CIAC Resolution No. 07-2013

(NAR) VOL. 24 NO. 4 / OCTOBER - DECEMBER 2013

[ CIAC RESOLUTION NO. 07-2013, August 23, 2013 ]

ADJUSTING CIAC FEES AND CHARGES AND REVISING THE CIAC TABLES OF ARBITRATION AND MEDIATION FEES

WHEREAS, Section 13 of Executive Order No. 1008, the Construction Industry Arbitration Law, empowers the Commission “to determine and collect fees, deposits, costs of arbitration, as well as administrative and other charges as may be necessary in the performance of its functions and responsibilities” and “to use its receipts and deposits of funds to finance its operations subject to the approval of the Philippine Domestic Construction Board (PDCB), the provision of any law to the contrary notwithstanding”;

WHEREAS, pursuant to its power and authority under the law, the Commission, in th its 8 Regular Meeting held on 25 August 1989, approved the first CIAC Table of Fees for arbitration cases involving monetary claims consisting of filing fees, administrative fees, and arbitrator’s/mediator’s fees. In its 23rd Regular Meeting held on 14 July 1993, arbitration fees for non-monetary claims were approved by the th Commission. The Commission, in its 37 Regular Meeting held on 28 May 1996, likewise, imposed a special assessment fee of 1/10 of 1% of the sum in dispute of cases involving claims above P1 million, to be deposited in the Arbitration Development Fund (ADF) established by the Commission to finance its Small Claims Assistance Program and to help defray the required capital outlay and expenses of the CIAC relative to the development of arbitration and other alternative dispute resolution (ADR) schemes for construction disputes nationwide;

WHEREAS, in response to the directive for an increase in government rates and charges under Executive Order No. 197 dated 13 January 2000, the Commission, in its Special Meeting held on 13 February 2001, approved the mandated minimum increase of 20% in filing fees and administrative charges under the CIAC Table of Fees. Arbitrator’s fees and the ADF special assessment fees, however, remained the same;

WHEREAS, in line with its adoption of the new Mediation Rules during the CIAC Special Meeting held on 19 November 2005, the Commission approved the Table of Mediation Fees which, in effect, superseded the old schedule of fees for mediation;

WHEREAS, it has been twelve years since the filing & administrative fees for CIAC arbitration cases were increased, and almost eight years since the fees for mediation were adjusted to 50% of the base amounts for arbitrator’s fees. The rates for arbitrators’ fees and ADF fees, on the other hand, have not been changed for the past 24 and 17 years, respectively;WHEREAS, for the last five (5) years, the country’s inflation rates for all items have increased at an average of 4.82% per year;

WHEREAS, while the funding requirements of the CIAC from 2010 (P6,137,574.00) to the present (P9,336,404.82.00) have increased at an annual average of 13%, the administrative fees and ADF charges earned from cases resolved/settled/ dismissed/withdrawn have declined at an annual rate of 23.58% from 2010 to 2012;

WHEREAS, budgetary appropriations for the period 2010 (P2,801,523.00) to 2013 (P6,671,254.00) have been insufficient to cover CIAC funding requirements resulting in an average yearly deficit of 44.56% of the cost of CIAC services;

WHEREAS, to cover the deficits in the CIAC budget, supplemental funding from CIAC collections of administrative fees and ADF charges have been tapped to defray direct costs, overhead expenses, and other incidental charges incurred by the CIAC in rendering its services;

WHEREAS, to ensure that its fees and charges would adequately cover the budgetary shortfalls of the CIAC, thus helping in the recovery of the costs of its services and contributing to the sustainability of effective CIAC operations, upward adjustments in the fees and charges imposed by the Commission are necessary; th

WHEREAS, to address this need, the Commission, in its 150 Regular Meeting held on 1 February 2013, approved the following increases in the base amounts of arbitration fees for monetary claims recommended by the Philippine Institute of Construction Arbitrators & Mediators, Inc. (PICAM), subject to the parameters for just and reasonable rates to be prescribed under the Implementing Rules and Regulations (IRR) of Administrative Order No. 31, Series of 2012, directing the rationalization of government fees & charges:

1) Filing Fees - 20% (applying the minimum increase prescribed under E.O. 197 dated 13 January 2000) 2) Administrative Fees70% (based on the amount of administrative expenses charged to - the ADF from 2009 to 2011) 3) Arbitrators’ Fees 70% (based on a comparison of CIAC Fees with that of other arbitral institutions such as the Phil. Dispute Resolution Center, Inc. or PDRCI which fees are more than 100% higher than the CIAC fees);

