The primary laws that govern the construction market in the Philippines are as follows.

• Republic Act No 386 or the Civil Code of the Philippines.
• Republic Act No 4566, as amended or the Contractors’ License Law and its implementing rules and regulations.
• Republic Act No 11966 or the Public–Private Partnership Code and its implementing rules and regulations.
• Republic Act No 12009 or the New Government Procurement Act and its implementing rules and regulations.
• Presidential Decree No 1746, as amended and its implementing rules and regulations.
• Republic Act No 9285, or the Alternative Dispute Resolution Act and its implementing rules and regulations.

There is no mandatory standard contract used in the Philippines for construction. In practice, private construction contracts are typically patterned after the FIDIC books and the Uniform General Conditions of Contract for Private Construction, or the Construction Industry Authority of the Philippines (CIAP) Document 102. While these standard contracts serve as a guide, they are not mandatory. Meanwhile, in government procurement of infrastructure projects, the agreement must follow the standard forms and manuals prescribed by the Government Procurement Policy Board.

Kinds of Employers

Employers in a construction project may be any individual, corporation, partnership, co-operative or joint venture, whether domestic or foreign.

Rights and Obligations of the Employer

Since the relationship between the employer and the contractor is governed by the general provisions and principles of contract law, the rights and obligations of the employer shall primarily be those provided under the parties’ contract. Further, the Civil Code also provides the following rights of the employer.

• Right to have any defect removed – under Article 1715 of the Philippine Civil Code, the contractor is required to execute the work in a matter where the work has the qualities agreed upon and where there are no defects that would destroy or lessen the work’s value or fitness for its ordinary or stipulated use. If not, the employer may require the contractor to remove the defect or execute another work. If the contractor fails or refuses to do so, the employer may have the defect removed or another work executed at the contractor’s cost.
• Warranty against hidden defects – under Article 1719 of the Civil Code, the employer is entitled to a warranty against any defect that is hidden and the employer is not, by his/her special knowledge, expected to recognise the same.

Kinds of Contractors

Contractors in a construction project may be an individual, firm, partnership, corporation, or association. In the Philippines, a contractor entity is required to secure a licence from the Philippine Contractors Accreditation Board (PCAB). There are two types of PCAB Licence namely (i) the Regular PCAB Licence and (ii) the Special PCAB Licence.

• A regular PCAB Licence is issued only to construction firms who are Filipino proprietorships or partnerships/corporations with at least 60% Filipino equity and duly organised and existing under Philippine laws. Until the PCAB issues new rules on PCAB Regular Licence reflecting and adopting the Supreme Court’s pronouncements in PCAB v Manila Water Case Co., Inc. (G.R. No. 217590, 10 March 2020), foreign contractors may only secure a Quadruple A Gold Regular Licence as long as it is incorporated as a domestic corporation with a capitalisation of at least PHP1 billion in cash. A regular PCAB licence allows the licensee to engage in the construction industry in general, subject to licence renewal every year and subject to the restrictions and conditions placed on its licence category.
• A special PCAB Licence may be issued to either local or foreign contractors. In the case of foreign contractors, they must either form a subsidiary or domestic corporation in the Philippines or set up a branch office in the Philippines. It authorises the licensee to engage only in the construction of a single specific undertaking/project.

Rights and Obligations of the Contractor

Since the relationship between the employer and the contractor is governed by the general provisions and principles of contract law, the rights and obligations of the contractor shall primarily be those provided under the parties’ contract. Further, the Civil Code also provides the following rights and obligations of the contractor.

• Right to receive a certain price or compensation as consideration of the work to be executed following Article 1713 of the Civil Code.
• Obligation to execute the construction project with the qualities agreed upon, without defects that destroy or lessen the value or fitness of the project for its ordinary or stipulated use following Article 1715 of the Civil Code. Pursuant to the same provision, the contractor is bound to remove any defect, or execute another work, as the employer may require, when the project is not of such quality.
• Right to reasonable compensation pursuant to Article 1721 of the Civil Code if in the execution of work, an act of the employer is required, and the employer incurs delay or fails to perform the act.
• Right to equitable part of compensation proportionally to the work done pursuant to Article 1722 of the Civil Code if the work cannot be completed on account of a defect in the material furnished by the employer or because of orders from the employer, without any fault on the part of the contractor.
• Obligation to complete the contract pursuant to Article 1724 of the Civil Code, where the contractor who undertakes to build a structure or any other work for a stipulate price can neither withdraw from the contract nor demand an increase in the price on account of the higher cost of labour or materials.

