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                       CONSTRUCTION ARBITRATION
Approved and promulgated by the Construction Industry Arbitration Commission (CIAC) on Aug. 23, 1988 and
   as amended by CIAC Res. Nos. 2-91, 3-93, 1-94, 2-95, 2-96, 6-96, 1-98, 2-98, 3-98, 8-98, 6-99, & 01-2002
             adopted on June 21, 1991, August 25, 1993, October 25, 1994, November 7, 1995,
May 28, 1996, August 8, 1996, March 31, 1998, April 28, 1998, July 9, 1998, December 15, 1998, July 15, 1999,
                                    and 17 January 2002, respectively

Pursuant to Section 21 of Executive Order No. 1008 creating the Construction Industry
Arbitration Commission (CIAC), the following Rules of Procedure Governing Construction
Arbitration are hereby promulgated.

                                               ARTICLE 1

                                     POLICY AND OBJECTIVES

SECTION 1. Statement of Policy and Objectives - It is the policy and objective of these
           Rules to provide a fair and expeditious settlement of construction disputes
           through a non- judicial process which ensures harmonious and friendly
           relationships between or among the parties.

SECTION 2.       Applicability of Rules - These Rules are applicable to proceedings in
               arbitration either before a single Arbitrator or an Arbitral Tribunal.

SECTION 3. Technical Rules not Binding - In any proceeding before a single Arbitrator or
           Arbitral Tribunal, the rules of evidence prevailing in courts of law or equity
           need not be controlling and it is the spirit and intention of the Construction
           Industry Arbitration Commission that Arbitrators shall use every and all
           reasonable means to ascertain the facts in each case speedily and
           objectively and without regard to technicalities of law or procedure, all in
           the interest of substantive due process.

                                               ARTICLE II

                                   REQUEST FOR ARBITRATION

SECTION 1. Submission to Arbitration - Any party to a construction contract wishing to
           have recourse to arbitration by the Construction Industry Arbitration
           Commission (CIAC) shall submit its Request for Arbitration in sufficient
           copies to the Secretariat of the CIAC; PROVIDED, that in the case of
           government construction contracts, the claimant against the government
           shall state in the submission that he has exhausted all administrative
           remedies, or that there is unreasonable delay, on the part of the
           government office or officer to whom appeal is made, in acting upon the
           claim, or that, due to the application for interim relief, exhaustion of
           administrative remedies is not practicable.

SECTION 2. Contents of Request - The Request for Arbitration shall, inter alia, contain
           the following information:
                 a. Names in full, description, and addresses of the parties;

                 b. A statement of the claimant's case;

                 c. Copy of the construction contract in question;

                 d. The relevant agreements, and in particular the agreement to
                    arbitrate, and such documentation or information as will serve
                    clearly to establish the circumstances of the case.

SECTION 3. Notice to Respondent - The CIAC shall within three (3) days from filing
           transmit a copy of the Request of Arbitration and of the documents annexed
           to the Respondent for his Answer.

SECTION 4. Commencement of Arbitral Proceedings - The date when the Request for
           Adjudication is filed with the CIAC shall, for all intents and purposes, be
           deemed to be the date of commencement of the proceedings.

                                        ARTICLE III


SECTION 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. When a contract
           contains a clause for the submission of a future controversy to arbitration, it
           is not necessary for the parties to enter into a submission agreement before
           the claimant may invoke the jurisdiction of CIAC.

             An arbitration agreement or a submission to arbitration shall be in writing,
             but it need not be signed by the parties, as long as the intent is clear that the
             parties agree to submit a present or future controversy arising from a
             construction contract to arbitration.

             It may be in the form of exchange of letters sent by post or by telefax,
             telexes, telegrams or any other mode of communication.

SECTION 2. Failure or Refusal to Arbitrate - Where the jurisdiction of CIAC is properly
           invoked by the filing of a Request for Arbitration in accordance with these
           Rules, the failure or refusal of the respondent to arbitrate shall not affect the
           proceedings. In such case, CIAC shall appoint the sole arbitrator from
           among the list of accredited arbitrators, or if the arbitration clause provides
           for a panel of three (3) arbitrators, CIAC shall name the arbitrator for the
           respondent. Arbitration proceedings shall continue notwithstanding the
           absence or lack of participation of the respondent, and the award shall be
           made after receiving the evidence of the claimant. In the event that, before
           award, the respondent shall appear and offer to present his evidence, the
           arbitrator shall reopen the proceedings and allow the respondent to present
           his evidence, but evidence already received shall not be affected by the
           reopening of the proceedings.
                                       ARTICLE IV


SECTION 1. When Arbitration cannot Proceed - Where the contract between the parties
           did not provide for arbitration and the parties cannot agree to submit the
           dispute(s) to arbitration, the Claimant/s shall be informed that the
           arbitration cannot proceed.

