PHILROCK VS CONSTRUCTION
INDUSTRY ARBITRATION COMMISSION
G.R. No. 132848-49 June 26, 2001
PHILROCK, INC., petitioner, vs.
CONSTRUCTION INDUSTRY
ARBITRATION COMMISSION and
Spouses VICENTE and NELIA CID,
respondents.
FACTS : Private respondents, filed a
Complaint for damages against Philrock and
seven of its officers and engineers with the
Regional Trial Court of Quezon City, Branch
82. The trial court issued an Order
dismissing the case and referring the same
to the CIAC because the Cid spouses and
Philrock had filed an Agreement to Arbitrate
with the CIAC. Preliminary conferences
were held among the parties and their
appointed arbitrators. At these conferences,
disagreements arose as to:
1) whether moral and exemplary damages
and tort should be included as an issue
along with breach of contract, and
2) whether the seven officers and engineers
of Philrock who are not parties to the
Agreement to Arbitrate should be included
in the arbitration proceedings.
No common ground could be reached by
the parties, hence, on April 2, 1994, both
the Cid spouses and Philrock requested that
the case be remanded to the trial court.
On June 13, 1995, The trial court declared
that it no longer had jurisdiction over the
case and ordered the records of the case to
be remanded anew to the CIAC for arbitral
proceedings. the CIAC resumed conducting
preliminary conferences. On August 21,
1995, herein [P]etitioner Philrock requested
to suspend the proceedings until the court
clarified its ruling in the Order dated June
13, 1995
Petioner : Philrock argued that said Order
was based on a mistaken premise that 'the
proceedings in the CIAC fell through
because of the refusal of Philrock to include
the issue of damages therein,' whereas the
true reason for the withdrawal of the case
1
from the CIAC was due to Philrock's
opposition to the inclusion of its seven
officers and engineers, who did not give
their consent to arbitration, as party
defendants
Respondent : manifested that she was
willing to exclude the seven officers and
engineers of Philrock as parties to the case
so as to facilitate or expedite the
proceedings.
the Arbitral Tribunal denied Philrock's
request for the suspension of the
proceedings. The parties then proceeded to
finalize, approve and sign the Terms of
Reference. Philrock's counsel and
representative, Atty. Pericles C. Consunji
affixed his signature to said Terms of
Reference which stated that 'the parties
agree that their differences be settled by an
Arbitral Tribunal
On September 12, 1995, [P]etitioner
Philrock filed its Motion to Dismiss, alleging
therein that the CIAC had lost jurisdiction to
hear the arbitration case due to the parties'
withdrawal of their consent to arbitrate. The
motion was denied. public respondent
ordered the parties to appear before it on
November 28, 1995 for the continuation of
the arbitral proceedings, and on February 7,
1996, public respondent directed [P]etitioner
Philrock to set two hearing dates in the
month of February to present its evidence
and to pay all fees assessed by it, otherwise
Philrock would be deemed to have waived
its right to present evidence
Judgment is rendered in favor of the
Claimant, directing Respondent to pay.
Before the CA, petitioner filed a Petition for
Review, docketed as CA-GR SP No. 42443,
contesting the jurisdiction of the CIAC and
assailing the propriety of the monetary
awards in favor of respondent spouses.
This Petition was consolidated by the CA
with CA-GR SP No. 39781,
The CA upheld the jurisdiction of the
CIAC[5] over the dispute between petitioner
and private respondent. Under Executive
Order No. 1008, the CIAC acquires
jurisdiction when the parties agree to submit
their dispute to voluntary arbitration. Thus,
in the present case, its jurisdiction continued
despite its April 13, 1994 Order referring the
case back to the Regional Trial Court (RTC)
of Quezon City, Branch 82, the court of
origin. The CIACs action was based on the
principle that once acquired, jurisdiction
remains until the full termination of the case
unless a law provides the contrary
A Petition for Certiorari earlier elevated by
petitioner questioning the jurisdiction of the
CIAC.
ISSUE : Whether or not the CIAC could take
jurisdiction over the case of Respondent Cid
spouses against Petitioner Philrock after the
case had been dismissed by both the RTC
and the CIAC.