Subcontractors in a construction project may be an individual, firm, partnership, corporation, or association. Since the relationship between the employer and the contractor is governed by the general provisions and principles of contract law, the rights and obligations of the contractor shall primarily be those provided under the parties’ contract. The relationship between the subcontractors, the employer, the contractor and the financiers is normally an independent contractor relationship that is governed by the provisions of the contract agreed upon.

Financiers in a construction project are typically private banks for private construction projects and for government construction projects, through direct government appropriations, government financial institutions, and/or from official development assistance of foreign governments.

The designers are usually the architects or engineers who are qualified under the law to carry out and comply with the employer’s requirements in the design. Since the relationship between the employer and the designer is governed by the general provisions and principles of contract law, the rights and obligations of the designer shall primarily be those provided under the parties’ contract. The relationship between the parties is normally an independent contractor relationship that is governed by the provisions of the contract agreed upon.

The employer prepares the scope of work. The scope includes the estimates of the work, items, quantities, costs, programme evaluation and project management tools to monitor and supervise the project activities. Depending on the contract, the scope of work may be nomenclated as the employer’s requirements, employer’s specifications, etc.

Variations ordered by the employer may be allowed at anytime, as long as it is in writing and does not exceed a stipulated percentage of the costs in the contract price, typically pegged at 25%. On the other hand, a contractor must notify the employer though a written notice for variations such as changes in the scope of work and/or delays on account of the employer, which entitles the contractor payment for the costs incurred.

Generally, the parties are free to stipulate the rate for which variations may be accounted for. However, in government procurement of infrastructure projects, additional works that may be ordered by the employer are limited to 10% of the contract price, otherwise, the variation will be considered a new project and a new bidding will be called for.

In a construction project, the employer usually provides for the project drawings and specifications, specifically the description of the construction project to be done, including the qualities of the material to be used, the equipment to be installed and the mode of construction. The designer is then responsible for preparing the conceptual and detailed designs in conformity with the employer’s requirements.

Once possession of the land or property where the construction will be undertaken is turned over by the employer to the contractor, the contractor will be primarily responsible for the construction process. The subcontractor will be responsible only for those aspects of work that have been subcontracted to them.

The responsibility for the status of the construction sites is determined by the agreement of the parties. Normally, the contractor conducts a due diligence review of the site as part of the work for any and all above surface and subsurface conditions at the site. Once the site is turned over, the contractor becomes responsible for the status of the construction site and will be responsible to comply with environmental and other regulations.

The following permits are typically obtained by the employer.

• Environmental Compliance Certificate.
• Tree Cutting Permit.
• Coconut Tree Cutting Permit.
• Certificate of Non-Overlap.
• Height Clearance.
• Certificate of Non-Coverage.

The following permits/clearances/registrations are typically obtained by the contractor.

• Barangay Clearance for Construction.
• Locational Clearance.
• Zoning Certificate.
• Excavation Permit.
• Building Permit.
• Electrical Permit.
• Certificate of Final Electrical Inspection.
• Mechanical Permit.
• Sanitary Permit.
• Occupancy Permit.
• Road Construction Permit.
• Traffic Management Plan.
• Right-of-way Permit.

The employer is generally responsible for the maintenance of the works and normally enters into a separate maintenance agreement with the contractor or with another party. For large and complex construction projects, the contractor is typically asked to prepare operations and maintenance manuals, which include the necessary technical documents, the documents required for maintenance, the necessary drawings and diagrams for the appropriate use of objects of the construction, equipment specification sheets, all the required warranty information, material safety data sheets, applicable health and safety documentation, specific maintenance schedules required to comply with the warranty, testing and commissioning reports, and any other information or data necessary for operations and maintenance in accordance with the law and good industry practice.

Other functions in the construction process – such as operation, finance, and transfer – depend on the scale and complexity of the construction project. It can be contractually delegated by the employer to the contractor or to other parties. This is especially prevalent in PPP projects which are large-scale infrastructure projects, where integrated arrangements would be more advantageous to manage potential risks, ensure project viability, and optimise long-term performance.

