or contract
price;
• the employer’s right to order suspension of
work due to the contractor’s breach; and
• termination of contract for specified causes,
such as bankruptcy or insolvency and nega-
tive slippage of the contractor.
See 4.2 Payment and 5.3 Remedies in the
Event of Delays.
9.2 Restricting Remedies
It is common practice for parties to a construc-
tion contract in the Philippines to agree on the
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remedies available to each party in case of
breach. The only limitation would be mandatory
laws applicable to limitations of liability and pub-
lic policy, such as those prohibiting:
• waiver of remedies/actions arising from future
fraud; and
• waiver of remedies/actions involving gross
negligence or wilful misconduct.
9.3 Sole Remedy Clauses
Sole remedy clauses are not typically used in
construction contracts in the Philippines. How-
ever, waivers of rights and remedies are gen-
erally allowed under Philippine law, and thus
enforcement of such waivers is possible.
Nevertheless, sole remedy clauses may, in cer-
tain circumstances, be considered void and
unenforceable if they essentially limit claims/
remedies in situations where limitations of liabil-
ity are disallowed (eg, fraud).
9.4 Excluded Damages
As mentioned in 6.3 Limitation of Liability,
parties usually agree to limit liabilities for certain
types of consequential damages, such as lost
profits. In such cases, parties typically agree that
these damages cannot be claimed by one party
against another, subject to statutory limits on
limitations of liability (eg, fraud).
9.5 Retention and Suspension Rights
Construction contracts typically allow the
employer to retain a portion of the contract sum
for a specified period after the completion of
the works, until the lapse of the agreed defects
liability period.
Suspension rights are usually allowed and are
not typically contractually excluded. Normally,
the contractor is given the right to suspend work
or terminate the contract on written notice to the
employer, if the employer fails to pay the con-
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Quisumbing Torres
tractor an approved request for payment. The
employer is also usually given the right to order
suspension of work due to a breach on the part
of the contractor.
10. DISPUTE RESOLUTION
10.1 Regular Dispute Resolution
Disputes arising out of construction contracts
that have no arbitration clauses are resolved
through ordinary court litigation, before the first
and second-level courts in the Philippines.
If a construction contract provides for arbitration
as the mode of dispute resolution, the dispute
will be resolved via arbitration before the CIAC,
regardless of whether another institution is cho-
sen. The Philippine Supreme Court has held that
“as long as the parties agree to submit their dis-
pute to voluntary arbitration, regardless of what
forum they may choose, their agreement will fall
within the jurisdiction of the CIAC, such that,
even if they specifically choose another forum,
the parties will not be precluded from electing
to submit their dispute before the CIAC because
this right has been vested by law” (National Irri-
gation Administration v Court of Appeals, 1999).
Where a construction contract involves a project
under the PPP Law, the revised IRR of the PPP
Law says that “acts and decisions of Regulators
shall not be subject to arbitration”.
Recent Court Ruling
In Global Medical Center of Laguna v Ross Sys-
tems International (GR Nos 230112 & 230119,
21
11 May 2021), the Philippine Supreme Court
limited the grounds to appeal arbitral awards in
construction disputes presided over by tribu-
nals under the CIAC. Factual issues may still be
appealed to the Philippine Court of Appeals, but
only on grounds that pertain to (a) challenges
to the integrity of the composition of the arbi-
tral tribunal such as allegations of corruption,
fraud, misconduct, evident partiality, incapacity,
or excess of powers; and (b) allegations that the
tribunal violated the Constitution or positive law
in the conduct of the arbitral process. Mean-
while, issues involving pure questions of law are
to be resolved by the Supreme Court. Previously,
the practice was to appeal all factual and legal
issues to the Court of Appeals, which allowed a
re-examination of a CIAC arbitral award.
10.2 Alternative Dispute Resolution
Republic Act No 9285 (The Alternative Dispute
Resolution Act of 2004) recognises mediation,
arbitration and other forms of alternative dispute
resolution mechanisms.
Arbitration, mediation and the use of Dispute
Boards are alternative means of dispute resolu-
tion available to parties to a construction con-
tract. These are commonly used in the Philip-
pines, subject to the limitation that, where a
construction contract involves an arbitration
clause, it is the CIAC that has jurisdiction over a
dispute arising therefrom.
Dispute Boards are also becoming popular in
construction contracts in the Philippines, par-
ticularly those that adopt, or are based on, a
FIDIC contract.
 Law and Practice PHILIPPINES
Contributed by: Julius Cervantes, Michael Macapagal, Ramon Miguel Bacani and Jared Amoroso,
Quisumbing Torres is a member firm of Baker
& McKenzie International, a Swiss verein. Es-
tablished in 1963, it has nearly six decades of
experience advising and assisting multinational
companies on various areas of real estate, in-
cluding construction. Lawyers are organised
into distinct focus groups that can help address
specific client needs. One such group is the
real estate (RE) team. The RE team has special-
ised legal expertise across all critical elements
of real estate and construction. The team ad-
AUTHORS
Julius Cervantes is a partner in
Quisumbing Torres’ corporate
and commercial/M&A practice
group and heads the real estate
focus group. He is a member of
the restructuring and insolvency
focus group, and the industrials, manufacturing
and transportation group, as well as the
consumer goods and retail industry group. He
has been engaged in corporate and
commercial law practice for over 19 years, and
is experienced in M&A, real estate
transactions, joint ventures, corporate
restructuring, foreign direct investments,
commercial agreements and contracts,
construction law, public procurement, and
regulatory matters. He is a private sector
representative to the Sub-Task Force on
Registering Property of the Philippine
government’s Ease of Doing Business and
Anti-Red Tape Advisory Council.
Quisumbing Torres
vises and assists on acquisitions and disposi-
tions, commercial leasing, development and
construction law, construction litigation/arbitra-
tion, hotels, resorts and tourism, planning and
land use, real estate management agreements,
real estate finance, real estate tax and REITs.
The firm published a Philippine primer on con-
struction contract management that provides a
high-level presentation of the various features
of Philippine construction law and of common
issues encountered in construction projects.
Michael Macapagal is a partner
in Quisumbing Torres’ dispute
resolution practice group. He is
a member of the energy, mining
and infrastructure industry
group, and the compliance and
competition focus groups. He has 13 years of
legal practice involving arbitration,
construction, healthcare disputes, compliance,
civil and criminal litigation, labour law,
intellectual property law, public-private
partnerships, project finance and joint venture
matters. He is a member and deputy secretary-
general for case administration of the
Philippine International Center for Conflict
Resolution (PICCR), where he is also an
accredited arbitrator.
22
PHILIPPINES Law and Practice
Contributed by: Julius Cervantes, Michael Macapagal, Ramon Miguel Bacani and Jared Amoroso,
Quisumbing Torres