HELD : Section 4 of Executive Order 1008
expressly vests in the CIAC original and
exclusive jurisdiction over disputes arising
from or connected with construction
contracts entered into by parties that have
agreed to submit their dispute to voluntary
arbitration. It is undisputed that the parties
submitted themselves to the jurisdiction of
the Commission by virtue of their
Agreement to Arbitrate dated November 24,
1993. Signatories to the Agreement were
Atty. Ismael J. Andres and Perry Y. Uy
(president of Philippine Rock Products, Inc.)
for petitioner, and Nelia G. Cid and Atty.
Esteban A. Bautista for respondent spouses
Petitioner claims, on the other hand, that
this Agreement was withdrawn by
respondents on April 8, 1994, because of
the exclusion of the seven engineers of
petitioners in the arbitration case. This
contention is untenable. First, private
respondents removed the obstacle to the
continuation of the arbitration, precisely by
withdrawing their objection to the exclusion
of the seven engineers. Second, petitioner
continued participating in the arbitration
even after the CIAC Order had been
issued. Finally, as pointed out by the
2
solicitor general, petitioner maneuvered to
avoid the RTC’s final resolution of the
dispute by arguing that the regular court
also lost jurisdiction after the arbitral
tribunal’s April 13, 1994 Order referring the
case back to the RTC. After submitting itself
to arbitration proceedings and actively
participating therein, petitioner is estopped
from assailing the jurisdiction of the CIAC,
merely because the latter rendered an
adverse decision.
Petitioner contends that respondent
spouses were negligent in not engaging the
services of an engineer or architect who
should oversee their construction, in
violation of Section 308 of the National
Building Code. It adds that even if the
concrete it delivered was defective,
respondent spouses should bear the loss
arising from their illegal operation. In short,
it alleges that they had no cause of action
against it.
We disagree. Cause of action is
defined as an act or omission by which a
party violates the right of another.[12] A
complaint is deemed to have stated a cause
of action provided it has indicated the
following: (1) the legal right of the plaintiff,
(2) the correlative obligation of the
defendant, and (3) the act or the omission of
the defendant in violation of the said legal
right.[13] The cause of action against
petitioner was clearly
established. Respondents were purchasers
of ready-mix concrete from petitioner. The
concrete delivered by the latter turned out to
be of substandard quality. As a result,
respondents sustained damages when the
structures they built using such cement
developed cracks and
honeycombs. Consequently, the
construction of their residence had to be
stopped.
EXCELLENT QUALITY APPAREL, INC.
vs. WIN MULTI RICH BUILDERS, INC.,
represented by its President, WILSON G.
CHUA
G.R. No. 175048 | February 10, 2009 |
TINGA, J.
SUMMARY: Excellent Quality and Multi-
Rich entered into a contract of construction.
Multi-Rich was headed by Wilson G. Chua,
who later registered the corporation Win
Multi-Rich Builders, Inc. with the SEC. Win
filed a complaint for a sum of money against
Excellent Quality together with a writ of
attachment upon the claim that Excellent
Quality was about to close down and that
Mr. Ying was about to abscond. Excellent
Quality questioned the personality of Win to
institute the case as it (Excellent) did not
contract with Win, but rather with Multi-Rich.
The SC held that Win had no personality to
sue and could not claim any rights as
against Excellent Quality.
DOCTRINE: The plaintiff in the collection
suit is a corporation. The name cannot be
changed to that of a sole proprietorship,
which is what Multi-Rich was. A sole
proprietorship is not vested with juridical
personality to file or defend an action.
In order for a corporation to be able to file
suit and claim the receivables of its
predecessor in business, in this case a sole
proprietorship, it must show proof that the
corporation had acquired the assets and
liabilities of the sole proprietorship.
FACTS:
On 26 March 1996, petitioner Excellent
Quality Apparel, Inc. then represented by
Max L.F. Ying, Vice-President for
Productions, and Alfiero R. Orden,
Treasurer, entered into a contract with Multi-
Rich Builders (Multi-Rich) represented by
Wilson G. Chua (Chua), its President and
General Manager, for the construction of a
garment factory within the Cavite Philippine
Economic Zone Authority (CPEZ). The
duration of the project was for a maximum
period of five (5) months or 150 consecutive
3
calendar days. Included in the contract is an
arbitration clause.