The typical process for the tests for completion of work involve the preparation by the contractor of the procedure or protocol for the testing of works to confirm compliance of the works with the employer’s requirements. Once the works are ready for testing, the contractor will notify the employer of the date when testing will be conducted. There will then be a punch list rectification procedure, where the contractor will rectify the works done that did not pass testing. The contractor will thereafter carry out further commissioning and acceptance tests. Once the works pass testing, the employer will issue a notice of completion or an acceptance certificate.

Once the works pass testing, the employer will issue a notice of completion or an acceptance certificate. At this point, the employer will take over possession of the works.

Under the Civil Code, the contractor shall remain liable for defects in the work until the acceptance by the employer. Parties typically agree on the contractual period to discover defects in general, for which the period normally ranges from one year to three years. Generally, in the event of a defect in the works, the contractor is liable to undertake the repair at its own expense.

In case of default on the part of the contractor, the employer may engage another party to carry out the repairs, at the cost of the contractor. The engineer or architect responsible for the plans and specifications for a building is liable for damages for the collapse by reason of defect within 15 years. Similarly, the contractor shall be responsible for the same incident, on account of defects in the construction, the use of inferior quality materials, or any violation of the terms of contract.

In government procurement of infrastructure projects, the defects liability period prescribed by law is one year from project completion up to final acceptance by the procuring entity. Upon the lapse of the defects liability period, or upon final acceptance, the warranty against structural defects and failures kicks-in. The warranty begins from final acceptance, until:

• 15 years for permanent structures;
• five years for semi-permanent structures; and
• two years for other structures.

This warranty serves as a guarantee that the contractor remains liable to perform its responsibilities.

The contract price is generally established through an offer and the acceptance of said offer. For complex construction projects, the contract price is usually the result of a tender process undertaken by the employer, where one of the requirements to be submitted to support the contract price is the bill of quantities. Milestone payments are generally used for payment terms.

Parties agree on who bears the risk for large price fluctuations. Typically it is the contractor that bears the burden for price fluctuations, although it is not uncommon for parties to agree that price fluctuations on specific items (eg, fuel) are borne by the employer. Section 1724 of the Civil Code provides that the contractor who undertakes to build a structure or other work for a stipulated price in conformity with plans and specifications agreed with the employer can neither withdraw from the contract nor demand an increase in the price on account of price fluctuations. The contractor may only do so if there is a change in the plans and specifications that was approved by the owner and the additional price has been agreed upon by the parties.

In government procurement of infrastructure projects, an equitable adjustment in the contract price is allowed upon mutual agreement of the parties, subject to a cap of 10% of the original contract price.

Requiring an advance payment (and the posting of an advance payment bond) is typical in construction contracts in the Philippines. Aside from the advance payment, requiring the posting of a performance bond is usual, from where the employer is authorised to draw in case of delay in the works.

For invoicing, the contractor is usually required to submit to the employer a request for payment (together with reasonably documented evidence of achievement of the relevant component of the work completed) upon achievement of the relevant milestones set forth in the agreed payment schedule. Upon payment, the contractor is required to issue VAT-registered invoices pursuant to prevailing tax regulations.

Prior to the commencement of construction, parties agree upon the milestones of the construction project. The contractor prepares a programme for the execution of works to be submitted to the employer for approval. From time to time, the contractor is required to submit a revised programme that incorporates the actual progress or delays, if any.

Delays are typically addressed with the payment of liquidated damages by the contractor. If, however, the proximate cause of the delay is on account of a defect in the material furnished by the employer, or because of orders from the employer, without any fault on the part of the contractor, the Civil Code allows the contractor an equitable part of the compensation proportional to the work done, and reimbursement for proper expenses made.

In case of more than one instance of delay, whether in respect of a milestone or a time of completion, the “delay liquidated damages” for each instance of delay are typically stipulated to run concurrently with all other instances of delay.

Most construction contracts in the Philippines stipulate that the employer may order the acceleration of the work in case of delays to meet a desired completion date. Where the reason for acceleration is due to the fault of the contractor, such additional cost for acceleration shall be borne by the contractor alone. In some cases, the employer may likewise step-in and order that the delayed work be completed by a third party at the cost of the contractor. In addition, the contractor shall pay the employer liquidated damages in the amount stipulated in the contract as indemnity, which shall accrue from the first day of delay until the date of completion of the works (or in some cases, until the date of substantial completion of the works). Under Philippine case law, it is understood that the work is substantially completed when the contractor completes 95% of the work and that the remaining work and the performance of the work necessary to complete the work shall not prevent the normal use of the completed portion.

Extensions of time are typically granted in the following instances.

