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G.R. No.

December 20, 2006
FACTS:This case involved Titan-Ikeda who entered into 3 construction agreement/
contract /project with Uniwide. Later Titan-Ikeda filed an action for sum of money against
Uniwide with the RTC because Uniwide allegedly failed to pay certain claims billed by Titan
after the completion of the 3 projects. Uniwide moved for the dismissal/suspension of the
proceeding for them to first undergo arbitration. The Arbitrators issued terms of reference
which was signed by the parties, (Uniwide did not attempt to modify the TOR to
accommodate its belated counterclaim on deadlines for liquidated damages.)Titan then
refiled the case with CIAC.
CIAC Decision: Project 1: Uniwide is absolved of any liability.Project 2: Uniwide is
absolved of any liability for VAT payment and for the account of Titan, and Titan is absolved
from liability for defective construction.Project 3: Uniwide id held liable for unpaid balance
(5,158,364.63) plus 12% interest/annum and to pay the full VAT for the additional work
where no written authorization was presented.
CIAC likewise rejected the claim on liquidated damages.
After Uniwide’s motion for reconsideration was denied by CIAC, it filed a petition for
review with CA but same was denied, thus, Uniwide filed a petition for review under rule 45
to seek partial reversal of the decision of CA which modified the decision of CIAC. Uniwide
claims that CIAC should have applied procedural rules such as section 5, Rule 10 with more
liberality because it was an administrative tribubal free from all rigid technicalities of
regular courts because CA held that the issue on liquidated damages should be left for
determination in future proceedings.
ISSUE:Whether or not CIAC should have applied the Rules of Court in the arbitration
RULING: Rule of Procedure Governing Construction Arbitration promulgated by the CIAC
contains no provision on the application of the Rules of Court to arbitration proceedings,
even in a suppletory capacity.Such importation of the Rules of Court provision on
amendment to conform to evidence would contravene the spirit, if not the letter of the CIAC
rules. This is for the reason that the formulation of the Terms of Reference is done with the
active participation of the parties and their counsel themselves. The TOR is further required
to be signed by all the parties, their respective counsel and all the members of the Arbitral
Tribunal. Unless the issues thus carefully formulated in the Terms of Reference were
expressly showed to be amended, issues outside thereof may not be resolved. As already
noted in the Decision, "no attempt was ever made by the [Uniwide] to modify the TOR in
order to accommodate the issues related to its belated counterclaim" on this issue.
Arbitration has been defined as "an arrangement for taking and abiding by the
judgment of selected persons in some disputed matter, instead of carrying it to established
tribunals of justice, and is intended to avoid the formalities, the delay, the expense and
vexation of ordinary litigation.