HANDOUT ON:

CONSTRUCTION DISPUTE ARBITRATION

By: JUSTICE GABRIEL T. ROBENIOL

In view of the resetting of the final exams for this semester, we have
extra time to devote to a specialized form of arbitration – construction dispute
arbitration. It is among the top two (2) most utilized species of arbitration in
the country, labor dispute arbitration being the other.

Unlike arbitration before the Labor Arbiters of the National Labor

Relations Commission (NLRC), arbitration before the Construction Industry
Arbitration Commission (CIAC) is conducted by arbitrators many of whom
are not lawyers. That is to be expected because the dispute presented before
the CIAC is highly specialized requiring the expertise of arbitrators learned in
the fields of engineering, science and accounting, subjects which you and I
tried to avoid by taking up Law. Although most of CIAC arbitrators are
lawyers and law professors, some of them are from the technical fields like
engineering. That peculiarity necessarily leads to a difference in the extent of
judicial review of CIAC awards even if they and the NLRC’s decisions are both
reviewable by the same appellate court – the Court of Appeals.

The judicial review of final awards of the CIAC is very much unlike that
for decisions of the NLRC. While a Rule 65 petition is the unquestionable
remedy from the latter, Rule 43 is the proper recourse from a final award of
the CIAC. To recall, a petition for certiorari under Rule 65 of the Rules of
Court is an extraordinary relief premised on grave abuse of discretion
amounting to lack or excess of jurisdiction committed by a court or quasi-
judicial agency when there is no appeal or other speedy and adequate remedy
available under the ordinary course of law. On the other hand, a petition for
review under Rule 43 is a mode of discretionary appeal grounded on errors of
fact, law or both, committed by a quasi-judicial agency mentioned in Section 1
of said Rule.

While I write these notes to highlight the significant features of

construction dispute arbitration, by no means does this handout do away
with the need to study the topics and cases outlined in our Course Syllabus.

In that light, here we go -

1. What is the CIAC?

At the forefront of construction dispute arbitration is the CIAC created by

virtue of Executive Order (E.O.) No. 1008, otherwise known as the
“Construction Industry Arbitration Law.” It is the quasi-judicial agency vested
with jurisdiction to resolve disputes arising from contracts involving

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construction in the Philippines. It is falls under the umbrella of the
Construction Industry Authority of the Philippines (CIAP) and is
administratively attached to the Department of Trade and Industry. It
consists of a Chairman and two (2) members.1

The policy and objective of the CIAC is to “provide a fair and expeditious
settlement of construction disputes through a non-judicial process which
ensures harmonious and friendly relations between or among the parties.” 2
Its mission has been succinctly described in Gammon Philippines, Inc. v. Metro
Rail Transit Development Corporation, 3 as follows:

“The Construction Industry Arbitration Commission (CIAC) was created in

recognition of the construction industry’s contribution to national development
goals. Realizing that delays in the resolution of construction industry disputes
would also hold up the country’s development, Executive Order No. 1008 (EO
1008) expressly mandates the CIAC to expeditiously settle construction industry
disputes and, for this purpose, vests upon the CIAC original and exclusive
jurisdiction 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. x x x.”

Unlike an arbitral tribunal constituted under auspices of R.A. No. 9285

(Alternative Dispute Resolution Act of 2004) which, per Fruehauf Electronics
Philippines Corp. v. Technology Electronics Assembly and Management Pacific
Corp., are creations of contract and are, therefore, not quasi-judicial agencies,
the CIAC is a quasi-judicial instrumentality. As heralded in the case of Metro
Construction, Inc. v. Chatham Properties, Inc.;4

“x x x In the first place, it is a quasi-judicial agency. A quasi-judicial agency

or body has been defined as an organ of government other than a court and other
than a legislature, which affects the rights of private parties through either
adjudication or rule-making. x x x The CIAC’s primary function is that of a
quasi-judicial agency, which is to adjudicate claims and/or determine rights
in accordance with procedures set forth in E.O. No. 1008.
xxx xxx xxx
x x x Further, it is a quasi-judicial agency or instrumentality. The
decision in Luzon Development Bank vs. Luzon Development Bank Employees, shed
light on the matter, thus:

1 Section 5, E.O. No. 1008.

2 Uniwide Sales Realty and Resources Corporation v. Titan-Ikeda Construction and Development
Corporation, 511 SCRA 335 [2006], p. 357; Camp John Hay Development Corporation v. Charter
Chemical and Coating Corporation, G.R. No. 198849, August 7, 2019.
3 481 SCRA 209 [2006], p. 212; see also: LICOMCEN Incorporated v. Foundation Specialists, Inc.,

647 SCRA 83 [2011], p. 96.

4 365 SCRA 697 [2001], pp. 722-724, emphasis supplied; citing Tropical Homes, Inc. v. National

Housing Authority, 152 SCRA 540 [1987]; Antipolo Realty Corp. v. NHA, 153 SCRA 399 [1987]; Solid
Homes, Inc. v. Payawal, 177 SCRA 72 [1989]; Luzon Development Bank v. Luzon Development Bank
Employees, 249 SCRA 162 [1995]. See also CE Construction Corporation v. Araneta Center, Inc., G.R.
No. 192725, August 9, 2017; Department of Public Works and Highways v. CMC/Monark/Pacific/Hi-
Tri-Joint Venture, G.R. No. 179732, September 13, 2017.

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 Assuming arguendo that the voluntary arbitrator or the panel of
voluntary arbitrators may not be strictly considered as a quasi-judicial
agency, board or commission, still both he and the panel are
comprehended within the concept of a ‘quasi-judicial instrumentality.’
It may even be stated that it was to meet the very situation presented
by the quasi-judicial functions of the voluntary arbitrators here, as well
as the subsequent arbitrator/arbitral tribunal operating under the
Construction Industry Arbitration Commission, that the broader term
‘instrumentalities’ was purposely included in [Section 9 of B.P. Blg. 129
as amended by R.A. No. 7902].” (Emphasis supplied)

The ADR Act of 2004 not only affirmed the original and exclusive
jurisdiction of the CIAC over construction disputes, but also strengthened it to
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, quantity surveyor, bondsman or
issuer of an insurance policy in a construction project,” and even if the
arbitration is commercial in character.5

Moreover, the ADR Act of 2004 directs the Regional Trial Courts before
which is presented a construction dispute for resolution, upon becoming
aware that the parties have entered into an arbitration agreement, motu
proprio or upon motion made not later than the pre-trial, not just to dismiss
the case, but also to refer the parties to arbitration by the CIAC, unless all the
parties to the arbitration, assisted by their respective counsels, submit to the
court a written agreement making the court the body that will resolve the
dispute.6

2. What is the CIAC’s jurisdiction?

The jurisdiction of the CIAC is conferred by E.O. No. 1008.7 Specifically,

Section 4 thereof provides that:
“SECTION 4. Jurisdiction.—The CIAC shall have original and exclusive
jurisdiction 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. These disputes may involve government or private contracts. x x
x.”8

The Supreme Court's following edification in Camp John Hay Development

Corporation vs. Charter Chemical and Coating Corporation, 9 is apropos:

5 Section 35, R.A. No. 9285; see also Section 2.1, CIAC Revised Rules.
6 Section 39, ADR Act; Rule 17.1, Special ADR Rules.
7 Heunghwa Industry Co., Ltd. v. DJ Builders Corporation, 573 SCRA 240 [2008], p. 259.
8 See also Sections 2.1 and 2.1.1 of the CIAC Revised Rules.

9 G.R. No. 198849, August 7, 2019.

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 “The Construction Industry Arbitration Commission was created under
Executive Order No. 1008 to establish an arbitral machinery that will 'settle
expeditiously problems arising from, or connected with, contracts in the
construction industry. 10 It has jurisdiction over 'construction disputes
between or among parties to an arbitration agreement, or those who are
otherwise bound by the latter, directly or by reference.'11 xxx.” (Emphasis
supplied)

In principle, the CIAC has jurisdiction over the construction dispute, and
not the contract.12 It also has jurisdiction over the reformation of contracts,13
and claims for moral damages, exemplary damages, opportunity or business
losses in addition to liquidated damages, and attorney’s fees, if the parties
acquiesce or mutually agree to submit these issues for arbitration and to
abide by the decision of the arbitrator thereon. 14

