ARBITRATION OF

CONSTRUCTION DISPUTES
Creation of Construction Industry Arbitration Commission
Executive Order 1008 of February 4, 1985 created the CIAC under the
administrative supervision of the Phiippine Domestic Construction BOARD
(PDCB)
JURISDICTION :
ORIGINAL and EXCLUSIVE .. “.over disputes arising from or connected with
contracts entered into by parties involved in construction in the Philippines ,
whether the dispute arises before or after the completion of the contract, or after
the abandonment or breach thereof. “
The se “disputes may involve government or private contracts. Jurisdiction is not
limited to violation of specifications for materials and workmanship , violation of
the terms of agreement, interpretation or , and application of contractual time and
delays , maintenance and defects, payment, default of employer or contractor and
changes in contract cost.”
EXCLUDED are “disputes arising from employer-employee relationships”
For the Board to acquire jurisdiction over the parties, they must agree to submit
the same to voluntary arbitration.
Revised Rules of Procedure Governing Const. Arbitration
The CIAC Board after having refined aspects of its authority and functions,
promulgated the Revised Rules of Procedure Governing Construction Arbitration
with date of promulgation Nov. 19, 2009
It retained the definition of a construction dispute from EO 1008 and added this -
Sec. 2.2 Coverage - Construction dispute shall include those between or among
parties to, or who are otherwise bound by, an arbitration agreement, directly or by
reference, whether such parties are project owner, contractor, subcontractor,
fabricator, project manager, design professional, consultant, quantity surveyor
bondsman, or issuer of an insurance policy in a construction project .
Sec. 2.2.1 The CIAC shall continue to exercise original and exclusive jurisdiction
over construction disputes although the arbitration is commercial pursuant to Sec.
21 of RA 9285 of the ADR Act of 2004.
Sec. 2.3 Condition for exercise of jurisdiction
-parties must be bound by arbitration agreement in their contract or subsequently
agree to submit the same to voluntary arbitration ( Same provision of Sec. 4 EO
1008)
What is the form of the agreement or submission ?
Three subsections of 22.3 of Revised Rules
1) Agreement or submission must be alleged in the compliant. Such submission
may be an exchange of communication between the parties, or some other
form showing that the parties of have agreed to submit their dispute to
arbitration…”
2) If a Complaint is filed without the required arbitration clause or subsequent
submission the CIAC Secretariat shall within three days from such filing, notify
the Respondent that if he/it shall be willing to have the dispute resolved by
arbitration such agreement shall be clearly expressed in the Answer.
 3) Respondent s refusal to answer .. or the filing of a motion to dismiss for lack of
jurisdiction shall be deemed a refusal to submit to arbitration. In either case the
CIAC shall dismiss the Complaint without prejudice to a refiling after a subsequent
submission .
JURISDICTIONAL CHALLENGE - a motion to dismiss shall be resolved by the
appointed tribunal
Sec. 2.4.1 The Arbitral Tribnal shall have full authority to resolve all issues in the
MD…..
Non waiver of jurisdictional challenge .
Sec. 2.5.Party does not waive even if
- It participates in the nomination process or challenges qualiifications of
nominee of arbitrators
- Prays for extension fo time to file pleading or a MD
- Opposing an interim relief
- Filing of motion to suspend
Composition /Functions of the Commission
Sec. 55-6 EO 1008 Chairman and two members all to be recommended by the
PDCB. The Commission holds office in G. Puyat Ave., Makati City ,
IN line with Section 6 Functions - To formulate and adopt arbitration program ; to
enunciate policies and prescribe rules and procedure . to supervise the arbitration
programme ; to direct officers and employees to perform such functions as
necessary ;
CIAC decides by majority vote , collects fees and maintains a list of arbitrators
accredited by the Board to act either as sole arbitrator or persons to serve as
tribunal.
Arbitration in general v. CIAC arbitration
Arbitration so far as we have discussed , is product of agreement of the parties ,
and is therefore contractual, where party agrees to be bound by the procedure
and the award resulting from the arbitration procedure.
The arbitrator or the tribunal if one is chosen or prescribed, is also an
instrumentality of the parties
The finality of an award depends upon agreement or convention of the parties
In, the enforcement of the award there is need for judicial confirmation
Arbitration vs Construction arbitration
CIAC arbitration is established by law EO 1008 and its Rules that somewhat restrict parties when
they arbitrate under CIAC procedure Although parties are given certain freedoms, some specific
ones, i.e., choice of arbtrators are still bound by the rules.