• Failure by the employer to provide access to the site.
• Late receipt of the instructions, approvals, details or levels from the employer beyond the agreed approval time.
• Delay caused by any act or omission by the employer or its employees, contractors, vendors, or others for whom the employer is responsible which interferes with or otherwise adversely impacts the contractor’s performance of the works.
• Delay caused by a governmental authority unless the delay is due to the act or negligence of the contractor.
• Delay caused by any sudden change in employer furnished information, data, equipment, or materials.
• Force majeure events.
• Delay caused by a change in any code or standard of performance applicable to the works.

A request for time extension usually requires that the contractor show the following.

• The delay is not the result of the failure of the contractor to perform any of his/her obligations under the contract.
• The delay affects a critical path of the works.
• The contractor has taken measures to prevent the delay and mitigate the effect of such delay by, for example, reducing or eliminating any float time or re-allocating and shifting its personnel, equipment and materials to other parts of the works.

Any event beyond the reasonable control of the employer or the contractor and which is unavoidable, notwithstanding the reasonable care of the party affected, would generally constitute an act of God or force majeure. This includes war, rebellion, strikes, lockouts, embargo, natural disasters, fire, and shortage of labour, materials, or utilities where caused by circumstances that are themselves force majeure.

General contract law allows the contracting parties to establish such stipulations, clauses, terms, and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. In view of this freedom to contract, parties may contractually limit or exclude certain circumstances from being qualified as force majeure.

Typically, a construction contract will stipulate that the occurrence of a force majeure event that delays or obstructs performance entitles the contractor to an extension of time, unless the contractor was already delayed when the fortuitous event occurred. For materials and services supplied by the contractor, the contract price may be adjusted to account for cost variations caused by the force majeure event.

Unforeseen circumstances are primarily governed by the Civil Code, but the latter also allows the parties the freedom to stipulate, provided such stipulations are not contrary to law and public policy. Unforeseen circumstances are governed by the same rules on force majeure. Thus, in a construction contract, the parties may contractually limit or expand the definition of unforeseen circumstances and the remedies available to a party for such circumstances.

General contract law does not expressly define disruption, but parties may agree on its consequences. Disruption is normally stipulated as a ground for extension of time if it falls under force majeure or if it falls within any of the excusable grounds to request for time extension.

While parties to a construction contract generally have freedom to stipulate, the parties cannot exclude liability for fraud or bad faith, including gross negligence. Any contract clause attempting to waive these liabilities will be void and unenforceable under Philippine law for being against the law and public policy.

The concepts of wilful misconduct and gross negligence exist under Philippine law. Although not defined explicitly in the Civil Code, these concepts have long been established in Philippine jurisprudence. Wilful misconduct generally refers to intentional wrongdoing or a deliberate violation of a rule of law or standard of behaviour, often involving a wrongful intent or flagrant disregard of established rules.

Meanwhile, gross negligence, is defined as negligence characterised by the want of slightest care, acting or omitting to act in a situation where there is duty to act, not inadvertently but wilfully and intentionally with a conscious indifference to consequences insofar as other persons may be affected.

General contract law allows contracting parties the freedom to stipulate, provided such terms and conditions are not contrary to law, morals, good customs, public order, or public policy. Thus, it is possible for the parties to contractually limit their liability, save for those which are mandated by law such as those discussed in 6.1 Exclusion of Liability.

Indemnities are commonly used to allocate and limit risk between the contracting parties. While parties have the freedom to negotiate indemnity provisions, these clauses must comply with mandatory legal provisions and cannot be used to waive liability for fraud, wilful misconduct, or gross negligence. Typical subjects include indemnities for third-party claims, breach of warranties, defective work, delays, and regulatory compliance.

For instance, CIAP Document 102 provides that the contractor shall render the employer free and harmless for the death of, or disease contracted or injury received by the contractor or any of its employees or labourers, for any damage done by or to the contractor’s plants or materials from any source or cause; and for damages caused by the contractor or its employees to any property of the employer and its adjoining property.

Construction contracts in the Philippines commonly use performance bonds, advance payment guarantees, retention money, and warranty bonds to limit risk for both parties. On the one hand, contractors typically provide performance bonds and, in some instances, allow retention to employers to ensure proper execution, workmanship quality, delays, and rectification of defects. Employers may also ask contractors to issue parent company guarantees. On the other hand, employers may provide advance payment and payment guarantees to assure financial protection for contractors although in most cases (and depending on the scale of the project) employers only provide advance payment. Contractors also typically ask employers to provide parent company guarantees.

