Republic of the Philippines
Supreme Court
Manila
|
WILLIAM GOLANGCO CONSTRUCTION CORPORATION, Petitioner,
- versus – RAY
BURTON DEVELOPMENT CORPORATION, Respondent. |
G.R. No.
163582 Present:
CARPIO, J., Chairperson, NACHURA, PERALTA ABAD, and MENDOZA, JJ. Promulgated: August 9, 2010 |
x----------------------------------------------------------------------------------------x
D E C I S I O N
PERALTA, J.:
This resolves
the Petition for Review on Certiorari under Rule 45 of the Rules of
Court, praying that the Decision[1] of
the Court of Appeals (CA) dated December 19, 2003, holding that the
Construction Industry Arbitration Commission (CIAC) had no jurisdiction over
the dispute between herein parties, and the CA Resolution[2] dated May 24, 2004, denying herein
petitioner's motion for reconsideration, be reversed and set aside.
The undisputed
facts, as accurately narrated in the CA Decision, are as follows.
On July 20, 1995, petitioner Ray Burton Development
Corporation [herein respondent] (RBDC for brevity) and private respondent
William Golangco Construction Corporation [herein petitioner] (WGCC) entered
into a Contract for the construction of the Elizabeth Place (Office/Residential
Condominium).
On March 18, 2002, private
respondent WGCC filed a complaint with a request for arbitration with the
Construction Industry Arbitration Commission (hereinafter referred to as
CIAC). In its complaint, private
respondent prayed that CIAC render judgment ordering petitioner to pay private
respondent the amount of, to wit:
1.
P24,703,132.44 for the unpaid
balance on the contract price;
2.
P10,602,670.25 for the unpaid
balance on the labor cost adjustment;
3.
P9,264,503.70 for the unpaid
balance of additive works;
4.
P2,865,615.10 for extended
overhead expenses;
5.
P1,395,364.01 for materials
cost adjustment and trade contractors' utilities expenses;
6.
P4,835,933.95 for interest
charges on unpaid overdue billings on labor cost adjustment and change orders.
or
for a total of Fifty Three Million Six Hundred Sixty-Seven Thousand Two Hundred
Nineteen and 45/xx (P53,667,219.45) and interest charges based on the
prevailing bank rates on the foregoing amount from March 1, 2002 and until such
time as the same shall be fully paid.
On April 12, 2002, petitioner RBDC
filed a Motion to Dismiss the aforesaid complaint on the ground of lack of
jurisdiction. It is petitioner's
contention that the CIAC acquires jurisdiction over disputes arising from or
connected with construction contracts only when the parties to the contract
agree to submit the same to voluntary arbitration. In the contract between petitioner and
private respondent, petitioner claimed that only disputes by reason of
differences in interpretation of the contract documents shall be deemed subject
to arbitration.
Private respondent filed a Comment
and Opposition to the aforesaid Motion dated April 15, 2002. Private respondent averred that the claims
set forth in the complaint require contract interpretation and are thus
cognizable by the CIAC pursuant to the arbitration clause in the construction
contract between the parties. Moreover,
even assuming that the claims do not involve differing contract interpretation,
they are still cognizable by the CIAC as the arbitration clause mandates their
direct filing therewith.
On May 6, 2002, the CIAC rendered an
Order the pertinent portion of which reads as follows:
The Commission has taken note of the
foregoing arguments of the parties.
After due deliberations, the Commission resolved to DENY Respondent's
motion on the following grounds:
[1]
Clause 17.2 of Art. XVII of the Contract Agreement explicitly provides
that “any dispute” arising under the construction contract shall be submitted
to “the Construction Arbitration Authority created by the Government.” Even without this provision, the bare
agreement to submit a construction dispute to arbitration vests in the
Commission original and exclusive jurisdiction by virtue of Sec. 4 of Executive
Order No. 1008, whether or not a dispute involves a collection of sum of money
or contract interpretation as long as the same arises from, or in connection
with, contracts entered into by the parties involved. The Supreme Court jurisprudence on Tesco vs.
Vera case referred to by respondent is no longer controlling as the same was
based on the old provision of Article III, Sec. 1 of the CIAC Rules which has
long been amended.
[2] The issue raised by Respondent in
its Motion to Dismiss is similar to the issue set forth in CA-G.R. Sp. No.
67367, Continental Cement Corporation vs. CIAC and EEI Corporation, where the
appellate court upheld the ruling of the CIAC thereon that since the parties
agreed to submit to arbitration any dispute, the same does not exclude disputes
relating to claims for payment in as much as the said dispute originates from
execution of the works. As such, the
subject dispute falls within the original and exclusive jurisdiction of the
CIAC.