The tribunal vested with jurisdiction is an instrumentality of State, See Policy Declaration on EO
1008 , the Whereas clauses ,
The award in a CIAC arbitration is already integrated into the legal system.
Wen final they need not be judicially recognized or confirmed
Neither are they subject to judicial review on the merits ( Global Medical) .
 Appointment of Arbitrators
General qualifications See Section 8.1
8.2 They must be CIAC accredited
When may a non accredited arbitrator be appointed “
If the nominee is the parties common nominee
He possesses technical legal competence to handle construction dispute involved
He signifies availability or acceptance
CIAC arbitrators are not permanent employees of the CIAC
General qualifications of arbitrator
Should be a person in whom stakeholders of the construction industry and
government have confidence
Possess competence, integrity and leadership qualities to equip them with
capacity to resolve any construction dispute expeditiously and equitably.
They can come from different professions but they must be familiar with the
construction industry and experienced in construction disputes
CIAC has sole option to appoint in the absence of agreement on the number of
arbitrators , taking into consideration the complexities of the dispute sum involved
It is the same where all parties are unable to agree to a method for constitution of the
tribunal, in multiple parties . 10 days
Sec. 9.2 Sole Arbitrator
6 nominees from each party in the order of preference within period set by CIAC, If
parties fail to do so, CIAC appoints sole arbitrator
See 9.2.1
9.3 Arbitral Tribunal
Parties 6 nominees each in the order of preference , CIAC choose one each from
the nominees. CIAC still appoints the third member and notify the parties for
confirmation in writing 5 days from receipt of notice. If no written notice is received
from parties, the confirmation is deemed accepted. This 3rd party chosen by
CIAC becomes the Chairman
Foreign arbitrator
Sec. 9.4 - a foreign arbitrator may be appointed co arbitrator or chairperson -
- When dispute is a construction dispute where one fo the parties is an
international party (place of business is outside of the Philippines) But it shall
not include a domestic subsidiary of such international party or a co venturer
in a joint venture with a party which has a place of business in the Philippines.
- The foreing arbitrator to be appointed is not a national of the Philippines and
is not of the same nationality as the international party in the dispute;
ChalSec. 9.6 to 9.6.5
Challenge grounds
a) Relationship by B or A within the 6th degree of either party , or to counsels
within the 4th
b) Financial fiduciary or other interest in the controversy
c) Partiality or bias
d) d) incomptence or professional misconduct ( this is also ground for inhibition )
Form of challenge -
Complaint under oath supported by affidavits and copies of documents to
substantiate the facts
Opportunity to be heard given to arbitrator concerned
If successful CIAC shall appoint replacement . If the arbitrator concerned is the
third member, the first two members shall select his replacement
Decision of CIAC to retain or replace shall be final
How to initiate arbitration
Rule 3 Revised Rules
Sec. 3.1 Fill up form of Request for Arbitration prescribed by CIAC to Secretariat
3.2 If claim is against government -
The complaint or request form must state that 1) all admin remedies have been exhausted or
There is unreasonable delay in acting upon a claim by the government office or officer to whom the
appeal is made
That due to the appllcation for interim relief , exhaustion of administrative remedies os not practicable
In claimant in private construction contract the same obligations apply - good faith compliance with
provisions on pre conditions
Failure or refusal to arbitrate
Sec. 4.2
Failure to reply to request to arbitrate despite due notice , shall be considered
refusal . It will not stay the proceedings despite absence of the Respondent . The
CIAC shall proceed with appointment of arbitrators and an award shall be made
after receiving evidence of the Claimant.
4.2.1
Party who has not challenged jurisdiction and who has not replied to request to
arbitrate may be allowed to present evidence provided the reason for failure to
appear is justified.
Service of request upon respondent , ; failure to serve
When contract between parties does not provide for arbitration and the parties cannot agree to submit
the dispute to arbitration, the arbitration cannot proceed and the Claimants shall be informed of that
fact. See Sec. 4.3
Service of Request to Arbitrate .
CIAC Secretariat within 3 days shal transmit to respondent a Request to Asnwer , respondent has 15
days to file or move to dismiss.