Ramon Miguel Bacani is a Jared Amoroso is a senior

senior associate in Quisumbing
Torres’ corporate and
commercial/M&A practice
group. He is also a member of
the firm’s energy, mining and
infrastructure industry group and the real
estate focus group. He has 11 years of
experience advising foreign and domestic
clients in M&A, joint ventures, corporate
restructuring, foreign investments, government
procurement, infrastructure, energy, mining
and natural resources, real estate, and general
corporate law matters. He represents clients
across a range of industries, including
infrastructure, energy, mining and natural
resources, real estate, logistics, transportation,
technology, media and telecommunications,
gaming, consumer goods and retail, and
industrial manufacturing.
associate in Quisumbing Torres’
dispute resolution practice
group. He heads the firm’s
transportation and logistics
industry group subsector. Jared
has 11 years of litigation experience, with a
particular focus on criminal litigation and
arbitration. He is one of a handful of Philippine
Fellows of the Chartered Institute of Arbitrators
and the Philippine Institute of Arbitrators. He is
an accredited arbitrator of the Philippine
Dispute Resolution Center Inc, the Office for
Alternative Dispute Resolution, and the
Philippine Wholesale Electricity Spot Market
(WESM). Jared sat as an arbitrator in the first
WESM arbitrations in the Philippines, and has
acted as counsel in ad hoc and institutional
arbitrations.

Quisumbing Torres
16th Floor, One/NEO Building
26th Street corner 3rd Avenue
Crescent Park West
Bonifacio Global City
Taguig City
Philippines 1634

Tel: +63 2 8819 4700

Fax: +63 2 8819 4626
Email: QTinfodesk@quisumbingtorres.com
Web: www.quisumbingtorres.com

23
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