Contractors are legally mandated to register themselves and their employees with state-administered social insurance programmes and to remit the corresponding insurance premiums to ensure accident coverage. In addition, it is standard practice for employers to require contractors to procure a Contractor’s All Risks Insurance policy.

Insolvency provisions differ based on whether the employer or contractor becomes insolvent. On one hand, the employer may exercise step-in or takeover rights in case of insolvency of the contractor and call upon the performance bonds to fund the completion of works of another contractor. On the other hand, the contractor may immediately suspend work upon prior notice to the employer. In either case, termination of contract is an available remedy if interim reliefs prove to be insufficient or unsatisfactory.

Risk-sharing is a common practice in Philippine construction contracts, with risks like force majeure, cost escalation, site conditions, and regulatory delays typically allocated between employer and contractor. These risks are priced through contingencies, cost-sharing mechanisms, and insurance coverage.

The allocation of risks is contractually agreed upon. For the risk of changes in law, general changes in law are typically borne by the contractor although increases in statutory minimum wage and change in sales or value added tax are risks shared with the employer. Where risks are shared, the parties may provide a mechanism to secure a price adjustment and, in most cases, an extension of the time for completion.

Labour laws and regulations, particularly those outlined in the Labor Code, are deemed written into every employment contract. This ensures that employees are protected by law, even if an employer’s contract does not explicitly mention them.

Construction contracts typically have general warranties that the contractor shall hire only competent and qualified professionals, technical personnel, foremen/forewomen, and construction workers to execute the work.

Contractors must also comply with the minimum standards and conditions of employment, including minimum wage, working hours, rest days, holiday pay, and statutory contributions.

Likewise, the contractor must comply with Republic Act No 11058 or the Occupational Safety Law, ensuring that workers are provided with free protective equipment and assured of safe and healthy working conditions on-site. In this regard, a safety officer must be appointed to oversee safety compliance. Contractors must submit a Construction Safety and Health Program (CHSP) to the Department of Labor and Employment for approval before starting work.

Subcontracting is typically allowed in the Philippines subject to securing the employer’s consent where the subcontracted work is an important component of the project or the value of the subcontracted work is substantial. That said, even if part of the work is subcontracted, the main contractor remains fully liable for the subcontractor’s performance, including compliance with labour laws and regulations.

For public infrastructure projects, the main contractor may subcontract up to 50% of the contract’s total cost, unless otherwise specified in the bidding documents. The subcontracted portion shall be limited to components that are not deemed significant or material to the project as determined by the procuring entity. Further, the main contractor shall remain liable for the subcontractor’s actions, defaults, delays, and negligence.

While parties may contractually determine the ownership of intellectual property in a construction project, Philippine intellectual property laws establish that copyrights and moral rights over works related to geography, topography, architecture, or science are inherently vested in their creator. The creator may then license or assign these rights to the employer. However, if the work is produced within the scope of regular employment duties, copyright ownership typically belongs to the employer, unless otherwise agreed. In practice, it is standard in the construction industry for the employer to be contractually designated as the owner of the contract documents, drawings, specifications, and models, or to hold the necessary licences, even when such materials are prepared by the contractor. Typically, the contractor is granted a limited licence to use these documents solely for project execution.

For the employer, a construction contract will typically stipulate that the employer shall have the right to claim liquidated damages in case of delay and, if the period of delay exceeds a certain threshold, the ability to terminate if the project has not been substantially completed.

The employer may likewise claim against the performance bond to answer for any damages suffered by him/her on account of breach by the contractor of his/her obligations and any additional costs incurred to complete the project.

For the contractor, if the employer fails to pay, unjustifiably suspends work, or improperly terminates the contract, the contractor may suspend the work after providing written notice and impose interests on delayed payments. In addition, a construction contract will typically stipulate that if the delay lasts for more than the specified period, the contractor has the right to terminate the contract. In case of termination, the contractor is entitled to recover based on the value of the works plus damages.

It is common practice for construction contracts to include provisions that limit the remedies available to a party in case of breach or dispute. General contract law allows the parties to define their contractual terms including limiting liability or remedies, provided such limitations do not violate the law, morals, and public policy (see 6.1 Exclusion of Liability); are mutually agreed upon by the parties; and are clearly expressed in the contract. Examples of such limitations would be exclusion of certain damages and setting liability caps. That said, while parties can limit contractual remedies, Philippine law prohibits the waiver of future fraud or gross negligence.