SECTION 2. Non-Arbitrable Issues - Pursuant to Section 4 of Executive Order No. 1008,
           claims for moral damages, exemplary damages, opportunity/business
           losses in addition to liquidated damages, and attorney's fees are not
           arbitrable except when the parties acquiesce or mutually agree to submit
           the same for arbitration and to abide by the decision of the arbitrator

            Claims for unrealized expected profits (built-in in the contract price) and
            issues on rescission or termination of a contract, however, are arbitrable.

                                       ARTICLE V


SECTION 1. Number of Arbitrators - A sole Arbitrator or an Arbitral Tribunal of three
           Arbitrators may settle a dispute.

            The Commission shall appoint the arbitrator/s based on the mode of
            arbitration agreed upon by the parties as specified in the arbitration clause
            of the contract or in the agreement to arbitrate. In the absence of a
            stipulation thereon, the Commission, taking into consideration the
            complexities and intricacies of the dispute/s or the Sum in Dispute, has the
            option to appoint a Sole Arbitrator or an Arbitral Tribunal.

SECTION 2. Sole Arbitrator - Where the parties have agreed that the dispute(s) shall be
           settled by a Sole Arbitrator, each party shall have the right to nominate
           three arbitrators. If any or both of the parties fail to submit the names of
           their nominees within the period/s prescribed by the Commission, a sole
           arbitrator shall be appointed by the CIAC.

            If there is a common nominee, CIAC shall appoint him as Sole Arbitrator,
            provided he is not disqualified and has declared his availability. In the
            absence of a common nominee or in cases where the common nominee is
            disqualified or is not available, CIAC may appoint a Sole Arbitrator or an
            Arbitral Tribunal. If CIAC decides to appoint a Sole Arbitrator, it shall select
            the appointee who is not a nominee of one of the parties and who is not
            disqualified and is available for appointment.

SECTION 3. Arbitral Tribunal - Where the parties agree that the dispute shall be settled
           by an Arbitral Tribunal, each party shall have the right to nominate six
           arbitrators from the list of CIAC-accredited arbitrators. If there is no
           common nominee, the CIAC shall choose and appoint, as members of the
           Tribunal, one arbitrator from the claimant’s nominees and another
           arbitrator from respondent’s nominees. The Third Arbitrator shall be
           selected by the two Arbitrators first chosen within fifteen (15) days from
            acceptance of their appointment. The three arbitrators shall decide among
            themselves who will be the Chairman. In case of failure to agree on the third
            member within such period, the CIAC shall, within fifteen (15) days
            thereafter, appoint the third member from its list of accredited arbitrators.

            If there is a common nominee, the Commission shall appoint the common
            nominee and one from each list submitted by the parties. The three
            arbitrators appointed shall designate their Chairman. If there are two
            common nominees, the Commission shall appoint them and the third
            member who shall be selected by the first two appointees within the period
            prescribed above. If there are three common nominees, all of them shall be
            appointed. The appointees shall designate their Chairman.

SECTION 4. Disqualification of or Non-acceptance by Nominees - If the nominee(s) of a
           party shall be disqualified or fail or refuse to accept the appointment, CIAC
           shall choose and appoint any qualified arbitrator who is willing to be so

SECTION 5. Challenge - An Arbitrator may be challenged by a party at any time after his
           appointment but before award upon the ground of his partiality, bias,
           incompetence, or professional misconduct. A party may also request the
           inhibition of an arbitrator upon the same grounds.

            A motion for inhibition or a request for the disqualification and replacement
            of an arbitrator shall be treated as a challenge.

            The challenge, motion or request shall be in the form of a complaint under
            oath, stating distinctly and concisely the facts complained of, supported by
            affidavits, if any, of persons having personal knowledge of the facts therein
            alleged and shall be accompanied with copies of such documents as may
            substantiate said facts.

            The arbitrator concerned shall be given by CIAC an opportunity to be heard.
            He may, without admitting the existence of the ground of the challenge,
            motion or request, choose to inhibit himself but his decision shall be subject
            to approval by CIAC.

            In case the challenged arbitrator is allowed to inhibit himself or is removed,
            CIAC shall promptly appoint his replacement. If the arbitrator concerned is
            the third member of the Arbitral Tribunal, the first two members thereof
            shall select his replacement.

            The decision of the CIAC to retain or replace an arbitrator shall be final.

SECTION 6. When Arbitrator Previously Acted as Conciliator/ Mediator - An Arbitrator
           who acted as conciliator/mediator in a case previously brought before him
           for conciliation/mediation cannot act as arbitrator for the same case when
           brought to arbitration.