In LICOMCEN, Incorporated v. Foundation Specialists, Inc., 15 the Supreme

Court elaborated on the jurisdiction of the CIAC as follows:

“The jurisdiction of the CIAC

xxx xxx xxx

In fact, all that is required for the CIAC to acquire jurisdiction is for the
parties to a construction contract to agree to submit their dispute to
arbitration. x x x
xxx xxx xxx
In HUTAMA-RSEA Joint Operations, Inc. v. Citra Metro Manila Tollways
Corporation,16 the Court declared that ‘the bare fact that the parties x x x
incorporated an arbitration clause in [their contract] is sufficient to vest the CIAC
with jurisdiction over any construction controversy or claim between the parties.
The arbitration clause in the construction contract ipso facto vested the
CIAC with jurisdiction.’
xxx xxx xxx
If the CIAC’s jurisdiction can neither be enlarged nor diminished by the
parties, it also cannot be subjected to a condition precedent. x x x: To reiterate,
all that is required for the CIAC to acquire jurisdiction is for the parties to agree to
submit their dispute to voluntary arbitration:

‘[T]he mere existence of an arbitration clause in the

construction contract is considered by law as an agreement by the
parties to submit existing or future controversies between them to
CIAC jurisdiction, without any qualification or condition precedent.
To affirm a condition precedent in the construction contract, which

10Metro Rail Transit Development Corporation vs. Gammon Philippines, Inc., G.R. No. 200401,
January 17, 2018.

11 Id.
12 National Irrigation Administration v. Court of Appeals, 318 SCRA 255 [1999], p. 267, reiterated
in Metropolitan Cebu Water District v. Mactan Rock Industries, Inc., 675 SCRA 577 [2012], p. 597.
13 Metropolitan Cebu Water District v. Mactan Rock Industries, Inc., supra.
14 Gammon Philippines, Inc., supra, p. 223.
15 647 SCRA 83, [2011], pp. 96-100. See also Federal Builders, Inc. v. Power Factors, Inc., G.R. No.

211504, March 8, 2017.

16 G.R. No. 180640, April 24, 2009, 586 SCRA 746, 760-761.

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 would effectively suspend the jurisdiction of the CIAC until compliance
therewith, would be in conflict with the intention of the law and rules
to automatically vest CIAC with jurisdiction over a dispute should the
construction contract contain an arbitration clause.’17

The CIAC is given the original and exclusive jurisdiction over disputes
arising from, or connected with, contracts entered into by parties involved in
construction in the Philippines. 18 This jurisdiction cannot be altered by
stipulations restricting the nature of construction disputes, appointing another
arbitral body, or making that body’s decision final and binding.” (Emphasis
supplied)

For the CIAC to acquire jurisdiction, the parties to a dispute must be

bound by an arbitration agreement in their contract or subsequently agree to
submit the same to voluntary arbitration.19 Plainly, the CIAC has original and
exclusive jurisdiction over disputes arising from or connected with
construction contracts entered into by parties that have agreed to submit
their dispute to voluntary arbitration.20 This is true even if the parties have
designated another arbitration institution or arbitral body 21 because, as laid
down by decisional law,22 no condition precedent to the exercise of the CIAC’s
jurisdiction may be imposed by the parties which will have the effect of
restricting its jurisdiction.

There are two acts which vest the CIAC with jurisdiction over a
construction dispute. “One is the presence of an arbitration clause in a
construction contract, and the other is the agreement of the parties to submit
the dispute to the CIAC.”23 In other words, the conditions sine qua non for the
exercise by the CIAC of jurisdiction as ensconced in case law, are: (1) the case
involves a construction dispute;24 and (2) the parties have given their consent
to undergo arbitration. 25 No other condition is imposed, not even the
circumstance that no other arbitral institution has been named for the
purpose.26

The Supreme Court's discourse in Federal Builders, Inc. vs. Power Factors,
Inc.27 illustrates the effect of a submission to arbitration of a construction

17 Id., at p. 763.
18 E.O. 1008, Section 4.
19 Section 2.3, CIAC Revised Rules.
20 LICOMCEN, Incorporated v. Foundation Specialists, Inc., supra.; see also Philrock, Inc. v.