Sole remedy clauses are commonly used in construction contracts. Under Philippine law, the same act of a party breaching the contract may give rise to an action for tort or quasi-delict. Thus, sole remedy clauses restrict a party’s recourse to only the specific remedies stated in the contract, preventing them from seeking additional claims or legal actions beyond what is contractually provided.

Construction contracts commonly exclude liability for certain types of damages to manage risk and limit exposure, such as lost profits, loss of business opportunities, and punitive or exemplary damages.

In the Philippines, retention and suspension rights are generally not contractually excluded in construction contracts, as they serve essential risk management functions for both employers and contractors. However, their exercise may be contractually regulated to provide clear terms for enforcement. In addition, for retention money, some contracts provide the contractor the option of replacing retention money with a performance bond during the warranty period.

Properly drafted construction contracts, including those based on standard forms like FIDIC, will include specific termination clauses.

Common grounds for termination include:

• Contractor’s Default – this can involve failure to progress diligently (eg, negative slippage), not following instructions, abandoning the site, failing to fix defects, using substandard materials, not providing security, unauthorised subcontracting, insolvency, or illegal acts.
• Employer’s Default – grounds for a contractor to terminate include the employer’s failure to make timely payments, provide site access or necessary information, secure financial arrangements, or if there is a prolonged work suspension, material breach, or insolvency.
• Employer’s Convenience – many contracts allow the employer to terminate without cause, requiring specific compensation to the contractor.

It is important to note that all contractual terminations require strict adherence to procedures like notices of default, cure periods, show-cause periods, and formal termination notices. The failure to follow these can invalidate the termination.

The consequences of termination vary by ground:

• Contractor’s Default – the employer can take over and complete the work, claiming all additional costs and damages, potentially forfeiting the contractor’s performance security and blacklisting them. The contractor is only paid for work properly executed, less damages, and receives no profit on uncompleted work.
• Employer’s Default – the contractor can claim payment for work done, demobilisation costs, lost profit on the uncompleted portion, other damages resulting from the breach, and the return of their performance security.
• Employer’s Convenience – as a “no-fault” termination, the contractor is compensated for work done, ordered materials/equipment, demobilisation, and lost profit on the remaining work, along with other reasonable costs.
• Force Majeure/Frustration – with no party at fault, obligations are extinguished. Compensation typically covers work done and demobilisation, with parties generally bearing their own losses and no claim for profit on uncompleted work.

If a construction contract contains an arbitration clause, the dispute shall be subject to arbitration before the Construction Industry Arbitration Commission (CIAC) of the Philippines. CIAC has original and exclusive jurisdiction over disputes arising from construction contracts, whether the disputes arise before or after the completion of the contract, or after the abandonment or breach thereof. Otherwise, if the contract does not contain an arbitration clause and the parties do not agree to submit their dispute to arbitration, the disputes shall be adjudicated by the regular courts.

CIAC maintains a roster of accredited arbitrators with expertise in construction and law. This ensures that disputes are heard by individuals who understand the technical and legal nuances of the industry.

Alternative dispute resolution in the Philippines is governed by Republic Act No 9285 or the Alternative Dispute Resolution Act (ADR Act). While construction disputes are also considered commercial disputes, the ADR Act provides that construction disputes shall be primarily governed by Executive Order No 1008 or the Construction Industry Arbitration Law (CIA Law). Under the CIA Law, construction disputes fall within the original and exclusive jurisdiction of the CIAC.

Parties to construction contracts are strongly encouraged to resort to alternative dispute resolution (ADR), such as mediation and arbitration, to alleviate court congestion and promote efficient dispute resolution. In the Philippines, it is common practice for a construction contract, especially those involving large projects, to contain an arbitration clause and for construction disputes to be resolved through alternative means of dispute resolution.

Arbitration before CIAC is generally voluntary, meaning the parties must agree to submit their dispute to CIAC arbitration. However, once they have agreed, the arbitration becomes compulsory in the sense that they are bound by the arbitration proceedings and the arbitral award. CIAC arbitration aims to be less formal and more expeditious than traditional court litigation. The proceedings are governed by CIAC’s Revised Rules of Procedure. Arbitral awards rendered by CIAC are final and executory, subject to very limited grounds for appeal or review by the regular courts.