Failure to serve -When there is failure to serve request to answer complaint because he /it has moved
out from or cannot be found in the supplied address, CIAC shall give time for Claimant 15 days from
receipt to provide new address,
CIAC shall dismiss If no such new address can be supplied by Complainant
The issues to be resolved in question form
Arbitrators full names
Place where arbitration shall be conducted
Breakdown, schedule fo payments and sharing of arbitrators fees
Other particulars as may be required for speedy and proper adjudication fo the
case
Similar to a pre trial brief, to be signed by parties and counsels
A TOR is not an absolute requirement
Terms of Reference (TOR)
Preliminary conference is held to introduce parties, seek disclosures, and clarify
facts or issues . Thereafter parties are required to submit TOR
Sec. 11. 4 content
Full names of parties and counsels if any ‘
Addresses and contact numbers for communication purposes
Summary of respective claims
Full statement of admitted facts and documents
Arbitration Proceedings Rule 13
Party who seeks to enforce a right generally has the first opportunity to present evidence . The
tribunal shall not however be bound by any special order . Tribunal may require:
Presentation of oral evidence or
Produce documentary evidence
Or submit affidavit in lieu of direct testimony
Or receive evidenc e only form one party
Direct a summation
Direct submission of memoranda
The Tribunal may appoint expert
Confidentiality of proceedings
Confidentiality in all proceedings may be disregarded when
Parties consent to publication of proceedings
When disclosure or publication is necessary in case resort to the Court is made
and under the Rules of Court, information may be provided to the court.
Pleadings, sworn statements , documentary and testimonial evidence, reports,
minutes , orders, decisions award or resolutions issued by arbitrators or any
communication to or from CIAC are included in the term arbitration proceedings
in relation to confidentiality .i
Violation of confidentiality is subject to administrative proceeding to be conducted
by the CIAC itself
If violator is a lawyer, he may be prohibited or suspended form appearing as
counsel before the CIAC fir period not exceeding 6 months
He may also be subjected to proceedings before the Integrated Bar/Supreme
Court, which may lead to suspension or disbarment
If violator is licensed professional disciplinary action shall be before the PRC
Cases on CIAC jurisdiction
Sec. 4.1 of the Revised Rules … incorporates the ruling in China Chang Jiang
Energy Corp. v. Rosal Builders , decided in 30 September 1996 . Parties agreed
that any dispute that will arise between them shall be submitted to the
International Chamber of Commerce. Rosal nevertheless filed a complaint for
arbitration with the CIAC which China Chang refuted.
Did the CIAC acquire jurisdiction despite the clear provision in the arbitration
clause that the dispute be referred to another body?
Read Sec. 4.1 and the dispositive in China Chang.
All that is required for a particular construction contract to fall within the jurisdiction of
the CIAC is an agreement to arbitrate . Even if parties refer to a specific forum other
than the CIAC, the parties shall not be precluded from electing to submit their dispute
to the CIAC . Otherwise put, parties , by agreeing to submit disputes to another
institution or body cannot divest the CIAC of jurisdiction . Does this mean that parties
cannot under the law on voluntariness of contracts, stipulate to submit disputes to
another body? First to file rule
HUTAMA RSEA Joint Operations Inc. v. CITRA 586 SCRA 746 (2009) lays down
another jurisprudential rule on jurisdiction .Petitioner and respondent agreed to an
Engineering Procurement Construction Contract in the construction by the HUTAMA of
the Skyway project .
Pre condition
The EPCC agreement contains the arbitration clause and other provisions of it
refer to a Dispute Adjudication Board to which any dispute between them must
be first referred in writing to the DAB. A clause also says, no arbitration may be
commenced unless notice is sent to other party and a full referral to the DAB has
been completed.
RULING : CIAC Jurisdiction cannot be subjected to a pre condition, which is the
referral of the dispute to an internal/external adjudication board. CIAC upheld its
jurisdiction which respondent challenged in the CA . The latter ruled in the
negative. Supreme Court, came up with the ruling .
Facts - CITRA MMC Tollways Corporation is general contractor-operator of South
Metro Manila Skyway Project , HUTAMA is subcontractor for engineering and
construction works -
Dispute/Action taken by Hutama - CIAC Action - CA decision? What s the referral
contained in the EPCC?/
HUTAMA case makes it appear that the condition precedent would effectively
suspend the jurisdiction of the CIAC until compliance therewith. This would be in
conflict with the recognized intention of the law and rules to automatically vest
CIAC with jurisdiction over a dispute should a construction contract contain an
arbitration clause.
MTRDC v Gammon
If the construction contact is terminated prior to the referral to arbitrate or notice to
arbitrate, will CIAC still have jurisdiction ?
Backdrop - North Triangle Project ( train terminal and exchange ) construction of the
podium was bidde dut and Gammon won. However there occurred four notices to
proceed as the implementation of the entire project was affected by “foreign exchange
rates” , revisions of scope of works. In the meantime Gammon was allowed to proceed
with mobilization . its claims at time of default amounted to P58,642,969.