Construction Industry Arbitration Commission, 359 SCRA 632 [2001], p. 640; Uy v. Court of Appeals,
494 SCRA 535 [2006], p. 545.
21 Section 4.1, CIAC Revised Rules.
22 See notes 15-18.
23 Heunghwa Industry Co., Ltd. v. DJ Builders Corporation, supra.; see also HUTAMA-RSEA

Joint Operations, Inc. v. Citra Metro Manila Tollways Corporation, 586 SCRA 746 [2009], pp. 754-755;
Camp John Hay Development Corporation v. Charter Chemical and Coating Corporation, supra.

24 LICOMCEN, Incorporated vs. Foundation Specialists, Inc., supra.

25 Federal Builders, Inc. vs. Power Factors, Inc., G.R. No. 211504, March 8, 2017.

26 Id., citing Rule 4, Section 4.1 of the CIAC Revised Rules of Procedure Governing Construction
Arbitration.
27 Id.

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dispute notwithstanding the parties' designation of a different arbitral
institution. Thus:

“Under the CIAC Revised Rules of Procedure Governing Construction

Arbitration (CIAC Revised Rules), all that is required for the CIAC to
acquire jurisdiction is for the parties of any construction contract to
agree to submit their dispute to arbitration.28 Also, Section 2.3 of the
CIAC Revised Rules states that the agreement may be reflected in an
arbitration clause in their contract or by subsequently agreeing to submit
their dispute to voluntary arbitration. The CIAC Revised Rules clarifies,
however, that the agreement of the parties to submit their dispute to
arbitration need not be signed or be formally agreed upon in the contract
because it can also be in the form of other modes of communication in
writing, viz.:

RULE 4 - EFFECT OF AGREEMENT TO ARBITRATE

SECTION 4.1. Submission to CIAC jurisdiction - An arbitration
clause in a construction contract or a submission to arbitration of a
construction dispute shall be deemed an agreement to submit an
existing or future controversy to CIAC jurisdiction,
notwithstanding the reference to a different arbitration
institution or arbitral body in such contract or submission.

xxx xxx xxx.”

(Emphasis supplied)

Indeed, the growing trend of jurisprudence on construction dispute

resolution favors a liberal interpretation of the CIAC's jurisdiction so as to
cover any dispute arising from, or connected with construction contracts
whether these involve contractual money claims, or execution of the
contract.29

3. What is a “construction dispute”?

Construction refers to “all on-site works on buildings or altering

structures, from land clearance through completion including excavation,
erection and assembly and installation of components and equipment.”30

Under the Revised Rules of Procedure Governing Construction

Arbitration (CIAC Revised Rules) a construction dispute shall include “those
between or among parties to, or who are otherwise bound by, an arbitration

28Rule 4, CIAC Revised Rules; LICOMCEN. Inc. vs. Foundation Specialists. Inc., G.R. Nos. 167022
and 169678, April 4, 2011.

29Stronghold Insurance Company, Inc. vs. Spouses Rune and Lea Stroem, G.R. No;. 204689, January
21, 2015; The Manila Insurance Company, Inc. vs. Spouses Roberto and Aida Amurao, G.R. No.
179628, January 16, 2013, citing LICOMCEN, Incorporated vs. Foundation Specialists, Inc., G.R. Nos.
167022 and 169678, April 4, 2011.
30 Fort Bonifacio Development Corporation v. Sorongon, 587 SCRA 613 [2009], p. 621, citing Fort

Bonifacio Development Corporation v. Domingo, G.R. No. 180765, 27 February 2009, 580 SCRA 398,
and Gammon Philippines, Inc. v. Metro Rail Transit Development Corporation, 481 SCRA 209 [2006],
pp. 218-219; see also Romago, Inc. v. Siemens Building Technologies, Inc., 602 SCRA 656 [2009], p. 670.