WHEREFORE, in view of the
foregoing, Respondent's Motion to Dismiss is DENIED for lack of
merit. Respondent is given anew an
inextendible period of ten (10) days from receipt hereof within which to file
its Answer and nominees for the Arbitral Tribunal. If Respondent shall fail to comply within the
prescribed period, the Commission shall proceed with arbitration in accordance
with its Rules. x x x
Thereafter, petitioner filed a
Motion to Suspend Proceedings praying that the CIAC order a suspension of the
proceedings in Case No. 13-2002 until the resolution of the negotiations
between the parties, and consequently, that the period to file an Answer be
held in abeyance.
Private respondent filed an
Opposition to the aforesaid Motion and a Counter-Motion to Declare respondent
to Have Refused to Arbitrate and to Proceed with Arbitration Ex Parte.
On May 24, 2002 the CIAC issued an
Order, the pertinent portion of which reads:
In view of the foregoing, Respondent's (petitioner's) Motion
to Suspend Proceedings is DENIED.
Accordingly, respondent is hereby given a non-extendible period of five
(5) days from receipt thereof within which to submit its Answer and nominees
for the Arbitral Tribunal. In default
thereof, claimant's (private respondent's) Counter-Motion is deemed granted and
arbitration shall proceed in accordance with the CIAC Rules Governing
Construction Arbitration.
SO
ORDERED. x x x
On June 3, 2002, petitioner RBDC filed [with the Court of
Appeals (CA)] a petition for Certiorari and Prohibition with prayer for the
issuance of a temporary restraining order and a writ of preliminary
injunction. Petitioner contended that
CIAC acted without or in excess of its jurisdiction when it issued the
questioned order despite the clear showing that there is lack of jurisdiction
on the issue submitted by private respondent for arbitration.[3]
On
December 19, 2003, the CA rendered the assailed Decision granting the petition
for certiorari, ruling that the CIAC had no jurisdiction over the subject
matter of the case because the parties agreed that only disputes regarding
differences in interpretation of the contract documents shall be submitted for
arbitration, while the allegations in the complaint make out a case for
collection of sum of money. Petitioner
moved for reconsideration of said ruling, but the same was denied in a
Resolution dated May 24, 2004.
Hence, this
petition where it is alleged that:
I.
THE
COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION IN FAILING TO DISMISS
PRIVATE RESPONDENT RBDC'S PETITION IN CA-G.R. SP NO. 70959 OUTRIGHT IN VIEW OF
RBDC'S FAILURE TO FILE A MOTION FOR RECONSIDERATION OF THE CIAC'S ORDER, AS
WELL AS FOR RBDC'S FAILURE TO ATTACH TO THE PETITION THE RELEVANT PLEADINGS IN
CIAC CASE NO. 13-2002, IN VIOLATION OF THE REQUIREMENT UNDER RULE 65, SECTIONS
1 AND 2, PARAGRAPH 2 THEREOF, AND RULE 46, SECTION 3, PARAGRAPH 2 THEREOF.
II.
THE
COURT OF APPEALS ERRED GRAVELY IN NOT RULING THAT THE CIAC HAS JURISDICTION
OVER WGCC'S CLAIMS, WHICH ARE IN THE NATURE OF ARBITRABLE DISPUTES COVERED BY
CLAUSE 17.1 OF ARTICLE XVII INVOLVING CONTRACT INTERPRETATION.
x x x x
III.
THE
COURT OF APPEALS ERRED GRAVELY IN FAILING TO DISCERN THAT CLAUSE 17.2 OF
ARTICLE XVII CANNOT BE TREATED AS BEING “LIMITED TO DISPUTES ARISING FROM
INTERPRETATION OF THE CONTRACT.”
x x x x
IV.
THE
COURT OF APPEALS ERRED GRAVELY IN NOT RULING THAT RBDC IS ESTOPPED FROM
DISPUTING THE JURISDICTION OF THE CIAC.
x x x x
V.
FINALLY,
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN REFUSING TO PAY
HEED TO THE DECLARATION IN EXECUTIVE ORDER NO. 1008 THAT THE POLICY OF THE
STATE IS IN FAVOR OF ARBITRATION OF CONSTRUCTION DISPUTES, WHICH POLICY HAS
BEEN REINFORCED FURTHER BY THE RECENT PASSAGE OF THE “ALTERNATIVE DISPUTE
RESOLUTION ACT OF 2004”(R.A. NO. 9285).[4]
The petition is meritorious.
