Policy and declared intent
- Section 2 declares the policy of the State to encourage the early and expeditious settlement of disputes in the Philippine construction industry.
- The Executive Order directs the creation of an arbitration machinery to support this policy (Sections 3 and 4).
Creation and supervisory structure
- Section 3 establishes in the Construction Industry Authority of the Philippines (CIAP) a body known as the Construction Industry Arbitration Commission (CIAC).
- Section 3 provides that the CIAC is under the administrative supervision of the Philippine Domestic Construction Board (PDCB).
- Section 6 assigns to the CIAC the formulation and supervision of the arbitration program and related authority.
Scope, jurisdiction, and exclusions
- Section 4 grants the CIAC original and exclusive jurisdiction over disputes arising from, or connected with, construction contracts entered into by parties involved in construction in the Philippines.
- Section 4 covers disputes arising before or after the abandonment or breach of the contract.
- Section 4 covers disputes involving government or private contracts.
- Section 4 requires a jurisdictional agreement: for the Board to acquire jurisdiction, the parties must agree to submit the dispute to voluntary arbitration.
- Section 4 provides that CIAC jurisdiction includes, among others:
- violation of specifications for materials and workmanship;
- violation of the terms agreement;
- interpretation and/or application of contractual provisions;
- amount of damages and penalties;
- commencement time and delays;
- maintenance and defects;
- payment default of employer or contractor; and
- changes in contract cost.
- Section 4 excludes disputes arising from employer-employee relationship, which remain governed by the Labor Code of the Philippines.
Composition, term, and governance
- Section 5 provides that the CIAC consists of a Chairman and two (2) members.
- Section 5 states that all members are appointed by the CIAP Board upon recommendation by the members of the PDCB.
- Section 8 sets the term of office at six (6) years for the members, with staggered terms as follows:
- one member for six (6) years;
- another member for four (4) years; and
- the third member for two (2) years.
- Section 8 provides that an appointment to fill a vacancy is only for the unexpired portion of the predecessor’s term.
- Section 9 provides that a majority of the members constitutes quorum.
- Section 10 provides that the CIAC’s decisions are reached by majority vote.
CIAC functions and personnel
- Section 6 directs the CIAC to formulate and adopt an arbitration program for the construction industry.
- Section 6 directs the CIAC to enunciate policies and prescribe rules and procedures for construction arbitration.
- Section 6 authorizes the CIAC to supervise the arbitration program and exercise authority on the appointment, replacement, or challenging of arbitrators.
- Section 6 requires the CIAC to direct its officers and employees to perform functions assigned from time to time.
- Section 12 authorizes the CIAC to appoint the Executive Director, consultants, arbitrators, and other personnel and staff.
Secretariat and its responsibilities
- Section 11 requires the CIAC to have a Secretariat headed by an Executive Director.
- Section 11 makes the Executive Director responsible for:
- receiving requests for arbitration and other pleadings;
- notifying the parties; and
- fixing and receiving filing fees, deposits, costs of arbitration, administrative charges, and fees.
- Section 11 requires the Executive Director to notify the parties of the decisions/awards made by the arbitrators.
- Section 11 provides that the Secretariat includes a Publication and Training Division.
Fees, deposits, and financial authority
- Section 7 provides that CIAC members receive per diems and allowances fixed by the CIAP from time to time.
- Section 13 empowers the CIAC to determine and collect fees, deposits, cost of arbitration, and administrative and other charges needed for its functions.
- Section 13 authorizes the CIAC to use its receipts and deposits to finance its operations, subject to approval by the President and without prejudice to any law to the contrary.
- Section 16 provides that arbitration expenses include:
- filing fee;
- administrative charges;
- arbitrator’s fees;
- expert’s fees and expenses; and
- other impositions that the CIAC imposes.
- Section 16 provides that administrative charges and arbitrator’s fees are computed based on a percentage of the sum in dispute, to be fixed under the Table of Administrative Charges and Arbitrator’s Fees.
Arbitrators, tribunal composition, and experts
- Section 14 allows settlement of a dispute by either a sole arbitrator or three arbitrators.
- Section 14 allows, by party agreement, the nomination of a sole arbitrator from the CIAC’s list of accredited arbitrators for appointment and confirmation.
- Section 14 grants the CIAC the option, considering the complexities and intricacies of the dispute, to appoint a single arbitrator if the parties fail to agree.
- Section 14 provides that if the CIAC decides to form an Arbitral Tribunal, each party may nominate one (1) arbitrator from the accredited list for appointment and confirmation.
- Section 14 requires the third arbitrator acceptable to both parties, confirmed in writing, to be appointed by the CIAC and to preside over the Tribunal.
- Section 14 provides that arbitrators must be people in whom both the business sector and the government have confidence.
- Section 14 provides that arbitrators are not permanently employed with the CIAC and render services only when called to arbitrate, and they receive fees for each dispute they settle.
- Section 15 authorizes the use of technical or legal experts in dispute settlement if requested by a party or by the Arbitral Tribunal.
- Section 15 requires that if a party requests an expert, the appointment is confirmed by the Arbitral Tribunal.
- Section 15 allocates expert costs:
- if both parties request an expert, they equally shoulder the expert’s fees and expenses; and half must be deposited with the Secretariat before the expert renders service;
- if only one party requests an expert, that party deposits the whole amount required.
Arbitration deposits and dismissal consequences
- Section 17 authorizes the CIAC to fix the required deposit amount equivalent to the expected arbitration expenses.
- Section 17 requires the deposit to be paid to the Secretariat before arbitration proceedings commence.
- Section 17 provides that the deposit is paid either equally by the parties or by any one of them.
- Section 17 provides that if one party fails to contribute its share, the other party must pay in full.
- Section 17 provides that if both parties fail to tender the required deposit, the case is considered dismissed.
- Section 17 provides that even if the case is dismissed for failure to deposit, the parties remain liable to pay one half (1/2) of the agreed administrative charge.
Awards: finality, appeal, and execution
- Section 19 states that the arbitral award is binding on the parties.
- Section 19 provides that the award is final and inappealable, except on questions of law.
- Section 19 provides that questions of law are appealable to the Supreme Court.
- Section 20 provides that once a decision, order, or award becomes final and executory, the Arbitral Tribunal or the single arbitrator, with the concurrence of the CIAC, issues a writ of execution.
- Section 20 authorizes the writ of execution to be issued motu proprio or on motion of any interested party.
- Section 20 directs the writ to require a sheriff or other proper officer to execute the decision, order, or award.
Reports and rule-making
- Section 18 requires the Commission to submit an annual report to the CIAP within three (3) months after the end of the fiscal year.
- Section 18 requires the Commission to submit other periodic reports as required from time to time.
- Section 21 requires the CIAC to formulate and adopt necessary rules and procedures for construction arbitration.
Separability, repeals, and effectivity
- Section 22 provides a separability rule: if any provision is held invalid or unconstitutional, the validity of the remaining provisions remains in full force and effect.
- Section 23 repeals or modifies, accordingly, all provisions of existing laws, proclamations, decrees, letters of instructions, and executive orders that are contrary to or inconsistent with this Executive Order.
- Section 24 provides immediate effectivity of the Executive Order.