                                       ARTICLE VI

                                  THE ARBITRATORS
SECTION 1. General Qualification of Arbitrators - The Arbitrators shall be men of
           distinction in whom the business sector and the government can have
           confidence. They shall be technically qualified to resolve any construction
           dispute expediently and equitably. The Arbitrators shall come from different
           professions. They may include engineers, architects, construction
           managers, engineering consultants, businessmen familiar with the
           construction industry and lawyers who are experienced in construction

SECTION 2. The Arbitrators Must be CIAC-Accredited - The Sole Arbitrator or the
           members and Chairman of an Arbitral Tribunal originally appointed by CIAC
           for a dispute or their replacement shall come from the list of CIAC-
           accredited arbitrators.

SECTION 3. Arbitrators Not Permanent Employees of CIAC - The Arbitrators shall not be
           permanently employed by CIAC. They shall render service only when called
           upon to arbitrate a construction dispute.

SECTION 4. Arbitrators shall not be civilly liable for acts done in the performance of their
           official duties except as provided in Section 38 (1), Chapter 9, Book 1 of the
           Administrative Code of 1987, upon a clear showing of bad faith, malice or
           gross negligence.

                                       ARTICLE VII


SECTION 1. Communication of Appointments - After the CIAC (or the two members first
           chosen as the case may be) has selected the Arbitrator(s) for a particular
           case, the Secretariat shall communicate the appointment (or proposed
           appointment) to the Arbitrator(s).

SECTION 2. Disclosure by Arbitrator of Disqualification - Upon acceptance of
           appointment, the Arbitrator(s) shall disclose in writing to the CIAC any
           circumstance likely to create in either party a presumption of bias or which
           he believes might disqualify him as an impartial Arbitrator. Such written
           disclosure shall be communicated to the parties immediately by the
           Secretariat. The purpose of such disclosure shall be to enable either party
           to investigate and ascertain whether there is a substantial legal basis to file
           a motion for inhibition of the arbitrator concerned or seek his replacement.

SECTION 3. Acceptance or Refusal - The arbitrator must communicate to the
           Construction Industry Arbitration Commission (CIAC) the acceptance or
           refusal of his/her appointment within five (5) working days from receipt
           thereof. If no communication is received within the prescribed period, the
           Commission shall appoint a replacement from the list of the party who
           nominated him/her or, if none is available or qualified, from the list of CIAC-
           accredited arbitrators.

SECTION 4. Vacancies - If any Arbitrator should resign, be incapacitated, refuse or be
           unable, or be disqualified for any reason to perform the duties of his office,
           the CIAC shall, within five (5) working days from the occurrence of a
           vacancy or refusal/inability to accept appointment, appoint a substitute(s) to
           be chosen from a list of alternatives previously agreed upon by the parties.
            In the absence of such a list, the CIAC shall fill the vacancy from the list of
            accredited arbitrators.

                                       ARTICLE VIII

                               PRELIMINARY CONFERENCE

SECTION 1. Preliminary Conference - In any construction dispute, after the respondent
           has filed his Answer, the Arbitrator/Arbitral Tribunal shall set the case for
           preliminary conference and a notice to the parties thereof shall be sent at
           least five (5) days before the date set but not later than 15 days after
           appointment of arbitrator to consider the following:

                  1. possibility of amicable settlement;

                  2. necessity or desirability of amendments to pleadings;

                  3. possibility of obtaining stipulations or admission of facts and/or
                     documents to avoid unnecessary proof;

                  4. limitation of the number of witnesses;

                  5. simplification of the issues;

                  6. and such other matters as may aid in the just and speedy
                     disposition of the case

                                        ARTICLE IX

                                 TERMS OF REFERENCE

SECTION 1. Contents - Before proceeding with the hearing of the case, the Arbitrator(s)
           shall formulate the Terms of Reference (TOR) on the basis of the documents
           submitted and agreements reached in the preliminary and subsequent
           conferences with the parties. The TOR shall include the following

                  a) the full names of the parties and their personal circumstances;

                  b) the addresses of the parties to which notifications or
                     communications arising in the course of the arbitration may validly
                     be made;

                  c) a summary of the parties' respective claims;

                  d) definition of the issues to be determined;

                  e) the Arbitrators' full names, and addresses;

                  f)   the place of arbitration;

                  g) the breakdown, schedule of payment, and sharing of arbitration
                  h) such other particulars as may be required to make the arbitral
                     award enforceable in law, or may be regarded as helpful by the
                     CIAC or the Arbitrator(s).