The
aforementioned issues boil down to (1) whether the CA acted with grave abuse of
discretion in failing to dismiss the petition for certiorari filed by
herein respondent, in view of the latter's failure to file a motion for
reconsideration of the assailed CIAC Order and for failure to attach to the
petition the relevant pleadings in CIAC Case No. 13-2002; and (2) whether the
CA gravely erred in not upholding the jurisdiction of the CIAC over the subject
complaint.
Petitioner is correct that it was
grave error for the CA to have given due course to respondent's petition for certiorari
despite its failure to attach copies of relevant pleadings in CIAC Case No.
13-2002. In Tagle v. Equitable PCI
Bank,[5]
the party filing the petition for certiorari before the CA failed to
attach the Motion to Stop Writ of Possession and the Order denying the
same. On the ground of non-compliance
with the rules, the CA dismissed said petition for certiorari. When the case was elevated to this Court via
a petition for certiorari, the same was likewise dismissed. In said case, the Court emphasized the
importance of complying with the formal requirements for filing a petition for certiorari
and held as follows:
x x x Sec. 1, Rule 65, in relation to Sec. 3, Rule
46, of the Revised Rules of Court. Sec. 1 of Rule 65 reads:
SECTION 1. Petition for certiorari. – When any
tribunal, board or officer exercising judicial or quasi-judicial functions has
acted without or in excess of its or his jurisdiction, or with grave abuse of
discretion amounting to lack or excess of [its or his] jurisdiction, and there
is no appeal, or any plain, speedy, and adequate remedy in the ordinary course
of law, a person aggrieved thereby may file a verified petition in the proper
court, alleging the facts with certainty and praying that judgment be rendered
annulling or modifying the proceedings of such tribunal, board or officer, and
granting such incidental reliefs as law and justice may require.
The petition shall
be accompanied by a certified true copy of the judgment, order or resolution
subject thereof, copies of all pleadings and documents relevant and pertinent
thereto, and a sworn certification of non-forum shopping as provided in the third
paragraph of Section 3, Rule 46. (Emphasis supplied.)
And
Sec. 3 of Rule 46 provides:
SEC. 3. Contents and filing of petition; effect of
non-compliance with requirements. – The petition shall contain the
full names and actual addresses of all the petitioners and respondents, a
concise statement of the matters involved, the factual background of the case,
and the grounds relied upon for the relief prayed for.
In actions filed under Rule 65, the petition shall
further indicate the material dates showing when notice of the judgment or
final order or resolution subject thereof was received, when a motion for new
trial or reconsideration, if any, was filed and when notice of the denial
thereof was received.
It shall be
filed in seven (7) clearly legible copies together with proof of service
thereof on
the respondent with the original copy intended for the court indicated as such
by the petitioner and shall be accompanied by a clearly legible
duplicate original or certified true copy of the judgment, order, resolution,
or ruling subject thereof, such material portions of the record as are referred
to therein, and other documents relevant or pertinent thereto. The certification
shall be accomplished by the proper clerk of court or by his duly-authorized
representative, or by the proper officer of the court, tribunal, agency or
office involved or by his duly authorized representative. The other requisite
number of copies of the petition shall be accompanied by clearly legible plain
copies of all documents attached to the original.
x x x x
The failure of the petitioner to comply with any of
the foregoing requirements shall be sufficient ground for the dismissal of the
petition. (Emphasis supplied.)
The afore-quoted provisions are
plain and unmistakable. Failure to comply with the requirement that the
petition be accompanied by a duplicate original or certified true copy of the
judgment, order, resolution or ruling being challenged is sufficient ground for
the dismissal of said petition. Consequently, it cannot be said that the
Court of Appeals acted with grave abuse of discretion amounting to lack or
excess of jurisdiction in dismissing the petition x x x for non-compliance with Sec. 1, Rule 65, in
relation to Sec. 3, Rule 46, of the Revised Rules of Court.[6]
In the present case, herein
petitioner (private respondent below) strongly argued against the CA's granting
due course to the petition, pointing out that pertinent pleadings such as the Complaint
before the CIAC, herein respondent's Motion to Dismiss, herein
petitioner's Comment and Opposition (Re: Motion to Dismiss), and the Motion
to Suspend Proceedings, have not been attached to the petition. Herein respondent (petitioner before the CA)
argued in its Reply[7]
before the CA that it did not deem such pleadings or documents germane to the
petition. However, in the CA Resolution[8]
dated July 4, 2002, the appellate court itself revealed the necessity of such
documents by ordering the submission of copies of pleadings relevant to the
petition. Indeed, such pleadings are
necessary for a judicious resolution of the issues raised in the petition and
should have been attached thereto. As
mandated by the rules, the failure to do so is sufficient ground for the
dismissal of the petition. The CA did
not give any convincing reason why the rule regarding requirements for filing a
petition should be relaxed in favor of herein respondent. Therefore,
it was error for the CA to have given due course to the petition for certiorari
despite herein respondent's failure to comply with the requirements set forth
in Section 1, Rule 65, in relation to Section 3, Rule 46, of
the Revised Rules of Court.