WHEREAS, in response to the request of the Commission for its recommendations on non-monetary claims, mediation cases, and ADF charges, the PICAM also proposed the following increases/adjustments:

1) ADF charges - 1/10 of 1.5% of the Sum in Dispute (based on a yearly average shortfall of 51.70% in ADF collections from 2009 to 2011 as against expenses charged) 2) Arbitration Fees for non-monetary claims - same as increases in base amounts for monetary claims (Filing: 20%; Administrative Fee: 70%; and Arbitrators’ Fees: 70%) 3) Mediation 70% of base amounts (same as rates of increase for arbitration fees for Fees - uniformity);WHEREAS, the 70% increase in administrative & arbitrator’s fees recommended by PICAM, in effect, translates to an annual rate of increase of 5.4% for administrative fees since the last adjustment in 2000, and only 2.9% for arbitrator’s fees since the approval of the original fees in 1989. These are well within the range of inflationary increases in the last five (5) years;

WHEREAS, the Commission believes that the recommended adjustments/ increases are just and reasonable taking into consideration the cost of the services rendered by CIAC; inflation over the period of years since the last approval/revision of the fees; uniformity in the imposition of the new rates; and the costs of comparable services rendered by similar institutions.

NOW, THEREFORE, THE COMMISSION, by virtue of the powers vested in it th by law and after due deliberation in its 155 Regular Meeting held on 23 August 2013, RESOLVED, as it is hereby RESOLVED, to adjust the CIAC arbitration and mediation fees as recommended, and to revise the following pertinent portions of the CIAC Table of Arbitration Fees and Table of Mediation Fees accordingly: CIAC TABLE OF ARBITRATION FEES A. For Monetary Claims

I. SCHEDULE OF FILING AND ADMINISTRATIVE FEES [1] ADMINISTRATIVE SUM IN DISPUTE

[2] FILING FEE (M=Million) FEE [3] Less than P100,000.00 P4,320.00 P10,200.00 P100,000.00 to P1.0M P4,320.00 + 0.36% of P10,200.00 + 0.24% of excess over P100,000 excess over P100,000 P1.0M to P10.0M P8,208.00 + 0.12% of P13,800.00 + 0.12% of excess over P1.0M excess over P1.0M P10.0M to P50.0M P21,168.00 + 0.06% of P32,200.00 + 0.06% of excess of P10.0M excess over P10.0M More than P50.0M P49,968.00 + 0.03% of P73,000.00 + 0.03% of excess of P50.0M excess over P50.0M [1] See Rules for computing the Sum in Dispute attached as Annex “A” and made an integral part of CIAC Resolution No. 07-2013 [2] 20% increase in the base amounts approved in the CIAC Special Meeting held on 13 February 2001 [3] 70% increase in the base amounts approved in the CIAC Special Meeting held on 13 February 2001 Note: Pursuant to CIAC Res. No. 02-1996 (dtd. May 28, 1996), a special assessment fee for the establishment of the Arbitration Development Fund (ADF), equivalent to 1/10 of 1.5% of the Sum in Dispute (SID), as amended by CIAC Resolution No. 07-2013, shall be imposed on cases with SID over P1.0 Million.II. ARBITRATOR’S FEES (The Honoraria of the arbitrators shall consist of a Base Amount plus Adjustments to reflect complexity of the case, number of disputants and number of arbitrators 1. SUM IN DISPUTE BASE AMOUNT (for arbitrator’s fees) (SID) < P 1 Million 3% of SID but not < P17,000 or as may be prescribed by CIAC** Over 1M – 5.0M P 34,000.00 + 1.00% in excess of P1.0M Over P5M - P10.0M P 102,000.00 + 0.75% in excess of 5.0M Over P10M - P20.0M P 165,750.00 + 0.50% in excess of P10.0M Over P20M - P50.0M P 250,750.00 + 0.20% in excess of P20.0M Over P50M - P100.0M P 352,750.00 + 0.10% in excess of P50.0M Over P100M - P500.0M P 437,750.00 + 0.05% in excess of P100.0M*** Over P500M – P1 Billion P 777,750.00 + 0.035% in excess of P500.0M*** Above 1 Billion P1,075,280.00 + 0.025% in excess of P1 Billion*** *70% increase in the base amounts approved in the 8th CIAC Regular Meeting held on 25 August 1989 **70% increase in minimum amount for Arbitrator’s Fee of P10,000 for small claims per Rule 20.1.1, CIAC Rules (revised December 2005) ***70% increase in base amounts prescribed under CIAC Resolution No. 05-2009 (Approving Additional Ranges & Base Amounts for Arbitrator’s Fees) B. For Non-Monetary Claims ARBITRATION FEES FOR NON-MONETARY CLAIMS B.1 PURELY NON-MONETARY SCHEDULE OF PAYMENTS* AWARD INVOLVED - 100% upon filing of the Request for Arbitration based on estimated 1. Filing Fee total arbitrators’ fees for 3 sessions P4,320.00 plus 9.0% of of 3 hours per session arbitrators’ fees (20% increase in the base amount approved on 13 - Before the final hearing, balance of February 2001) the filing fee based on actual total arbitrators’ fees - 100% upon filing of the Request 2. Administrative Fees for Arbitration based on estimated P10,200 plus 6.0% of total total arbitrators’ fees for 3 sessions Arbitrators’ Fees (70% increase of 3 hours per session in the base amount approved on - Before the final hearing, balance of 13 February 2001) administrative fees based on actual total arbitrators’ fees 3. Arbitrator’s Fees(70% increase in the amounts approved on 25 August 1989) P17,000.00 upon filing of the 3.1 Acceptance Fee Request for Arbitration 3.2 Fees per session For a Tribunal: - Upon signing of the TOR, 50% of the estimated arbitrators’ fees Chairman: - Before the final hearing, balance of • Minimum of P7,650.00 per arbitrator’s fees based on actual session of 3 hours or less plus number of sessions P2,550.00 in excess of 3 hours Members • Minimum of P5,100.00 per session of 3 hours or less plus P1,700.00 per hour in excess of 3 hours - Before the final hearing For Sole Arbitrator: *Amended by CIAC Resolution No.