SECTION 2. Signing of the Terms of Reference - The Terms of Reference mentioned in
           Section 1 hereof shall be signed by the parties and the Arbitrator(s), within
           fifteen (15) days from the preliminary conference or the last meeting held
           for the purpose of finalizing the TOR as the case may be. The same shall
           then be transmitted to the CIAC Secretariat within three (3) days after the

            Upon the Arbitrator's request, the Commission through the Secretariat may
            in exceptional circumstances, extend this time limit.

SECTION 3. Arbitration To Proceed Even Without the Terms Of Reference - Except in
           cases where arbitration cannot proceed pursuant to Sections 1 and 2 of
           Article IV of these Rules, arbitration shall proceed despite the absence of
           the Terms of Reference (TOR) due to the refusal of any of the parties to sign
           or for reasons other than the exceptions stated above. In the absence of a
           TOR, all of the issues and related matters in the pleadings filed by the
           parties and admitted by the Sole Arbitrator or the Arbitral Tribunal, as the
           case may be, shall be deemed submitted for resolution by the appointed

                                       ARTICLE X

                              ANSWER TO THE REQUEST

SECTION 1. Time to Answer - The Respondent shall, within fifteen (15) days from the
           receipt of the Request for Arbitration and of the documents referred to
           Section 2 of Article II, set out his defense in an Answer, and submit relevant
           documents. In exceptional circumstances, the Respondent may apply to the
           CIAC for an extension of time for the filing of his defense and his documents.
           If the Respondent fails to do so, the Commission shall proceed with the
           arbitration in accordance with these Rules.

SECTION 2. Transmittal of Answer - A copy of the Answer and the documents attached
           thereto, if any, shall be transmitted in sufficient copies to the Claimant and
           to the Commission.

                                      ARTICLE XI


SECTION 1. Statement of Counterclaim - If the Respondent wishes to make a
           counterclaim(s), the same shall be included in the Answer. In such case,
           Respondent shall be required, upon filing of the Answer with
           counterclaim(s), to pay a deposit of 10% of arbitrator's fees (based on the
           amount of counterclaim) or P 5,000 whichever is higher but not to exceed P
           50,000. Where the total amount of counterclaim(s) exceeds P 1 million,
           Respondent shall, upon filing of its Answer with counterclaim/s and in
           addition to deposit of arbitrator's fees, deposit an amount equivalent to 1/10
           of 1% of the amount of counterclaim. Such deposit shall be treated as
           Respondent's initial payment of its share of the special assessment fee of
            1/10 of 1% of the sum in dispute imposed under CIAC Resolution No. 2-96. If
            the counterclaim is a non-monetary one, the amount to be charged shall be
            in accordance with the approved Table of Fees for such claims.

SECTION 2. Reply to Counterclaim - The Claimant shall file a reply in sufficient copies
           with the Commission and shall furnish the Respondent a copy thereof within
           fifteen (15) days from date of receipt of the counterclaim.

                                      ARTICLE XII


SECTION 1. Number of Copies - All pleadings and written statements submitted by the
           parties, as well as all documents attached thereto, shall be in sufficient
           copies to provide one copy for each party, plus one for each Arbitrator, and
           one for the Secretariat.

SECTION 2. Notices - Notifications or communications from the Secretariat and/or the
           Arbitrator(s) shall be validly made if they are delivered against receipt or
           forwarded by registered mail to the address or last known address of the
           party/ies for whom the same are intended as notified by the party/ies in
           question or by the other party/ies as appropriate.

            Notification or communication shall be deemed to have been effected on the
            date when received.

SECTION 3. Confidentiality of Proceedings – The arbitration proceedings shall be
           considered confidential and shall not be published except (i) with the
           consent of the parties, or (ii) when necessary in case where resort to the
           Court is made under the Rules of Court. The term “arbitration proceedings”
           shall include communications to or from CIAC, the pleadings, applications
           and other papers filed with CIAC, sworn statements, documentary and
           testimonial evidence, reports and minutes taken of the proceedings, and
           other orders, decision, award or resolution issued by the Arbitrator(s).

                                      ARTICLE XIII

                           VENUE AND GENERAL MATTERS

SECTION 1. Venue, Date and Time of Hearing - The venue, date and time of the arbitral
           proceedings shall be mutually agreed upon by the parties and the
           Arbitrator(s) or an Arbitral Tribunal. In the event there is disagreement, the
           choice of the Arbitrator(s) shall prevail.