Respondent Win Multi-Rich Builders, Inc.
(Win) was incorporated with Chua as its
President and General Manager. Win later
filed a complaint for a sum of money against
petitioner and Mr. Ying amounting
to P8,634,448.20. It also prayed for the
issuance of a writ of attachment claiming
that Mr. Ying was about to abscond and
Excellent Quality was about to close. RTC
issued the writ. Petitioner pointed to the
presence of the Arbitration Clause and it
asserted that the case should be referred to
the Construction Industry Arbitration
Commission (CIAC) pursuant to Executive
Order (E.O.) No. 1008.
In the hearing held on 10 February 2004,
the counsel of Win moved that its name
in the case be changed from "Win Multi-
Rich Builders, Inc." to "Multi-Rich
Builders, Inc." It was only then that
petitioner apparently became aware of
the variance in the name of the plaintiff.
In the Reply filed by petitioner, it moved to
dismiss the case since Win was not the
contractor and neither a party to the
contract, thus it cannot institute the case.
Petitioner obtained a Certificate of Non-
Registration of Corporation/Partnership from
the SEC which certified that the latter did
not have any records of a "Multi-Rich
Builders, Inc."
Win admitted that it was only incorporated
on 20 February 1997 while the construction
contract was executed on 26 March 1996.
Likewise, it admitted that at the time of
execution of the contract, Multi-Rich was a
registered sole proprietorship and was
issued a business permit by the Office of
the Mayor of Manila.
The RTC issued an Order which granted the
motion to deposit the garnished amount.
The CA reversed the grant of the motion
but it also ruled that the RTC had
jurisdiction over the case since it is a suit for
collection of sum of money.
ISSUES:
(1) WON Win has a legal personality to
institute the present case – No (Main issue
for class)
(2) does the RTC have jurisdiction over the
case notwithstanding the presence of the
arbitration clause – No. So similarly, the
issuance of the writ of attachment and the
subsequent garnishment proper.
HELD:
(Issue 1)
A real party in interest is the party who
stands to be benefited or injured by the
judgment in the suit, or the party entitled to
the avails of the suit. Unless otherwise
authorized by law or these Rules, every
action must be prosecuted or defended in
the name of the real party in interest.
Is Win a real party in interest? We answer in
the negative.
Win admitted that the contract was
executed between Multi-Rich and petitioner.
It further admitted that Multi-Rich was a sole
proprietorship with a business permit issued
by the Office of the Mayor of Manila. The
sole proprietor is personally liable for all the
debts and obligations of the business.
The original petition was instituted by Win,
which is a SEC-registered corporation. It
filed a collection of sum of money suit which
involved a construction contract entered into
by petitioner and Multi-Rich, a sole
proprietorship. The counsel of Win wanted
to change the name of the plaintiff in the suit
to Multi-Rich. The change cannot be
countenanced. The plaintiff in the
collection suit is a corporation. The
name cannot be changed to that of a
sole proprietorship. Again, a sole
proprietorship is not vested with juridical
personality to file or defend an action.
4
In order for a corporation to be able to
file suit and claim the receivables of its
predecessor in business, in this case a
sole proprietorship, it must show proof
that the corporation had acquired the
assets and liabilities of the sole
proprietorship. Win could have easily
presented or attached any document e.g.,
deed of assignment which will show
whether the assets, liabilities and
receivables of Multi-Rich were acquired by
Win. Having been given the opportunity to
rebut the allegations made by petitioner,
Win failed to use that opportunity. Thus, we
cannot presume that Multi-Rich is the
predecessor-in-business of Win and hold
that the latter has standing to institute the
collection suit.
(Issue 2)
Assuming arguendo that Win has legal
personality, the petition will still be granted.
The CIAC acquires jurisdiction over a
construction contract by the mere fact that
the parties agreed to submit to voluntary
arbitration. The law does not preclude
parties from stipulating a preferred forum or
arbitral body but they may not divest the
CIAC of jurisdiction as provided by law.
Arbitration is an alternative method of
dispute resolution which is highly
encouraged. The arbitration clause is a
commitment on the part of the parties to
submit to arbitration the disputes covered
since that clause is binding, and they are
expected to abide by it in good faith.