• Minimum of P12,750.00 per 09- 2012 (Effective 5 July 2012) session of 3 hours or less plus P4,250.00 per hour in excess of 3 hours 3.3Award Drafting P17,000.00 B.2. FOR NON-MONETARY CLAIMS BUT WITH MONETARY AWARD INVOLVED Fess will be based on the schedule of monetary claims TABLE OF MEDIATION FEES I. From Filing to Formulation of Settlement Agreement A. Mediation Fees (Filing, Administrative and Mediator’s Fees) SUM IN DISPUTE MEDIATION FEE* 1st Php 1M ---- 1.7% of the SID Next 4M 5M 17,000 + 0.50% in excess of 1M Next 5M 10M 68,000 + 0.375% in excess of 5M 110,500 + 0.25% in excess of Next 10M 20M 10M 153,000 + 0.10% in excess of Next 20M 50M 20M204,000 + 0.05% in excess of Next 50M 100M 50M 246,500 + 0.25% in excess of Above 100M ---- 100M B. 10% Filing 30% 60% Mediator’s Breakdown: Fee Administrative Fee Fee C. Payment • Full Filing and Administrative Fees upon Schedule**: filing of Request for Mediation • Mediator’s Fee - 50% upon filing of Request for Mediation - 50% upon Appointment of Mediator *70% increase in the base amounts approved on 19 November 2005 **Pursuant to CIAC Resolution No. 09-2012 (effective 5 July 2012) This resolution shall take effect fifteen (15) days from receipt of certified true copies thereof by the Office of the National Administrative Register, University of the Philippines Law Center.

UNANIMOUSLY APPROVED. THE COMMISSION:

(SGD) MANUEL M. COSICO Chairman (SGD) EMILIO LOLITO J.

(SGD) ANTONIO A. ABOLA TUMBOCON Member Member Annex A RULES FOR COMPUTING THE SUM IN DISPUTE (SID) 1. Where there are only two parties to arbitration or mediation: 1.1total claims made by Claimant added to all the counterclaims made by Respondent that is not directly related to the claims (permissive counterclaims) shall constitute the sum in dispute (SID); 1.2Compulsory counterclaims, or those directly related to the claims shall be treated only as defenses and not be added to the claims to compute the SID;

2. Where two Respondents are sued by Claimant and a cross-claim is made by Respondent 1 against Respondent 2:2.1amount of a cross-claim that seeks only to pass on the liability of Respondent 1 to Respondent 2, shall not be added to the computation of the SID; 2.2amount sought by Respondent 1 against Respondent 2 that is based on a different cause of action, shall be added to compute the SID; 2.3amount sought by Respondent 2 against Respondent 1 that is not merely intended to defeat the cross-claim but seeks the award of amounts based on a different cause of action, shall be added to compute the SID.