SECTION 2. Recording of Proceedings - Proceedings before an Arbitrator or an Arbitral
           Tribunal may be recorded by means of any audio and /or audio-visual
           recording equipment such as, but not limited to, tape recorders and video
           cameras, or if a stenographer is available, either through stenographic
             notes or minutes taken of the proceedings. All recordings on tapes, films,
             cassettes, disks, or diskettes shall be done by the CIAC and shall remain in
             its custody for safekeeping and eventual disposal after the resolution of the
             case. Copies of such recordings including transcripts and minutes of the
             proceedings shall be made available to the parties upon request for a
             nominal fee. The Sole Arbitrator or the Chairman of the Arbitral Tribunal, as
             the case may be, may opt to dispense with the use of recording devices or
             stenographic services and take down notes of the proceedings. Such notes
             taken shall be filed with the CIAC and shall be part of the records of the
             case. Copies of the notes filed shall be made available to the parties, upon
             request, at reproduction cost.

SECTION 3. Control Over Proceedings - The Arbitrator or the Chairman of the Arbitral
           Tribunal shall exercise complete control over all proceedings to insure a
           speedy, adequate and justifiable disposition of the disputes and cases
           submitted to them for resolution.

SECTION 4. Extent of Power of Arbitrator - The Arbitrator or the Arbitral Tribunal shall
           decide only such issues and related matters as are submitted to them for
           adjudication. They have no power to add, to subtract from, modify, or
           amend any of the terms of the contract or any supplementary agreement
           thereto, or any rule, regulation or policy promulgated by the CIAC.

SECTION 5. Appointment of Experts - The service of technical or legal experts may be
           utilized in the settlement of disputes if requested by any of the parties or by
           the Arbitral Tribunal. If the request for an expert is done by either or by both
           of the parties, it is necessary that the appointment of the expert be
           confirmed by the Arbitral Tribunal.

             Whenever the parties request for the services of an expert, they shall
             equally shoulder the expert's fees and expenses, half of which shall be
             deposited with the Secretariat before the expert renders service. When only
             one party makes the request, it shall deposit the whole amount required. If
             the request for an expert is by the Arbitrator(s), the cost of such service(s)
             shall be considered part of the arbitration expenses which may be ordered
             to be paid by the losing party or by both parties as the arbitrator(s) in
             his/their award may adjudge, in the absence of a provision in the Terms of
             Reference signed by the parties relative to the sharing of these expenses;
             provided, however, both parties consented to the hiring of an expert.

SECTION 6. Interpretation and Application of Rules - The Sole Arbitrator or the Arbitral
           Tribunal shall interpret and apply these Rules in so far as they relate to
           his/its powers and duties. Where there is an Arbitral Tribunal, and a
           difference arises among the Arbitrators concerning the meaning or
           application of these Rules, the same shall be decided by a majority vote.

SECTION 7. Attendance of Hearings - Persons having direct interest in the arbitration
           are entitled to attend the hearings. It shall be discretionary upon the
           Arbitrator/Arbitral Tribunal to determine the propriety of the attendance of
           any other person. The Arbitrator/Arbitral Tribunal shall have the power to
           require the exclusion of any witness.
SECTION 8. Adjournments - The Arbitrator/Arbitral Tribunal for good cause shown, may
           adjourn the hearing upon his/its own initiative or upon the request of one of
           the parties. Adjournment shall not be more than five (5) working days.

            Hearings may be adjourned for more than five (5) working days when such
            have been suspended due to payment defaults of any or both of the parties.
            The Arbitrator(s) shall order the suspension of hearings upon advice by the
            CIAC of non-payment of arbitration fees by one or both parties. Hearings
            shall resume upon notice by CIAC of compliance by the defaulting party/ies.

SECTION 9. Arbitration in the Absence of the Party - The Arbitration may proceed
           despite the absence of any party who after due notice, fails to be present or
           fails to obtain an adjournment. An award, however, shall not be made solely
           on the default of a party. It shall be made on the basis of evidence submitted
           and proven.

SECTION 10. Waiver of Rules - Any party who proceeds with the arbitration after
            knowledge that any provision or requirement of these Rules has not been
            complied with and fails to state his objection thereto in writing, shall be
            deemed to have waived his right to object.

SECTION 11. Expenses and Deposit - Arbitration expenses shall include the filing fee;
            administrative charges, arbitrator's fees, fee and expenses of the expert,
            and others which may be imposed by the CIAC.

              The administrative charges and arbitrator's fees shall be in accordance
              with the Table of Administrative Charges and Arbitrator's Fees.