Clearly, the RTC should not have taken
cognizance of the collection suit. The
presence of the arbitration clause vested
jurisdiction to the CIAC over all construction
disputes between Petitioner and Multi-Rich.
.The RTC does not have jurisdiction.
Based on the foregoing, there is no need to
discuss the propriety of the issuance of the
writ of attachment. However, we cannot
allow Win to retain the garnished amount
which was turned over by the RTC. The
RTC did not have jurisdiction to issue
the questioned writ of attachment and to
order the release of the garnished funds.
Section 4 of EO 1008 provides for the
jurisdiction of the CIAC, and excluded only
from the coverage of this law are disputes
from employer-employee relationships
which shall be governed by the Labor Code
Metropolitan Cebu Water District v.
Mactan Rock Industries, Inc.,
G.R. No. 172438, July 4, 2012
Facts:
Petitioner Metropolitan Cebu Water
District (MCWD) is a government-owned
and controlled corporation , is mandated to
supply water within its service area in the
cities of Cebu, Talisay, Mandaue, and Lapu-
Lapu and the municipalities of Compostela,
Liloan, Consolacion, and Cordova in the
Province of Cebu.
Respondent Metro Rock Industries,
Inc. (MRII) is a domestic corporation with
principal office address at the 2nd Level of
the Waterfront Cebu Hotel and Casino,
Lahug, Cebu City.
MCWD entered into a Water Supply
Contract (the Contract) with MRII wherein it
was agreed that the latter would supply
MCWD with potable water, in accordance
with the World Health Organization (WHO)
standard or the Philippine national standard,
with a minimum guaranteed annual volume.
MRII filed a Complaint against
MCWD with the CIAC. MRII sought the
reformation of Clause 17 of the Contract, or
the Price Escalation/De-Escalation Clause,
in order to include Capital Cost Recovery in
the price escalation formula, and to have
such revised formula applied from 1996
when the bidding was conducted, instead of
from the first day when MRII started selling
water to MCWD. It also sought the payment
of the unpaid price escalation/adjustment,
and the payment of unpaid variation/extra
5
work order and interest/cost of money up to
December 31, 2003.
MCWD filed its Answer dated April
27, 2004, which included a motion to
dismiss the complaint on the ground that the
CIAC had no jurisdiction over the case, as
the Contract was not one for construction or
infrastructure.
The CIAC issued an order denying MCWD’s
motion to dismiss and called the parties to a
preliminary conference for the review and
signing of the Terms of Reference. MCWD
then filed a petition for certiorari with Court
of Appeals questioning the jurisdiction of the
CIAC.
The CIAC proceeded with the scheduled
preliminary conference which MWCD did
not attend. MRII and the CIAC both signed
the Terms of Reference, and pursuant
thereto, MRII submitted its documentary
evidence and affidavits of its witnesses, and
subsequently filed its Formal Offer of
Evidence and memorandum of arguments
in the form of a draft decision. MCWD did
not attend the hearings, did not submit
evidence other than those annexed to its
Answer, and did not file a formal offer of
evidence or a memorandum. The CIAC
promulgated its Decision which, among
others, ordered the reformation of Clause
17 of the Water Supply Contract and
payment by MCWD to MRII under the
reformed Clause 17 of the net amount of
PHP12,126,296.70 plus legal interest; with
the parties sharing equally the cost of
arbitration.
MWCD appealed the CIAC decision. The
Supreme Court ruled against MWCD.
Issue: WON CIAC had no jurisdiction over
the case.
MAY THE CONSTRUCTION
INDUSTRY [ARBITRATION]
COMMISSION EXERCISE
JURISDICTION OVER
DISPUTES ARISING FROM
 A WATER SUPPLY
CONTRACT?
the parties apparently characterized
the Contract as one involving construction,
as its arbitration clause specifically refers
disputes, controversies or claims arising out
of or relating to the Contract or the breach,
termination or validity thereof, if the same
cannot be settled amicably, to an arbitration
tribunal, in accordance with E.O. No. 1008,
or the Construction Industry Arbitration Law:
government or private contracts. For the
Board to acquire jurisdiction, the parties to a
dispute must agree to submit the same to
voluntary arbitration.