Even on the main issue regarding the CIAC's jurisdiction,
the CA erred in ruling that said arbitration body had no jurisdiction over the
complaint filed by herein petitioner.
There is no question that, as provided under Section
4 of Executive Order No. 1008, also known as the “Construction Industry
Arbitration Law,” the
CIAC has original and exclusive jurisdiction over disputes arising from, or
connected with, contracts entered into by parties involved in construction in
the Philippines and all that is needed for the CIAC to acquire jurisdiction is
for the parties to agree to submit the same to voluntary arbitration. Nevertheless, respondent insists that the
only disputes it agreed to submit to voluntary arbitration are those arising
from interpretation of contract documents.
It argued that the claims alleged in petitioner's complaint are not
disputes arising from interpretation of contract documents; hence, the CIAC
cannot assume jurisdiction over the case.
Respondent's contention is tenuous.
The contract between herein parties contained an arbitration
clause which reads as follows:
17.1.1. Any
dispute arising in the course of the execution of this Contract by reason of
differences in interpretation of the Contract Documents which the OWNER and the
CONTRACTOR are unable to resolve between themselves, shall be submitted by
either party for resolution or decision,
x x x to a
Board of Arbitrators composed of three (3) members, to be chosen as follows:
One (1) member each shall be chosen by the OWNER and the
CONTRACTOR. The said two (2) members, in turn, shall select a third member
acceptable to both of them. The decision
of the Board of Arbitrators shall be rendered within fifteen (15) days from the
first meeting of the Board. The decision
of the Board of Arbitrators when reached through the affirmative vote of at
least two (2) of its members shall be final and binding upon the OWNER and the
CONTRACTOR.
17.2 Matters not otherwise provided for in this Contract or by special agreement of the parties shall be governed by the provisions of the Construction Arbitration Law of the Philippines. As a last resort, any dispute which is not resolved by the Board of Arbitrators shall be submitted to the Construction Arbitration Authority created by the government.[9]
In gist, the foregoing provisions
mean that herein parties agreed to submit disputes arising by reason of
differences in interpretation of the contract to a Board of Arbitrators the
composition of which is mutually agreed upon by the parties, and, as a last
resort, any other dispute which had not been resolved by the Board of
Arbitrators shall be submitted to the Construction Arbitration Authority
created by the government, which is no other than the CIAC. Moreover, other matters not dealt with by
provisions of the contract or by special agreements shall be governed by
provisions of the Construction Industry Arbitration Law, or Executive Order No.
1008.
The Court finds that petitioner's
claims that it is entitled to payment for several items under their contract,
which claims are, in turn, refuted by respondent, involves a “dispute arising
from differences in interpretation of the contract.” Verily, the matter of ascertaining the duties
and obligations of the parties under their contract all
involve interpretation of the provisions of the contract. Therefore, if the parties cannot see eye to
eye regarding each other’s obligations, i.e., the extent of work to be
expected from each of the parties and the valuation thereof, this is properly a dispute arising from
differences in the interpretation of the contract.
Note, further, that in respondent's
letter[10]
dated February 14, 2000, it stated that disputed items of work such as Labor
Cost Adjustment and interest charges, retention, processing of payment on Cost
Retained by WGCC, Determination of Cost of Deletion for miscellaneous Finishing
Works, are considered “unresolved dispute[s] as to the proper interpretation of
our respective obligations under the Contract,” which should be referred to the
Board of Arbitrators. Even if the
dispute subject matter of said letter had been satisfactorily settled by herein
parties, the contents of the letter evinces respondent's frame of mind that the
claims being made by petitioner in the complaint subject of this petition, are
indeed matters involving disputes arising from differences in interpretation.