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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.”31

The CIAC Revised Rules add that:

Section 2.1.1. The jurisdiction of the CIAC may include but is not limited to
violation of specifications for materials and workmanship; violation of the
terms of agreement; interpretation and/or application of contractual
provisions; amounts of damages and penalties; commencement time and
delays; maintenance and defects; payment default of employer or contractor
and changes in contract cost.”32

4. What is the form required of the arbitration agreement? What is

the effect of the designation of another arbitration institution other
than the CIAC?

An arbitration agreement or a submission to arbitration must be in

writing although it need not be signed by the parties, as long as the intent is
clear that the parties have agreed to submit a present or future controversy
arising from a construction contract to arbitration. It may be contained in a
separate document or instrument,33 or in an arbitration clause in a container
contract,34 or through an incorporation of such agreement by reference in
another document.35 The agreement may even be in the form of exchange of
letters sent by post or telefax, telexes, telegrams, electronic mail or any other
mode of communication 36 as long as the parties’ intent to submit an existing
or future construction dispute to arbitration is clearly indicated.

Once jurisdiction has been acquired by the CIAC, the refusal of one party
to participate in the proceedings will not prevent the CIAC from proceeding
with the case and issuing an award in favor of one of the parties. This
principle was explained by the Supreme Court in Metropolitan Cebu Water
District v. Mactan Rock Industries, Inc., 37 as follows:

31 Section 2.2, CIAC Revised Rules; based on Section 35, ADR Act.
32 Section 2.1 and 2.1.1, CIAC Revised Rules.

33 Koppel, Inc. (formerly known as KPL Aircon, Inc.) vs. Makati Rotary Club Foundation, Inc., G.R.

No. 198075, September 4, 2013, citing Jorge Gonzales, et al. vs. Climax Mining, Ltd., et al., G.R. No.
161957, January 22, 2007.

34 Jorge Gonzales, et al. vs. Climax Mining Ltd., et al., G.R. No. 161957, January 22, 2007, citing P.

Capper, International Arbitration: A Handbook (3rd ed., 2004), p. 12; Insular Savings Bank vs. Far East
Bank and Trust Company, G.R. No. 141818, June 22, 2006. No. 173137, January 11, 20__6.

35Bases Conversion Development Authority vs. DMCI Project Developers, Inc., G.R. No. 173137,
January 11, 206; Stronghold Insurance Company, Inc. vs. Spouses Rune and Lea Stroem, G.R. No.
204689, January 21, 2015.

36Section 4.1.3, CIAC Revised Rules. See Federal Builders, Inc. v. Power Factors, Inc., supra.;
Hutama-Rsea Joint Operations, Inc. vs. Citra Metro Manila Tollways Corporation, G.R. No. 180640,
April 24, 2009.
37 Supra., pp. 600-601; emphasis supplied.

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 “Section 4.2 of the Revised Rules of Procedure Governing Construction
Arbitration (CIAC Rules) specifically provides that where the jurisdiction of the
CIAC is properly invoked by the filing of a Request for Arbitration in accordance
with the CIAC Rules, the failure of a respondent to appear, which amounts to
refusal to arbitrate, will not stay the proceedings, notwithstanding the
absence of the respondent or the lack of participation of such party. In such
cases, the CIAC is mandated to appoint the arbitrator/s in accordance with
the Rules, and the arbitration proceedings shall continue. The award shall
then be made after receiving the evidence of the claimant.

x x x x x x x x x

Thus, under the CIAC Rules, even without the participation of

one of the parties in the proceedings, the CIAC is still required to
proceed with the hearing of the construction dispute.” (Emphasis
supplied)

In fact, it has been held that the CIAC may continue with the arbitration
even though only one of the parties requested for arbitration,38 or even if
both parties have withdrawn their consent to arbitrate.39

5. What is the extent of judicial review of CIAC awards?

A petition for review from a final award of the CIAC may be taken by any
of the parties to the Court of Appeals within fifteen (15) days from receipt
thereof in accordance with Rule 43 of the Rules of Court. 40 This petition is
based on errors of fact or mixed fact and law. The development of this remedy
from the decisions of the CIAC was explained in the case of Asian Construction
and Development Corporation v. Sumitomo Corporation 41 as follows:

“A brief exegesis on the development of the procedural rules governing CIAC

cases clearly shows that a final award rendered by the Arbitral Tribunal is not
absolutely insulated from judicial review.
To begin, Executive Order No. (E.O.) 1008, which vests upon the CIAC
original and exclusive jurisdiction over disputes arising from, or connected
with, contracts entered into by parties involved in construction in the
Philippines, plainly states that the arbitral award ‘shall be final and
inappealable except on questions of law which shall be appealable to the
[Court]. Later, however, the Court, in Revised Administrative Circular (RAC) No.
1-95, modified this rule, directing that the appeals from the arbitral award of
the CIAC be first brought to the CA on questions of fact and law.’ This
amendment was eventually transposed into the present CIAC Revised Rule
which directs that ‘a petition for review from a final award may be taken by any

38 National Irrigation Administration, supra., cited in Metropolitan Cebu Water District v. Mactan

Rock Industries, Inc., supra., p. 601.

39 Philrock, Inc. v. Construction Industry Arbitration Commission, 359 SCRA 632 [2001], pp. 641-

642, cited in Metropolitan Cebu Water District v. Mactan Rock Industries, Inc., supra., p. 601.
40 Sections 18.2 and 18.4, CIAC Revised Rules. See also: J Plus Asia Development Corporation v.

Utility Assurance Corporation, supra.; Department of Environment and Natural Resources (DENR) v.
United Planners Consultants, Inc. (UPCI), supra.
41 704 SCRA 332 [2013], pp. 344-346, citing F.F. Cruz & Co., Inc. v. HR Construction Corp., 668

SCRA 302 [2012], p. 315; and Philrock, Inc. v. Construction Industry Arbitration Commission, supra.,
pp. 643-644.

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 of the parties within fifteen (15) days from receipt thereof in accordance with
the provisions of Rule 43 of the Rules of Court. Notably, the current provision is
in harmony with the Court’s pronouncement that ‘despite statutory provisions
making the decisions of certain administrative agencies ‘final,’ [the Court] still
takes cognizance of petitions showing want of jurisdiction, grave abuse of
discretion, violation of due process, denial of substantial justice or erroneous
interpretation of the law’ and that, in particular, ‘voluntary arbitrators, by the
nature of their functions, act in a quasi-judicial capacity, such that their
decisions are within the scope of judicial review.’”

The petition shall not stay the execution of the final award unless the
Court of Appeals issues a temporary restraining order and/or a writ of
preliminary injunction.42 The petitioner may also post a bond with the CIAC in
an amount equal to the award, conditioned upon the performance of the
appellate court’s judgment. The execution of the award shall be stayed upon
the approval of the bond by the CIAC. 43

The availability of a petition for review under Rule 43 precludes the

remedy of a petition for certiorari under Rule 65, and the filing of an
erroneous petition for certiorari will not toll the 15-day period to file a
petition for review. 44

Generally, in the absence of any showing of grave abuse of discretion,

courts must sustain the factual findings of the CIAC arbitrator this being in
accordance with the established principle that the determination of certain
questions of fact falling within the peculiar technical expertise of an
administrative agency must be accorded great respect if not finality by the
courts.45 The court will not interfere in matters which are addressed to the
sound discretion of government agencies entrusted with the regulation of
activities coming under the special technical knowledge and training of such
agencies.46

In the proceedings before the CIAC, judicial rules of evidence are not
controlling and the technicalities of law or procedure may be disregarded in
order to ascertain the facts in each and every case by every reasonable
means.47 The arbitral tribunal of the CIAC is mandated to “act according to
justice and equity and merits of the case, without regard to technicalities or
legal forms and need not be bound by any technical rule of evidence.” 48 As
held in Uniwide Sales Realty and Resources Corporation v. Titan-Ikeda
Construction and Development Corporation:49
42 Sections 18.2 and 18.4, CIAC Revised Rules.
43 Section 18.6, CIAC Revised Rules.
44 Department of Environment and Natural Resources (DENR) v. United Planners Consultants,

Inc. (UPCI), supra.