The jurisdiction of the CIAC may
include but is not limited to violation of
specifications for materials and
workmanship; violation of the terms of
agreement; interpretation and/or application
of contractual provisions; amount of
damages and penalties; commencement
time and delays; maintenance and defects;
payment default of employer or contractor
and changes in contract cost.

Excluded from the coverage of this

MAY A PARTY, WHO IS A
SIGNATORY TO THE law are disputes arising from employer-
WATER SUPPLY employee relationships which shall continue
CONTRACT[,] IN EFFECT to be covered by the Labor Code of the
SUBMITTING ITSELF TO Philippines.
THE JURISDICTION OF
THE CONSTRUCTION
INDUSTRY ARBITRATION
COMMISSION, QUESTION
THE JURISDICTION OF CIAC has jurisdiction over broad range of
[THE] CIAC? construction disputes, including reformation
of contracts.
DOES THE The Supreme Court noted that the parties
CONSTRUCTION themselves characterized the Contract as
INDUSTRY ARBITRATION one involving construction, as its arbitration
COMMISSION HAVE THE clause specifically refers disputes arising
(SIC) JURISDICTION OVER out of or relating to the Contract to an
A COMPLAINT PRAYING arbitration tribunal in accordance with the
FOR A REFORMATION OF Construction Industry Arbitration Law. Since
A WATER SUPPLY CIAC has jurisdiction over the Contract, it
CONTRACT? follows that it has jurisdiction to order the
reformation of the Contract as well. It held
that neither the provisions of the Civil Code
on reformation of contracts or the law
Held: CIAC had jurisdiction over the case. creating the CIAC exclude the reformation
of contracts from CIAC’s jurisdiction. The
The CIAC shall have original and Supreme Court cited previous rulings that
exclusive jurisdiction over disputes arising the CIAC has jurisdiction over a broad
from, or connected with, contracts entered range of issues and claims arising from
into by parties involved in construction in the construction disputes, and the law creating
Philippines, whether the disputes arise it excludes only disputes arising from
before or after the completion of the employer-employee relationships.
contract, or after the abandonment or
breach thereof. These disputes may involve

6
Where the law does not delineate, neither
should we. Neither the provisions of the
Civil Code on reformation of contracts nor
the law creating CIAC exclude reformation
in its jurisdiction. Therefore, because the
CIAC has been held to have jurisdiction
over the contract, it follows that it has
jurisdiction to order the reformation of the
contract as well.
W/N MWCD casn validly refuse to
participate in the proceedings.
Considering the affirmation of the CIAC’s
jurisdiction, the Supreme Court ruled that
the CIAC could proceed with the case even
if the MCWD refused to participate in the
arbitration proceedings. It said that the
refusal of a party to participate in the
arbitration proceedings, cannot prevent the
CIAC from proceeding with the case and
issuing an award in favor of one of the
parties. Under the Revised CIAC Rules, the
failure of a respondent to appear, which
amounts to refusal to arbitrate, will not stay
the proceedings, notwithstanding the
absence of the respondent or the lack of
participation of such party. In such cases,
the CIAC is mandated to appoint the
arbitrator/s in accordance with the Revised
CIAC Rules, and the arbitration proceedings
shall continue and an award made after
receiving the evidence of the claimant. In
support of the ruling, the Supreme Court
cited previous case where it held that the
CIAC has jurisdiction over a construction
dispute even though only one of the parties
requested for arbitration, or even if both
parties had withdrawn their consent to
arbitrate.
In any event the Supreme Court noted the
party who did not participate is not without a
remedy. Under the Revised CIAC Rules, a
respondent who failed to appear is still
given the opportunity to move for the
reopening of the proceedings to present
evidence, provided that this is done before
an award is issued.
7
Litis pendentia is predicated on the principle
that a party should not be allowed to vex
another more than once regarding the same
subject matter and for the same cause of
action
BF Corporation v. Court of Appeals et.al.
G.R. No. 120105
March 27, 1998
ROMERO, J.:
FACTS:
- BF Corporation (BF) and
respondent Shangri-La Properties,
Inc. (Shang) entered into the 1st
agreement whereby Shang engaged
BF to construct the main structure of
the EDSA Plaza Project – the EDSA
Shangri-La Mall – in Mandaluyong
City.
