Legal basis and legal framework
- P.D. 1746 establishes the Construction Industry Authority of the Philippines (CIAP) and empowers it to establish procedures, guidelines and criteria for fair and expeditious adjudication and settlement of claims and disputes in contract implementation.
- The CIAP Implementing Rules and Regulations authorize CIAP, acting as policy-making body through implementing agencies, to adopt different alternative modes of dispute resolution for public and private construction contracts.
- Section 16 of the CIAP IRR confers on the CIAC authority to establish rules of procedure for a fair and expeditious settlement of construction disputes through a non-judicial process that ensures harmonious and friendly relationship among parties.
- Executive Order No. 1008 (the Construction Industry Arbitration Law) defines construction disputes, and Republic Act No. 9285 (the Alternative Dispute Resolution Act of 2004) amends Executive Order No. 1008 for ADR framework.
Policy, purpose, and adoption context
- The mediation rules are adopted to encourage use of alternative modes of dispute resolution in construction disputes under CIAC auspices.
- The CIAC endorses mediation as an approach to resolving construction conflicts in the Philippines, consistent with the ADR legal framework under Republic Act No. 9285.
- The CIAC adopts a revised set of mediation rules after industry developments and specialized formulation work by a committee using mediation rules from Malaysia, Singapore, and Hong Kong as models.
- The approved rules and fees attach as annexes to the resolution and are treated as governing mediation proceedings under CIAC.
Coverage: where the rules apply
- The mediation rules apply to the mediation of construction disputes.
- The term construction disputes is given the same meaning as defined in Executive Order No. 1008, as amended by Republic Act No. 9285.
- The rules apply even when the construction dispute contract does not have a mediation clause, if the parties wish to submit their dispute to mediation to avoid arbitration or litigation or during the course of arbitration or litigation.
- The rules establish a mediation process under CIAC auspices and contemplate mediation as a step that can follow contract provisions.
Mediation clause and choosing mediators
- The rules provide a model future-dispute clause stating that disputes “shall first be referred to CIAC for settlement by mediation in accordance with its Mediation Rules,” and that failure of mediation gives rise to the right to resort to arbitration pursuant to Executive Order No. 1008, as amended by Republic Act No. 9285.
- Parties are free to choose any person accredited by CIAC as a mediator in whom they have trust and confidence.
- CIAC maintains a roster of accredited mediators, available from CIAC’s Secretariat (annex reference).
- If parties cannot agree on a common mediator from the CIAC roster or if a proposed mediator is unwilling, the parties are not precluded from agreeing to a common mediator outside the roster, provided that the mediator agrees to be bound by the mediation rules.
- If parties cannot agree on a mediator, CIAC shall appoint the mediator.
Accreditation, registration, and mediator eligibility
- Potential mediators seeking CIAC accreditation must apply using the prescribed form (annex reference).
- Accreditation is subject to CIAC standards and procedures for accreditation of mediator (annex reference).
- Certifications of accredited mediators are issued using a duly prescribed form (annex reference).
- Foreign mediators must register with CIAC using the prescribed form (annex reference) on a case-to-case basis before undertaking any mediation service under CIAC auspices.
- Qualified foreign mediators are issued a Certificate of Registration (annex reference).
- A registration fee applies, in an amount to be prescribed by CIAC from time to time.
Start, response, and mediator appointment
- Mediation is defined as a voluntary process where a mediator selected by disputing parties facilitates communication and negotiation and assists parties in reaching a voluntary agreement.
- A party initiates mediation by delivering a written Request for Mediation (RFM) to the other party.
- The RFM must include:
- a brief self-explanatory statement of the nature of the dispute;
- the amount in dispute (if any);
- the relief and/or remedy sought;
- nomination of a mediator or mediators;
- contract details and conditions of appointment of the nominated mediator(s) (if any);
- the names, addresses, telephone, facsimile and e-mail address (if known) of both parties and their representatives (if known).
- A copy of the RFM must also be sent to CIAC.
- The receiving party must notify the other party and CIAC within five (5) calendar days whether it consents to settle by mediation and whether any nominated mediator is acceptable.
- If nominated mediators are unacceptable, the parties must endeavor to agree on an acceptable mediator within another period of five (5) calendar days.
- If the receiving party objects to mediation or fails to notify CIAC of consent within the required period, CIAC must notify the initiating party that mediation cannot proceed.
- Where parties agree on a common mediator from the roster and the mediator is willing and not disqualified, parties notify CIAC, CIAC appoints the mediator, and the parties and mediator sign an agreement to proceed (annex reference).