              The CIAC Secretariat shall charge the Claimant an initial filing fee of P
              3,000 plus a deposit equivalent to 10% of expected arbitrator(s)' fees
              (based on the claim) or P 5,000 whichever is higher but not to exceed P
              50,000 upon filing of the claim. If the total amount of claim exceeds P 1
              million, Claimant shall, upon filing and in addition to the above fees,
              deposit an amount equivalent to 1/10 of 1% of the amount claimed. Such
              deposit shall be treated as Claimant's initial payment of its share of the
              special assessment fee of 1/10 of 1% of the sum in dispute imposed under
              CIAC Resolution No. 2-96, as amended by CIAC Resolution Nos. 7-98 and
              5-99 Where the case is a non-monetary claim, the fees and deposit to be
              charged shall be in accordance with the approved Table of Fees for such

              The CIAC may fix the Arbitrator(s)' fees at a figure higher or lower than
              that which would result from the application of the Table of Fees if in the
              exceptional circumstances of the case, the same appears to be

SECTION 12. Freedom to Settle - The parties shall be free to settle the dispute(s)
            anytime even if the same is under arbitration. In such case, the actual
            expenses incurred for arbitration shall be charged against the deposit. If
            the deposit is insufficient, the parties shall equally shoulder the balance.

              The parties may either jointly withdraw or submit their compromise
              agreement to the Commission for the rendition of an award by the
              arbitrator/s, if the arbitrator(s) have already been appointed. Where the
              arbitrators have been appointed and proceedings have commenced, the
              arbitration fees to be charged the parties shall be in accordance with the
              stage of proceedings.

SECTION 13. Small Claims - Cases where the sum in dispute is P 1 million or less may,
            upon request of either party, be categorized by CIAC as a small claim for
            purposes of qualifying for assistance under the Arbitration Development
            Fund established by CIAC in Resolution No. 2-96, as amended by CIAC
            Resolution Nos. 7-98, 5-99 and 02-2000.

              A case categorized as a small claim shall be handled by a Sole Arbitrator
              who shall be appointed by CIAC from among its accredited arbitrators
              residing nearest to the venue of hearings or to the place of residence of
              the party based outside of Metro Manila. The expenses of the Sole
              Arbitrator and CIAC staff consisting of actual expenses for travel,
              accommodations, and administrative costs for at most one (1) day
              incurred for hearings outside of Metro Manila, shall be charged against
              the CIAC Arbitration Development Fund. Expenses for hearings exceeding
              one (1) day, however, shall be shouldered equally by the parties.

              Administrative expenses and arbitrator's fees for cases falling under this
              category shall be charged against the CIAC Arbitration Development
              Fund. Mediation or conciliation fees prior to arbitration, shall also be
              charged against said fund. A minimal filing fee, however, of 1% of the
              claim shall be charged the Claimant. Small claims shall be handled only by
              a sole arbitrator or mediator whose fees shall be at a fixed rate of 3% of
              the claim but not less than P10,000.

                                      ARTICLE XIV

                             ARBITRATION PROCEEDINGS

SECTION 1. Order of Proceedings - A hearing shall be opened by recording of the place,
           time and date of hearing, the presence of the Arbitrator(s), parties, and
           witnesses, if any. The names and addresses of all witnesses and exhibits in
           the order received shall be made part of the record.

                  SECTION 1.1 Quorum - Two members of a tribunal shall comprise a
                              quorum for the purpose of conducting a hearing.

SECTION 2. Briefing on Rules and Procedures - At the initial hearing, the
           Arbitrator/Arbitral Tribunal shall inform the parties of the general rules and
           procedures that will be adopted to insure a speedy and adequate
           disposition of the issues.

SECTION 3. Opening Statements - The initial proceedings may start with the parties
           making an opening statement or its explanation of the issues, a brief
           statement of allegations, what it proposes to prove and the relief sought.

SECTION 4. Clarification of the Issues - After the opening statements, the
           Arbitrator/Arbitral Tribunal shall clarify and further redefine the issues, if
SECTION 5. Order of Presentation - It shall be within the discretion of the
           Arbitrator/Arbitral Tribunal to determine the order of presentation.
           Generally, the party whose action has given rise to the dispute, or the party
           who seeks to enforce a right or establish a claim shall be required to
           present its evidence first, followed by the other party.

SECTION 6. Expeditious Procedures - The Arbitrator/Arbitral Tribunal shall at all times
           adopt the most expeditious procedures for the introduction and reception of
           evidences, and shall have complete control over the proceedings, but in any
           case shall afford full and equal opportunity to all parties to present relevant

SECTION 7. Evidence - The parties may offer such evidence they desire and shall
           produce such additional documents and witnesses as the Arbitrator/Arbitral
           Tribunal may deem necessary to an understanding and determination of the
           dispute(s). The Arbitrator/Arbitral Tribunal shall 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. All evidences shall
           be taken in the presence of the Arbitrator or a majority of the Arbitrators in
           an Arbitral Tribunal and all of the parties, except where any of the parties is
           absent, or has waived his right to be present.