- While the construction work was in
progress Shang once again hired BF
for the expansion of the project, the
2nd agreement.
- BF incurred delay in the construction
work that SPI considered as serious
and substantial. BF contended that
they had faithfully complied with the
first agreement until a fire broke out
on [Nov 30, 1990] damaging phase
1 of the project, Hence SPI
proposed the renegotiation of the
agreement between them.
- [May 30, 1991] – Parties entered
into another agreement named
“Agreement for the Execution of
Builders Work for the EDSA Plaza
Project” (3rd agreement) that would
cover the construction work on said
project as of [May 1, 1991] until its
eventual completion.
- [July 14, 1993] BF filed with the RTC - In its sur-rejoinder, Shang pointed
of Pasig a complaint for the out the significance of the petitioners
collection of the balance due under admission of the due execution of
the construction agreement. Named the Articles of Agreement. It was
Defendants therein were Shang and shown that the Signature of Colayco
members of its board of directors – (Shang President) and Bayani
A. Ramos, Colayco, Obles, Lanuza Fernando (BF President) was in
Jr., Licauco & B.Ramos. such agreement and was even duly
- [Aug 3, 1993] Shang and its co- notarized.
defendants filed a motion to suspend - The RTC found that the arbitration
proceedings instead of filing an clause did exist, however the lower
answer. court denied motion to suspend
o Motion was anchored on the proceedings and ruled in favor of BF
defendants allegation that (see reasons below)
the formal trade contract of o This was because despite
the the construction project the fact there was an
provided for a clause arbitration agreement, the
requiring prior resort to Conditions of Contract only
arbitration before judicial the initials of Bayani
intervention. Fernando was present, while
- [Aug 4, 1993] Shang submitted a no signature on the part of
copy of the condition of the contract Shang.
containing arbitration clause that it o There were no singed
failed to attach its motion to suspend documents to prove Shang’s
proceedings. claims thus there is serious
- BF opposed said motion stating that doubt to the validity of the
there was no formal contract arbitration clause found in
between the parties although they the Conditions of Contract
entered into an agreement. They o Assuming that the arbitration
emphasized that the agreement did clause was valid and binding,
not provide for an arbitration thus it was too late for Shang to
cannot deprive the court of its invoke arbitration because:
jurisdiction.  the demand should
- Shang insisted that there was an have been made
arbitration clause in the existing before the time of
contract between them. It alleged final payment except
that the suspension would not as otherwise
deprive the court of its jurisdiction expressly stipulated
and would expedite the settlement in the contract
proceedings rather than delay it.  the court found that
- In a rejoinder, BF reiterated that the project was to be
there was no arbitration clause in the completed on [Oct 31,
contract bewtween the parties. It 1991] and any delays
averred that if there was an would incur 80K for
arbitration clause, suspension of the each day of delay
proceedings was no longer proper from [Nov 1,1991]
and that defendants should be with liquefied
declared in default for failure to damages up to a
answer within the reglementary maximum of 5% of
period. the total contract
price

8
  the court found out
that the project was
completed in
accordance with the
agreement and
Shang had took
possession and
started operations
thereof by opening
the same to the public
in [Nov, 1911].
 BF billed Shang the
total amount of
P110,883,101.52
contained in a made within a reasonable
demand letter sent on
Feb 17, 1993. Instead
of paying the amound
demanded, SPI set
up its own claim of
P220,000,000.00 and
scheduled a conference > Jul 14 Shang
conference on that
claim for July 12,
1993. The conference
took place but was
futile.
- Shang filed a motion for
reconsideration but was denied
because of lack of merit and directed
the other defendants to file their
responsive pleading within the
reglementary period.
- Instead of filing an answer to the
complaint, SPI filed a petition for
Certiorari under Rule 65 before the
Court of appeals.