Gammon sought CIAC arbitration and won the award.which MRTDC appealed to the CA.
What was the position of MRTDC?
The Arbitral award in construction disputes

Timeline : 30days from date deemed submitted for resolution , not more than 6
months from signing of the TOR , or in cases where TOR is absent, not more
than 6months from last preliminary conference called for finalizing TOR or signing
of TOR
Form : Written, explaining issues involved , brief statement of facts , authority
If an arbiter dissents, he must write it out
An agreement settled by mediation in the course of arbitration may be treated as
an arbitral award , subject to approval by the tribunal after a SUMMARY
HEARING.
Content of arbitral award
Sec. 16.3 CIAC Revised Rules
Issue involved
Brief statement and discussion of facts
Authority relied upon for resolution or disposition of the issues
Sec. 16.5 Tribunal fixes costs of arbitration , who bears the cost, or what
proportion each party shall bear, in the case of non monetary claims, or where the
parties agreed that the sharing shall be determined by the Tribunal.
Finality of award
There is no need for the CIAC award to be confirmed before it is executed. Sec/
20 of EO 1008 states :
As soon as a decision, order or award has become final and executory , the
Arbitral Tribunal or the single arbitrator , with the concurrence of the CIAC shall
motu proprio or on motion of any interested party, issue a writ of execution
requiring any sheriff or other proper official to execute said decision order or
award.
Jurisdiction of the Tribunal terminates upon the finality of the Final Award or
decision Sec. 16. 6 Revised Rules of CIAC
The original of the arbitral award is filed with the Secretariat . It is executed motu
proprio by the Tribunal or on motion of the prevailing party (Sec. 18.5) . Should
finality happen when no more arbitrators remain or survive, the Commission itself
shall issue the writ.
In this case, the releasing of the writ on the part of the Commission is purely
ministerial .
When arbitral award become final
There is no provision in the law nor in the CIAC Rules when award becomes final.
Resort may be to Rule 43 which includes the CIAC among the enumeration of
quasi judicial bodies whose decision may be reviewed by the CA .
Sec. 4 Rule 43 appeal shall be taken within 15 days from the notice of the award,
judgment , final order or resolution or form the date of its publication or effectivity
Mode verified petition for review
How is execution done if a final award involves property -
Under Rule 39 Sec. 15 of the Rules of Court .
Deviation from the general rule that sheriff conducts execution sales at the office
of the sheriff - Upon application of the sheriff , with notice to parties, CIAC may
authorize sale of real property and personal property not capable of manual
delivery to be held at the place where the property is LOCATED.
Stay of execution - approved by Tribunal with concurrence of the CIAC , with
surety bond supplied by company accredited by the SC
Executory powers of the Tribunal
Sec. 18.8 Revised Rules CIAC)
To decide matters and issue order necessary and related to the execution of the
award including but not limited to :
Sufficiency of the bond
Approval of the surety company
Satisfaction of the award
Quashal of execution/partial execution
Issuance of partial writs
Assessment of properties levied
Appointment of a quantity surveyor or assessor
Examination and issuance of subpoena ad testificandum and duces tecum to
banks, debtors of the judgment debtor and any person holding asset or properties
of judgment debtor
Sec. 18.7 issue orders of restitution or reparation for damages as equity or justice
may warrant in cases of appeals resulting in reversal of award
Correction of construction arbitral award prior to an appeal

Sec. 17.1 Any of the parties may file a motion for correction of the Final Award
within 15 days from receipt thereof upon any of the following grounds :
a. An Evident miscalculation of figures, typographical or arithmetical error
b. B, an evident mistake in description of any party, person date, amount, thing
or property referred to in the award
c. Where the arbitrators have awarded upon a matter not submitted to them ,
not affecting the merits of the decision upon the matter submitted
d. Where arbitrator have failed or omitted to resolve certain issues in the TOR
e. Where award is imperfect in matter of form and not affecting the merits
A motion for new trial or reconsideration in this section shall be a prohibited
pleading . The filing of a motion for correction based on the grounds enumerated
shall stay the period of appeal
Any motion to correct upon other grounds shall not stay the period for appeal.
Review of CIAC arbitral award
Sec. 18.2 of CIAC Rules directs that a judicial review of the award shall be by
petition for review under Rule 43 of the Rules of Court.
This Rule 43 pertains to appellate review of decisions of quasi judicial bodies like
SSS, ERB, National Telecom, DAR , GSIS… and the CIAC is included in the
enumeration. The appeal shall be to the Court of Appeals, to be taken within 15
days from notice of award .