             Upon motion of either or both of the parties, or on its own initiative, the
             Arbitrator/Arbitral Tribunal may request any person, board, body, tribunal,
             or government office, agency or instrumentality, or corporation to produce
             real or documentary evidences necessary for the proper adjudication of the

             The Arbitrator/Arbitral Tribunal may, likewise, request any person to give
             testimony at any proceedings for arbitration.

SECTION 8. Presentation of Evidence - Unless the parties shall agree upon a different
           mode of presentation of evidence, the Arbitrator/Arbitral Tribunal may
           require the simultaneous or successive submission of affidavits of
           witnesses which contain both direct and rebuttal testimony, attached to
           which shall be the documents which they shall identify to support their
           respective declarations. These documents shall be properly marked for
           purposes of identification.

SECTION 9.     Examination by Arbitrator/Arbitral Tribunal - The Arbitrator/Arbitral
               Tribunal may conduct the direct and cross- examination of such witnesses
               whether or not the parties are represented by counsel. Such counsel at
               his request may be allowed to ask additional direct or cross-examination
               questions of any witness.

SECTION 10. Documentary Evidence - As a general rule, no documentary evidence(s)
            presented and offered shall be rejected unless the same is found by the
            Arbitrator/Arbitral Tribunal to be completely irrelevant.

SECTION 11. Offer of Documents - All documents not offered with the Arbitrator/Arbitral
            Tribunal at the hearing but which are arranged at the hearing
            subsequently by agreement of the parties to be submitted, shall be filed
            within five (5) days from the termination of the hearing. All parties shall be
            afforded opportunity to examine such documents.
SECTION 12. Ocular Inspection - The Arbitrator/Arbitral Tribunal may at any time during
            working hours, after notice to the parties who may, if they so desire, be
            present, conduct an ocular inspection of any building, place or premises,
            including any work, material, implement, machinery, appliance or any
            object therein, and ask any employee or laborer, or other person, as the
            case may be, for any information or data concerning any matter, or
            questions relative to the object of the investigation.

SECTION 13. Interim Measures - In the course of the proceedings, the Arbitrator(s)
            may, upon the request of either of both parties or upon his/their own
            initiative, issue orders as is necessary for the following :

                  a. to ensure the enforcement of the award;

                  b. to prevent loss or deterioration of property;

                  c. to minimize or avoid undue delays in project or contract
                     implementation; or

                  d. such other measures deemed by the Arbitrator(s) to be necessary
                     to prevent a miscarriage of justice or abuse of rights of any of the

SECTION 14. Closing of the Hearings - The Arbitrator/Arbitral Tribunal shall inquire
            from all parties whether they have any further proofs to offer or witnesses
            to be heard. Upon receiving negative replies, the Arbitrator/Arbitral
            Tribunal shall declare the hearing closed and the minutes thereof shall be

SECTION 15. Reopening of Hearing - The hearing may be reopened by the Arbitrators
            on their own motion or upon the request of any party, upon good cause
            shown, at any time before the award is rendered. When hearings are thus
            reopened, the effective date for the closing of the hearing shall be the
            date of closing of the reopened hearing.

SECTION 16. Summation - The parties may make a brief oral summation and arguments
            at the end of the hearing.

SECTION 17. Submission of Memoranda - If any or both of the parties so desire, written
            memoranda may be submitted within five (5) working days from the
            termination of the hearing or from the date of the filing of additional
            documents as previously agreed upon, whichever is later.

              If both parties agree to submit memoranda, the filing shall be

SECTION 18. Award or Decision on the Pleadings - Instead of a formal hearing, the
            parties may agree to submit the issues for resolution after the filing of
            pleadings, documents, evidences, or memoranda.

SECTION 19. Period to Make Award - The number of days within which an award shall
            be made will start from the date of the termination of the hearing, or from
            the filing of additional documents, or from the submission date of
            memoranda, pleadings, documents or evidences whichever is later.
                                       ARTICLE XV

                               THE ARBITRATION AWARD

SECTION 1. Time of Award - The award shall be rendered promptly by the Arbitrator(s)
           within thirty (30) days from the time the case is submitted for resolution but
           not more than six (6) months from the date of signing of the TOR, or in cases
           where a TOR is absent, not more than six (6) months from the date of the
           last preliminary conference called for the purpose of finalizing and/or
           signing of the TOR. There shall be no extensions of time unless approved by
           the CIAC.

SECTION 2. Form of Award - The Award shall be in writing and signed by the
           Arbitrator(s). If there is an Arbitral Tribunal, each Arbitrator must indicate
           his/her concurrence or dissent, and the decision of the majority shall

SECTION 3. Contents of the Award - Generally, the Award shall contain the issues
           involved, a brief statement and discussion of the facts, and the authority
           relied upon for the resolution or disposition of the issues.