45 Philippine National Construction Corporation v. Court of Appeals, 512 SCRA 684 [2007], p.

698; Philippine Science High School-Cagayan Valley Campus v. Pirra Construction Enterprises, supra;
Pro Builders, Inc. v. TC Universal Business Ventures, Inc., supra.
46 First Lepanto Ceramics, Inc. v. Court of Appeals, 253 SCRA 552 [1996], p. 558.
47 Section 1.3, CIAC Revised Rules.
48 Section 13.5, CIAC Revised Rules. See Metro Rail Transit Development Corporation v. Gammon

Philippines, Inc., G.R. No. 200401, January 17, 2018.

49 511 SCRA 335 [2006], pp. 362-363, emphasis supplied.

9
 “x x x. The Court will not review the factual findings of an arbitral tribunal
upon the artful allegation that such body had ‘misapprehended facts’ and will not
pass upon issues which are, at bottom, issues of fact, no matter how cleverly
disguised they may be as ‘legal questions.’ The parties here had recourse to
arbitration and chose the arbitrators themselves; they must have had confidence
in such arbitrators. The Court will not, therefore, permit the parties to relitigate
before it the issues of facts previously presented and argued before the Arbitral
Tribunal, save only where a clear showing is made that, in reaching its
factual conclusions, the Arbitral Tribunal committed an error so egregious
and hurtful to one party as to constitute a grave abuse of discretion
resulting in lack or loss of jurisdiction. x x x Any other, more relaxed rule
would result in setting at naught the basic objective of a voluntary arbitration and
would reduce arbitration to a largely inutile institution.” (Emphasis supplied)

Also, in Shinryo (Philippines) Company, Inc. v. RRN Incorporated,50 it was

held that:

“As reiterated by the Court in IEX International, Inc. v. Government Service

Insurance System, to wit:
‘It is settled that findings of fact of quasi-judicial bodies, which
have acquired expertise because their jurisdiction is confined to
specific matters, are generally accorded not only respect, but also
finality, especially when affirmed by the Court of Appeals. In
particular, factual findings of construction arbitrators are final
and conclusive and not reviewable by this Court on appeal.’”
(Emphasis supplied)

However, as exceptions to the foregoing rule, factual findings of

construction arbitrators may be reviewed by the Supreme Court, and hence,
also by the Court of Appeals, when the petitioner proves affirmatively that:

“x x x (1) the award was procured by corruption, fraud or other undue

means; (2) there was evident partiality or corruption of the arbitrators or of any
of them; (3) the arbitrators were guilty of misconduct in refusing to hear evidence
pertinent and material to the controversy; (4) one of the arbitrators were
disqualified to act as such under Section nine of Republic Act No. 876 and willfully
refrained from disclosing such disqualifications or of any other misbehavior by
which the rights of any party have been materially prejudiced; or (5) the
arbitrators exceeded their powers, or so imperfectly executed them, that a
mutual, final and definitive award upon the subject matter submitted to them was
not made.

Other recognized exceptions are as follows: (1) when there is a very clear
showing of grave abuse of discretion resulting in lack or excess of jurisdiction as
when a party was deprived of a fair opportunity to present its position before the
Arbitral Tribunal or when an award is obtained through fraud or the corruption
of arbitrators, (2) when the findings of the Court of Appeals are contrary to those
of the CIAC, and (3) when a party is deprived of administrative due process.” 51

50634 SCRA 123 [2010], p. 130, emphasis supplied.

51Uniwide Sales Realty and Resources Corporation v. Titan-Ikeda Construction and Development
Corporation, supra., pp. 345-346; citing David v. Construction Industry Arbitration Commission, 435
SCRA 654 [2004], p. 666; Megaworld Globus Asia, Inc. v. DSM Construction and Development
Corporation, 424 SCRA 179 [2004], p. 198; Hi-Precision Steel Center, Inc. v. Lim Kim Steel Builders,

10
 How about legal conclusions? Although lawyers, members of the
academe, and retired magistrates are among those in the roster of arbitrators
of the CIAC, not all its arbitrators are lawyers. Many of them are engineers or
are experts in different aspects of construction, but have not taken units in
law, let alone completed a degree in that course.