- The Court of Appeals granted the
petition and annulled and set aside
the orders and stayed the
proceedings in the lower court.
o According to the contract the
project manager and the
contractor should coordinate
with the owner, should there
be failure to resolve
differences, dispute shall be
submitted for arbitration.
o Although it was only the
initials of Bayani Fernando
and De La Cruz present and
9
none from Shang, it does not
affect its effectivity. BF
categorically admitted that
the document is the
agreement bewtween the
parties, the initial signature of
BF representative to signify
conformity to arbitration is no
longer necessary. The
parties should be allowed to
submit their dispute to
arbitration in accordance with
their agreement.
o Demand for arbitration was
time after the dispute has
arisen and attempts to settle
amicably has failed. This was
evidenced by the fact that
such demands were acted
upon only months. Jul 12
complaint against BF > Aug
13 Request for arbitration.
- Hence the petition before the
Supreme Court.
ISSUE:
WON the parties entered into an
arbitrary agreement
HELD:
Yes, according to Sec 4 of R.A. 876
a contract to arbitrate a controversy
thereafter arising between the parties, as
well as a submission to arbitrate an existing
controversy, shall be in writing and
subscribed by the party sought to be
charged, or by his lawful agent.
The making of a contract or submission for contract may be encompassed in several
arbitration described in section two hereof, instruments even though every instrument is
providing for arbitration of any controversy, not signed by the parties, since it is
shall be deemed a consent of the parties of sufficient if the unsigned instruments are
the province or city where any of the parties clearly identified or referred to and made
resides, to enforce such contract of part of the signed instrument or instruments.
submission. (Underscoring supplied.) Similarly, a written agreement of which
there are two copies, one signed by each of
The formal requirements of an the parties, is binding on both to the same
agreement to arbitrate are therefore the extent as though there had been only one
following: copy of the agreement and both had signed
it.[14]
(a) it must be in writing and
(b) it must be subscribed by the parties
or their representatives. • William Golangco Construction
There is no denying that the parties Corporation v. Ray Burton
entered into a written contract that was Development Corporation, G.R. No.
submitted in evidence before the lower 163582, August 9, 2010
court. To subscribe means to write
underneath, as ones name; to sign at the Facts:
end of a document. That word may
sometimes be construed to mean to give Ray Burton Development
consent to or to attest. Corporation (RBDC) and William Golangco
Construction Corporation (WGCC) entered
The Court finds that, upon a scrutiny of
into a Contract for the construction of the
the records of this case, these requisites
Elizabeth Place (Office/Residential
were complied with in the contract in
Condominium).
question. The Articles of Agreement, which
incorporates all the other contracts and
agreements between the parties, was WGCC filed a complaint with a
signed by representatives of both parties request for arbitration with the Construction
and duly notarized. The failure of the private Industry Arbitration Commission (CIAC). In
respondents representative to initial the its complaint, private respondent prayed
`Conditions of Contract would therefore not that CIAC render judgment ordering
affect compliance with the formal petitioner to pay private respondent the
requirements for arbitration agreements amount of, to wit:
because that particular portion of the
covenants between the parties was included 1. P24,703,132.44 for the
by reference in the Articles of Agreement. unpaid balance on the
contract price;
Petitioners contention that there was no
arbitration clause because the contract 2. P10,602,670.25 for the
incorporating said provision is part of a unpaid balance on the labor
hodge-podge document, is therefore cost adjustment;
untenable. A contract need not be contained
in a single writing. It may be collected from 3. P9,264,503.70 for the
several different writings which do not unpaid balance of additive
conflict with each other and which, when works;
connected, show the parties, subject matter,
terms and consideration, as in contracts
entered into by correspondence.[13] A

10
 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.
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.
CIAC RULED THAT IT HAS
JURIDICTION. 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.
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
11
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
Issue: whether or not CIAC has jurisdiction
over the case.
Held: CIAC had jurisdiction over the dispute
between herein parties
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. Respondent's contention, that
the only disputes it agreed to submit to
voluntary arbitration are those arising from
interpretation of contract documents and 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, is tenuous.
The contract between herein parties
contained an arbitration clause which mean
that 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.
 Petitioner's claims that it is entitled connected with, contracts entered into by
to payment for several items under their the parties involved in construction in the
contract, which claims are, in turn, refuted Philippines.
by respondent, involves a "dispute arising
from differences in interpretation of the Thus, there is no question that in this
contract. case, the CIAC properly took cognizance of
petitioner's complaint as it had jurisdiction
Under Section 1, Article III of the over the same.
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.

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

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