SECTION 4. Award Upon Settlement - If the parties settle their dispute(s) during the
           course of the arbitration, the Arbitrator/Arbitral Tribunal, upon their
           request, may set forth the agreed settlement as an Award.

SECTION 5. Decision as to Costs 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 costs of the 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 of

SECTION 6. Termination of Jurisdiction - The jurisdiction of the Arbitrator(s) over the
           dispute is terminated upon the finality of the Award or Decision. Where an
           appeal is taken from a decision or award, and the appellate court directs a
           re-hearing or a hearing on the merits on any issue arising in the case,
           jurisdiction terminates only upon a final disposition of the case by the
           appellate court and/or a final determination of all incidental matters thereto.

SECTION 7. Notification of Award to Parties - Once an award has been made, provided
           that the costs of the arbitration have been fully paid to the Secretariat by the
           parties or by one of them, the Secretariat shall notify the parties of the text
           signed by the Arbitrator or Arbitral Tribunal.

             Additional copies certified true by the Executive Director of the Secretariat
             shall be made available, on request and at any time, to the parties or their
             counsel but to no one else.

SECTION 8. Deposit of Award - An original of each Award made in accordance with
           these Rules shall be deposited with the Secretariat.

             The Arbitrators and the Secretariat shall assist the parties in complying with
             whatever further formalities may be necessary.
SECTION 9. Motion for Correction of Award - Any of the parties may file a motion for
           correction of the award within fifteen (15) days from receipt thereof upon
           any of the following grounds:

                  (i) an evident miscalculation      of   figures,   a   typographical   or
                      arithmetical error

                  (ii) an evident mistake in the description of any party, person, date,
                       amount, thing or property referred to in the award.

             The filing of the motion for correction shall interrupt the running of the
             period for appeal.

             A Motion for Reconsideration or for correction upon grounds other than
             those mentioned in this section shall not interrupt the running of the period
             for appeal.

                                      ARTICLE XVI

                             EXECUTION OF FINAL AWARD

SECTION 1.    Execution of Award. A final arbitral award shall become executory upon
              the lapse of fifteen (15) days from receipt thereof by the parties.

SECTION 2.    Appeal. An appeal from a final award may be taken by any of the parties
              before the same becomes executory or within the period and in the
              manner provided by the Supreme Court.

SECTION 3.    Entry of Judgment. If a final award is appealed and a stay or restraining
              order is issued by the appellate court, such award shall become
              executory upon the issuance of the entry of judgment of the appellate
              court or upon the vacation of the stay or restraining order without a
              preliminary injunction being issued.

SECTION 4.    Effect of Appeal. The appeal shall not stay the execution of an award
              sought to be reviewed unless the Court of Appeals shall direct otherwise
              upon such terms as it may deem just.

SECTION 5.    Execution and Enforcement of Awards. As soon as a decision, order or
              award has become final and executory, the Arbitral Tribunal or Sole
              Arbitrator shall, with the concurrence or the CIAC, motu propio or on
              motion of the prevailing party issue a writ of execution requiring any
              sheriff or proper officer to execute said decision, order or award.

SECTION 6.    Execution After Appeal. When a writ of execution is issued after appeal
              interposed in accordance with these Rules, the Arbitral Tribunal or Sole
              Arbitrator, with the concurrence of the CIAC, may require the prevailing
              party to post a sufficient bond executed to the adverse party in an amount
              equivalent to the amount of the award, conditioned upon restitution in
              case the award is reversed partially or totally.

SECTION 7.    Stay of Execution Pending Appeal. Execution issued under the preceding
              Section may be stayed upon approval by the Arbitral Tribunal or Sole
                   Arbitrator, with the concurrence of the CIAC, of a bond or counter-bond
                   posted by the party against whom it is directed, conditioned upon the
                   performance of the judgment of the appellate court in case it upholds the
                   appealed award in whole or in part.

SECTION 8.         Effect of Reversal of Award. Where an award is partially or totally
                   reversed on appeal, the Arbitral Tribunal or Sole Arbitrator may, on
                   proper motion, issue such order of restitution or reparation of damages as
                   equity and justice may warrant under the circumstances.

                                                ARTICLE XVII

                                              GENERAL RULE

In all matters not expressly provided for in these rules, the CIAC and the Arbitrators shall
act in the spirit of these rules and shall make every effort to make sure that the award is
enforceable at law.

*        Under the Revised Supreme Court Circular 1-95/1997 Rules of Civil Procedures, CIAC decision may be
appealed on both questions of facts and law.

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