The circumstance that non-lawyer arbitrators may be rendering

conclusions on the legal aspect of the construction dispute does not render
their awards void or defective. Minor and inconsequential legal lapses should
not prove fatal to the tribunals’ final awards. A less than perfect but
unsubstantial mistake in the interpretation of the law or legal principles is
not enough to nullify the CIAC’s award. This is a necessary consequence of the
parties’ decision to submit their construction dispute to arbitration and of
their choice of arbitrators. The parties must be deemed to have relied upon
the legal acumen of the arbitrators they themselves have chosen.

Thus, the CIAC arbitrators’ legal conclusions should be reversed and

set aside only if the error in the application or interpretation of the law takes
the form of the same vices that render their factual conclusions reversible
such as when the legal conclusion is palpably and grossly erroneous, or when
it amounts to grave abuse of discretion, or when it is so hurtful and egregious
to a party.52

Although involving an arbitration under the ADR of 2004, the case of

Fruehauf Electronics Philippines Corporation v. Technology Electronics Assembly
and Management Pacific Corporation53 provided a good summation of the
extent of judicial review over findings of fact and law in arbitral proceedings,
viz:
“As a rule, the award of an arbitrator cannot be set aside for mere errors of
judgment either as to the law or as to the facts. Courts are without power to
amend or overrule merely because of disagreement with matters of law or
facts determined by the arbitrators. They will not review the findings of law and
fact contained in an award, and will not undertake to substitute their judgment
for that of the arbitrators, since any other rule would make an award the
commencement, not the end, of litigation. Errors of law and fact, or an erroneous
decision of matters submitted to the judgment of the arbitrators, are insufficient
to invalidate an award fairly and honestly made. Judicial review of an
arbitration is, thus, more limited than judicial review of a trial.” (Emphasis
supplied)

Inc., 228 SCRA 397 [1993], p. 405; Metro Construction, Inc. v. Chatham Properties, Inc., 365 SCRA 697
[2001]; Shinryo (Philippines) Company, Inc. v. RRN Incorporated, 634 SCRA 123 [2010]; and
Metropolitan Cebu Water District v. Mactan Rock Industries, Inc., supra.; Werr Corporation International
v. Highlands Prime, Inc., G.R. Nos. 187543 and 187580, February 8, 2017; B.F. Corporation and Honorio
Pineda v. Form-Eze Systems, Inc., G.R. No. 192948, December 7, 2017; Malayan Insurance Company, Inc. v.
St. Francis Square Realty Corporation, G.R. Nos. 198916-17, and 198920-21, January 11, 2016.
52 See note 37.
53 Supra.

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6. May costs of arbitration be apportioned by the CIAC?
In the case of Philippine National Construction Corporation vs. Court of
Appeals,54 the Supreme Court had occasion to reiterate the general rule in
determining which party ought to bear the costs of arbitration before the
CIAC. Said the Court:
“In respect of the costs of arbitration, Sec. 5, Article XV of the Rules of
Procedure Governing Construction Arbitration 55 states:
Decision as to Cost of Arbitration.—In the case of non-monetary
claims or where the parties agreed that the sharing of fees shall be
determined by the Arbitrator(s), the award shall, in addition to dealing
with the merits of the case, fix the cost of arbitration, and/or decide
which of the parties shall bear the cost(s) or in what proportion the
cost(s) shall be borne by each.
Rule 142 of the Revised Rules of Court of the Philippines governing the
imposition of costs likewise provides the following:
‘Section 1. Costs ordinarily follow the result of suit.—Unless
otherwise provided in these rules, costs shall be allowed to the
prevailing party as a matter of course, but the court shall have the
power for special reasons, to adjudge that either party shall pay the
cost of an action, or that the same shall be divided, as may be equitable.’
In the instant case, there is no basis for assessing the arbitration costs
against one party or the other, as the parties’ prayers were only partially granted.
We find it is just and equitable that both parties equally share the costs of
arbitration.”

Jgtrciaclecturev2.docx

54 514 SCRA 569 [2007], pp. 574-575. See also B.F. Corporation and Honorio Pineda v. Form-Eze

Systems, Inc., supra.

55 Section 5, Rule XV of the Rules of Procedure Governing Construction Arbitration was carried

over to the CIAC Revised Rules as Section 16.5 thereof.

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