Form and Content ;by petition with certification of non forum shopping, prior resort
to motion for reconsideration , certified copy of resolution, payment of docket and
filing fees.
Rule 43 allows review of facts and law
Does the appeal of an arbitral award to the Court of Appeals render questions of fact reviewable by
the CA despite the provision in Section 19 of EXecutive Order 1008 ?
Sec. 19.. Finality of Awards. The arbitral award shall be binding upon the parties . It shall be final
and inappealable except on questions of law which shall be appealable to the SUPREME COURT. .
Does a petition for review under Rule 43 allow the CA to overturn the merits or disturb the findings
of fact of the CIAC?
WHERE EXACTLY does APPELLATE JURISDICTION LIE supposing that the issue appealed is
one involving purely question of law?
What is the real effective remedy from an arbitral award?

Prior to 2009 the year of enactment of the Special Rules of Court on ADR, the
review mechanism was Rule 43. After issuance of the SADR its Section 19. 7 no
appeal or certiorari is allowed -
“Rule 19.7 SADR . No appeal or certiorari on the merits of an arbitral award. -
An agreement to refer a dispute to arbitration shall mean that an arbitral award
shall be final and binding. Consequently , a party to an arbitration is PRECLUDED
FROM FILING AN APPEAL OR A PETITION FOR CERTIORARI questioning the
merits of an award. “
SO what is reviewable by the appellate court on construction arbitral award?
Is a CIAC arbitration within the ambit of the SADR?
There is an apparent conflict in the provisions of EO 1008 and the Revised Rules
CIAC) in that the latter in providing Rule 43 as mode of review , authorizes review
of fact and merit of a CIAC award.
The cases which the Supreme Court decided , even prior to the enactment of the
SADR ruled that there could be no review on the merits.
Hi Precision Steel Center v. Lim Kim Builders (2004) and in Spouses David v
CIAC (2004) both held that in cases assailing the arbitral award of the CIAC the
Supreme Court may only pass upon questions of law and may not disturb findings
of fact made by construction arbitrators
In Sps.David the Supreme Court set the instances when factual findings of the
CIAC may be passed upon -
When the award was procured by corruption, fraud, or other undue means
There was evident partiality or corruption of the arbitrators or any of them;
The Arbitrators were guilty of misconduct in refusing to postpone the hearing upon
sufficient cause shown, or in refusing to hear evidence
One or more arbitrators were disqualified to act as such and willfully refrained
from disclosing disqualification or misbehavior
By which right of any party have been materially prejudiced
The arbitrators exceeded their powers or so imperfectly executed them that a mutual,
final and definite award upon the subject matter submitted to them was not made.
FACTS OF FF CRUZ v H.R
The newer case of FF Cruz v H R. laid these down -
1. In cases assailing the arbitral award rendered by the CIAC, only questions of
law may be passed upon
2. Factual findings of the construction arbitrators are final and conclusive and not
reviewable on appeal.
3. Exceptions
See the previous enumeration in David - all of them are grounds to vacate a
domestic arbitral award under the SADR.
The most recent case rendered on January 17, 2018, in regard to the mode of
review of arbitral awards is Metro Rail Transit Dev Corp v Gammon, Leonen , J,
Award rendered by CIAC was sustained by the CA. MRT filed petition for review
and assigned errors that prove that the CIA s award is based on speculations,
which are serious errors of law .
Historical background traced by the Supreme court in this case is as follows:
Under EO 1008 awards fo the CIAC shall be final and inappealable except on question os of law to the SC.
When the Rules of Court was enacted the appeal form CIAC decision became appealable to CA under Rule
43. Even if this Rule authorizes the CA to rule on questions of fact, it has been established in jurisprudence
that factual findings of the CIAC may not be reviewed on appeal.
Under this restrictive approach, SC is duty bound to be extremely watchful and to ensure that the appeal does
not become an ingenious means for undermining the integrity of arbitration or of conveniently setting aside the
conclusions arbitral processes make.
Factual findings of CIAC arbitral tribunals may be reviewed only in cases where the CIAC arbitral tribunals
conducted their affairs in a haphazard, immodest manner that the most basic integrity of the arbitration process
was imperiled.
The, Court repeated the instances when factual findings may be revised and quoted David.
Thus, Metro Rail v Gammon only allowed the SC to rule on 1) whether or not there
was a perfected contract between the parties 2) whether the dispute in this case
falls within the scope of the arbitration clause. 3) whether the award for lost profits
and reimbursements were backed by evidence.