Clearly, the subject matter of
petitioner's claims arose from differences in interpretation of the contract,
and under the terms thereof, such disputes are subject to voluntary
arbitration. Since, under Section
4 of Executive Order No. 1008 the
CIAC shall have original and exclusive jurisdiction over disputes arising from,
or connected with, contracts entered into by parties involved in construction
in the Philippines and all that is needed for the CIAC to acquire jurisdiction
is for the parties to agree to submit the same to voluntary arbitration, there
can be no other conclusion but that the CIAC had jurisdiction over petitioner's
complaint. Furthermore, Section 1, Article III of the CIAC Rules of Procedure
Governing Construction Arbitration (CIAC Rules) further provide that “[a]n
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.” Thus, even if there is no
showing that petitioner previously brought its claims before a Board of
Arbitrators constituted under the terms of the contract, this circumstance
would not divest the CIAC of jurisdiction.
In HUTAMA-RSEA Joint Operations, Inc. v. Citra Metro Manila Tollways
Corporation,[11] the
Court held that:
Under Section 1, Article III of
the CIAC Rules, an arbitration clause in a construction
contract shall be deemed as 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 x x x.” Elementary is the rule that when laws or rules are clear, it
is incumbent on the court to apply them. When the law (or rule) is unambiguous
and unequivocal, application, not interpretation thereof, is imperative.
Hence,
the bare fact that the parties herein incorporated an arbitration clause in the
EPCC is sufficient to vest the CIAC with jurisdiction over any construction
controversy or claim between the parties.
The arbitration clause in the construction contract ipso facto vested the CIAC with jurisdiction. This rule applies, regardless of whether the
parties specifically choose another forum or make reference to another arbitral
body. Since
the jurisdiction of CIAC is conferred by law, it cannot be subjected to any
condition; nor can it be waived or diminished by the stipulation, act or
omission of the parties, as long as the parties agreed to submit their
construction contract dispute to arbitration, or if there is an arbitration
clause in the construction contract. The
parties will not be precluded from electing to submit their dispute to CIAC,
because this right has been vested in each party by law.
x
x x x
It bears to emphasize
that the mere existence of an arbitration clause in the construction
contract is considered by law as an agreement by the parties to submit existing
or future controversies between them to
CIAC jurisdiction, without any qualification or condition precedent. To affirm a condition precedent in the
construction contract, which would effectively
suspend the jurisdiction of the CIAC until compliance therewith, would be in conflict with the recognized
intention of the law and rules to automatically
vest CIAC with jurisdiction over a
dispute should the construction contract contain an arbitration clause.
Moreover, the CIAC was created in recognition of the contribution
of the construction industry to national development goals. Realizing that
delays in the resolution of construction industry disputes would also hold up
the development of the country, Executive Order No. 1008 expressly mandates the
CIAC to expeditiously settle
construction industry disputes and, for this purpose, vests in the CIAC
original and exclusive jurisdiction over disputes arising from, or connected
with, contracts entered into by the parties involved in construction in the
Philippines.[12]
Thus, there is no question that in
this case, the CIAC properly took cognizance of petitioner's complaint as it
had jurisdiction over the same.
IN VIEW OF THE
FOREGOING, the Petition is GRANTED. The
Decision of the Court of Appeals, dated December 19, 2003, and its Resolution
dated May 24, 2004 in CA-G.R. SP No. 70959 are REVERSED and SET ASIDE. The Order of the Construction Industry
Arbitration Commission is REINSTATED.
SO ORDERED.
DIOSDADO M. PERALTA
Associate Justice
WE CONCUR:
Associate Justice
Chairperson
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ANTONIO EDUARDO B. NACHURA Associate Justice |
ROBERTO A. ABAD Associate Justice |
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JOSE CATRAL MENDOZA Associate Justice |
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ATTESTATION
I attest that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the writer
of the opinion of the Court’s Division.
ANTONIO
T. CARPIO
Associate Justice
Second
Division, Chairperson
Chief Justice
[1] Penned by Associate Justice Eloy R. Bello, Jr., with Associate Justices Amelita G. Tolentino and Arturo D. Brion (now a member of this Court), concurring; rollo, pp. 88-94.
[2] Id. at 96.
[3] Rollo, pp. 88-91.
[4] Id. at 34-36.
[5] G.R. No. 172299, April 22, 2008, 552 SCRA 424.
[6] Id. at 442-444. (Emphasis supplied.)
[7] CA rollo, pp. 293-303.
[8] Id. at 62-63.
[9] Rollo, pp. 494-495.
[10] Id. at 270-271.
[11] G.R. No. 180640, April 24, 2009, 586 SCRA 746.
[12] Id. at 760-763. (Emphasis supplied.)