- Where parties fail to agree within the Section 8 period:
- CIAC appoints a mediator prepared to serve and not disqualified.
- Mediators are appointed only from the CIAC-accredited roster.
- Parties must complete an Application Form for mediator appointment (annex reference) stating contact details, counsel (if any), nature of the dispute, and parties’ suggestions on areas of expertise/primary profession.
- CIAC considers the parties’ suggestions and selects a mediator who appears to fulfill the requirements.
- CIAC informs the mediator proposed appointment in writing within five (5) calendar days, and asks about conflict of interest, time availability, and willingness to mediate.
- The mediator forwards information to CIAC within three (3) calendar days from receipt.
- CIAC then informs parties in writing it intends to appoint within five (5) calendar days from receipt of the mediator’s required information, unless there are reasonable grounds for objection; objections must be made in writing to CIAC.
- If a conflict, lack of time, unwillingness, valid objection, or unsuitability/unavailability arises, the selection process repeats for a second and then a third and final time.
- If the third proposed mediator remains unsuitable or not accepted, CIAC writes to the parties instructing them to proceed to arbitration or re-examine previously rejected mediators or appoint a mediator outside the roster of CIAC-accredited mediators.
- If the CIAC receives no communication from the parties within five (5) calendar days from receipt of the notification, CIAC declares the mediation a failure.
- If parties opt to proceed under the failure pathway allowing use of a mediator outside the roster:
- parties inform CIAC (annex reference);
- the appointed mediator must agree to be bound by all CIAC mediation rules and the prescribed Code of Conduct for Mediators (annex reference).
Mediator duties, disclosure, co-mediation, and timeline
- A mediator must, before accepting:
- make a reasonable inquiry into known facts likely to affect impartiality, including financial or personal interest in the outcome and any existing or past relationship with a party or foreseeable participant; and
- disclose to the parties any such known or learned fact as soon as practical before accepting.
- If a mediator learns disqualifying facts after accepting, the mediator must disclose them as soon as practicable.
- Upon request of a party, a person requested to serve as mediator must disclose qualification to mediate.
- Co-mediators may be appointed from the roster of CIAC-accredited mediators if:
- the parties agree; and
- CIAC deems co-mediation necessary and appropriate, upon request of parties and the mediator.
- The mediator commences mediation as soon as possible after acceptance and must use best efforts to conclude mediation within thirty (30) calendar days of appointment.
- The mediator’s appointment cannot extend beyond thirty (30) calendar days without the parties’ written consent.
- The mediator prepares appropriately, abides by mediation agreement, the CIAC mediation rules, and the CIAC Code of Conduct for Mediators.
- The mediator conducts mediation in a manner he/she deems fit, considering case circumstances, the parties’ wishes, and the need for speedy settlement.
- The mediator assists the parties in drawing up any written settlement agreement.
How mediation proceeds and party roles
- During mediation, the mediator may communicate with parties together or separately, including private meetings.
- A party must cooperate with the mediator and may request a private meeting at any time.
- Parties must give full assistance to enable mediation to proceed and be concluded within the time stipulated.
- Parties agree on how and in what form they inform the mediator of their respective cases.
- Unless otherwise agreed, each party provides the mediator a brief written statement of its positions on issues in dispute.
- With permission of the parties but at the mediator’s discretion, written statements may be exchanged.
- Parties are required to bring to the mediation meeting all information reasonably required for the mediator to understand the matter in dispute.
- Each party may be represented or assisted by persons of its choice.
- Each party must notify in advance the mediator and the other party of the names and role of its representatives/assistants.
- Each party must identify a person with full authority to settle and confirm such authority in writing.
- Except as otherwise provided by law, a party may designate a lawyer (or any other person) to provide assistance in mediation.
- Waiver of participation or legal representation must be made in writing by the party waiving the right and may be rescinded at any time.
- Each party’s power to settle is tied to the written confirmation of authority.
Termination and settlement agreement rules
- Mediation ends upon the earliest of:
- signing of a Settlement Agreement by the parties; or
- the mediator’s written advice after consultation with the parties that further mediation is no longer justified; or
- written notification by either party after consultation with the mediator (if appointed) terminating mediation; or
- expiration of the Section 14 time limit and failure of the parties to agree in writing to extend that time limit.
- No Settlement Agreement reached in mediation is binding unless reduced to writing and signed by or on behalf of the parties.
- Parties may provide in their Settlement Agreement that, in case of default, CIAC appoints the mediator as sole arbitrator to enforce the Settlement Agreement as an arbitral award, subject to execution under the pertinent CIAC Arbitration Rules.
