Creating an Arbitration Machinery in the Construction Industry of the Philippines

Case Overview and Summary

Summary of Executive Order No. 1008 (Construction Industry Arbitration Law)

Declaration of Policy (Sec. 2): The State encourages the early and expeditious settlement of disputes in the Philippine construction industry.

Creation of Construction Industry Arbitration Commission (CIAC) (Sec. 3): A body called the CIAC is established under the administrative supervision of the Philippine Domestic Construction Board (PDCB).

Jurisdiction of CIAC (Sec. 4):
- Has original and exclusive jurisdiction over disputes arising from or connected with construction contracts in the Philippines.
- Parties must agree to submit the dispute to voluntary arbitration.
- Disputes may involve government or private contracts.
- Covers violations of specifications, terms of agreement, interpretation of contractual time and delays, maintenance and defects, payment issues, default of employer or contractor, and changes in contract cost.
- Excludes disputes arising from employer-employee relationships covered by the Labor Code.

Composition of CIAC (Sec. 5): Consists of a Chairman and two members appointed by the CIAP Board upon recommendation by the PDCB members.

Functions of CIAC (Sec. 6):
- Formulate and adopt an arbitration program for the construction industry.
- Enunciate policies and prescribe rules and procedures for construction arbitration.
- Supervise the arbitration program and exercise authority related to the appointment, replacement, or challenging of arbitrators.
- Direct its officers and employees to perform assigned functions.

Compensation of CIAC Members (Sec. 7): Members receive per diems and allowances fixed by the CIAP.

Term of CIAC Members (Sec. 8):
- Six-year term.
- Initial appointments staggered (Chairman for 6 years, one member for 4 years, one member for 2 years).
- Appointments to vacancies are for the unexpired portion of the predecessor's term.

Quorum and Deliberations (Sec. 9 & 10):
- Majority of members constitutes a quorum.
- Decisions are arrived at by majority vote.

Secretariat (Sec. 11): The CIAC has a Secretariat headed by an Executive Director responsible for receiving requests for arbitration, notifying parties, fixing and receiving fees, and notifying parties of awards. It has a Publication and a Training Division.

Appointment Authority (Sec. 12): The CIAC can appoint the Executive Director, consultants, arbitrators, personnel, and staff.

Authority to Collect Fees (Sec. 13): The CIAC can determine and collect fees, deposits, costs of arbitration, administrative charges, and other necessary charges. It can use its receipts and deposits to finance operations, subject to PDCB approval.

Arbitrators (Sec. 14):
- A sole arbitrator or three arbitrators may settle a dispute.
- If parties agree on a sole arbitrator, they can nominate one from the CIAC's accredited list for appointment and confirmation.
- If parties cannot agree, the CIAC can appoint a single arbitrator or an Arbitral Tribunal.
- For an Arbitral Tribunal, each party nominates one arbitrator from the CIAC's accredited list, and the CIAC appoints the third presiding arbitrator acceptable to both parties.
- Arbitrators are not permanently employed by the CIAC but render services when called and receive fees for each dispute settled.

Appointment of Experts (Sec. 15):
- Technical or legal experts may be utilized if requested by any party or the Arbitral Tribunal.
- If requested by parties, the appointment must be confirmed by the Arbitral Tribunal.
- Parties requesting an expert must equally shoulder the expert's fees and expenses, deposited with the Secretariat before the expert renders service.
- If only one party requests, it must deposit the whole amount.

Arbitration Expenses (Sec. 16): Include filing fee, administrative charges, arbitrator's fees, expert's fee and expenses, and others imposed by the CIAC. Administrative charges and arbitrator's fees are computed based on a percentage of the sum in dispute.

Deposit to Cover Arbitration Expenses (Sec. 17):
- The CIAC can fix the amount to be deposited, equivalent to the expected arbitration expenses.
- The deposit must be paid to the Secretariat before proceedings commence.
- Payment can be shared equally by parties or paid by any of them.
- If one party fails to contribute, the other must pay in full.
- If both fail to tender the deposit, the case is dismissed, but parties are still liable for half of the agreed administrative charge.

Reports (Sec. 18): The CIAC must submit an annual report to the CIAP within three months after the fiscal year end and periodic reports as required.

Finality of Awards (Sec. 19): The arbitral award is binding upon the parties and final and inappealable except on questions of law, which are appealable to the Supreme Court.

Execution and Enforcement of Awards (Sec. 20): As soon as a decision, order, or award becomes final and executory, the Arbitral Tribunal or single arbitrator, with the concurrence of the CIAC, shall issue a writ of execution requiring any sheriff or proper officer to execute it.

Rule-Making Power (Sec. 21): The CIAC shall formulate and adopt necessary rules and procedures for construction arbitration.

Separability Clause (Sec. 22): If any provision is held invalid or unconstitutional, the remaining valid provisions shall remain in full force and effect.

Repealing Clause (Sec. 23): All contrary or inconsistent provisions of existing laws, proclamations, decrees, letters of instructions, and executive orders are repealed or modified accordingly.

Effectivity Clause (Sec. 24): This Executive Order takes effect immediately.