- If the mediator is not a CIAC-accredited arbitrator, the parties must appoint a duly accredited CIAC arbitrator to render the award based on the Settlement Agreement, unless CIAC appoints a common nominee when the parties cannot jointly agree.
Confidentiality, records, privilege, and liability
- All mediation sessions are private and attended only by the mediator, the parties, and individuals identified in Section 17.
- The mediation process, negotiations, statements, and mediation documents are confidential and covered by legal privilege attendant to a Settlement Agreement.
- There is no formal record of mediation except any Settlement Agreement produced under Sections 18(a) and 19.
- The mediator must destroy all notes or other documents produced in mediation.
- The mediation is confidential to the extent permitted by law; unless the parties agree otherwise, the mediator, parties, and Section 17 individuals must not disclose mediation information, settlement terms, or outcome to any person except as provided for in Section 24.
- All documents and other information produced for, or arising from, mediation are privileged and are not admissible as evidence or otherwise discoverable in arbitration or litigation connected with the dispute referred to mediation, except for documents or information that would in any event be admissible or discoverable.
- Parties cannot rely on or introduce in arbitral or judicial proceedings any admissions, proposals, or views expressed by the mediator or the parties during the course of mediation.
- Mediators are not civilly liable for acts done in performance of official duties except upon a clear showing of bad faith, malice or gross negligence, as provided in Sec. 38(1), Chapter 9, Book 1 of the Administrative Code.
- For statistical purposes, the mediator informs CIAC whether mediation resulted in settlement in whole or in part or otherwise; the information is kept under strict confidence.
Mediation costs and fee schedule
- Unless otherwise agreed, each party bears its own costs regardless of mediation outcome.
- Witness expenses are paid by the party producing such witness.
- Other mediation expenses—including mediator fees, mediator representatives of CIAC, costs of expert witness requested by the mediator, CIAC administrative fees, and other related charges—are borne equally by the parties unless they agree otherwise.
- Mediation fees are computed and paid according to the CIAC schedule of fees (annex reference).
Fee breakdown and payment timing
- The fee schedule covers “From Filing to Formulation of Settlement Agreement” and includes a table for mediation fees compared with arbitrator’s fees based on SUM IN DISPUTE (SID).
- The mediation fees are computed with the following component breakdown:
- 10% Filing Fee;
- 30% Administrative Fee;
- 60% Mediator’s Fee.
- Payment schedule:
- 20% upon filing of Request for Mediation;
- 30% upon appointment of Mediator;
- 50% upon formulation of the Settlement Agreement or termination of proceedings.
- Additional fee schedules apply when conversion of the Settlement Agreement to an arbitral award is required for enforcement in case of default.
Conversion to arbitral award fees
- If the Settlement Agreement is required to be converted into an Arbitral Award for execution due to default:
- no additional compensation is paid to the mediator; only minimum work is required for the mediator to adopt the Settlement Agreement into an Arbitral Award;
- only minimum work is required by the mediator to adopt the Settlement Agreement into an Arbitral Award (no additional mediator charges are stated).
- CIAC responsibility phase charges include:
- appointment of mediator as sole arbitrator by CIAC and administrative cost of Php 3000.00;
- promulgation of the award and record keeping.
- Arbitrator responsibility phase charges include:
- 20% of Arbitrator’s Fee per CIAC for execution phase items.
- Execution-phase items under the arbitrator responsibility include:
- hearing of motion (if necessary);
- schedule of fees computed on issuance of writ of execution amount of award in the Settlement Agreement;
- approval of bond;
- satisfaction of judgment.
- The Php 3000.00 amount becomes due before the appointment of the mediator as sole arbitrator by CIAC.
- The execution-phase motion-related amount becomes due upon filing of the motion for execution by the movant and is recoverable as part of the cost of execution like the sheriff’s fee.
Other charges: registration of mediators
- Other charges apply for registration of non-accredited mediator for every case to be mediated.
- Local non-accredited mediator registration fees are:
- Php 2,500 for SID Php 10 M and below;
- Php 5,000 for SID > Php 10 M.
- Foreign non-accredited mediator registration fees are:
- Php 5,000 for SID Php 10 M and below;
- Php 10,000 for SID > Php 10 M.
Repeal and governing effect
- The resolution deems repealed the old CIAC Conciliation Rules, all amendments thereto, and all policies issued in connection therewith or inconsistent with the Mediation Rules, as well as the old mediation fees.
- The mediation rules and fees govern mediation proceedings under CIAC upon their effectivity.