You are on page 1of 11

High Precision Steel Center Inc. vs.

Lim Kim Steel Builder 228 SCRA 397*


(questions of fact are NOT APPEALEABLE - already final and executory)
F: Hi-Precision entered a construction contract with Steel Builders where Steel
Builders would complete a P21M construction project until Oct8, 1990. However,
the project's completion date was moved to Nov1990.
-Come Nov 1990, the construction was only almost 76% complete. Each party
attributed delay to the other. Hi-Precision undertook the project and completed it
February 1991.
-Steel builders filed a REQUEST FOR ARBITRATION w/ CIAC
-Steel builders filed a COMPLAINT FOR COLLECTION OF unpaid progress
buildings
-ANSWER: claimed actual and liquidated damages
-CIAC: Hi-Precision ordered to pay Steel Builders
-MRs filed by both parties. Net amount awarded reduced
ON AWARD: based on mutual default (though they could not point out which of
the two was the first infractor)
-High Precision now goes to SC for review of the CIAC Arbitrator's award,
claiming that there were errors of law and that if they do raise errors of facts,
these should still be considered, there being GAD on the part of the CIAC
H: For Lim Kim
1. Should have impleaded the arbitrators of the CIAC, not CIAC, as the award
sought ot be reviewed is that of the arbitrators and not of CIAC
2. The matters raised by High Precision are really matters of fact which are not
subject to review of the courts under Section 19 of eO 1008
Precision is asking this Court to pass upon claims which are either clearly and
directly factual innature or require previous determination of factual issues. This
upon the one hand. Upon the other hand, the Court considers that petitioner Hi-

Precision has failed to show any serious errors of law amounting to grave abuse
of discretion resulting in lack of jurisdiction on the part of the Arbitral Tribunal, in
either the methods employed or the results reached by the Arbitral Tribunal, in
disposing of the detailed claims of the respective parties.

Home Bankers Savings and Trust Company v. CA (G.R. No. 115412)


Jun3by Jai Cdn
Facts:
Victor Tancuan issued Petitioner Home Bankers Savings and Trust Company a check
while Eugene Arriesgado issued Private Respondent Far East Bank and Trust Company
three checks; both checks totaling the amount of P25,250,000.00. Tancuan and
Arriesgado exchanged each others checks and deposited them with their respective
banks for collection. When FEBTC presented Tancuans HBSTC check for clearing, it
was dishonored for being DAIF. Meanwhile, HBSTC sent Arriesgados 3 FEBTC checks
through the Philippine Clearing House Corporation (PCHC) to FEBTC but was returned
for being DAIF. HBSTC receive the notice of dishonor but refused to accept the checks
and returned them to FEBTC through the PCHC for the reason Beyond Reglementary
Period, implying that HBSTC already treated the 3 checks as cleared and allowed the
proceeds thereof to be withdrawn. FEBTC demanded reimbursement for the returned
checks and inquired from HBSTC whether it had permitted any withdrawal of funds
against the unfunded checks. HBSTC, however refused to make any reimbursement
and to provide FEBTC with the needed information. Thus, FEBTC submitted the dispute
for arbitration before the PCHC Arbitration Committee, under its Supplementary Rules
on Regional Clearing to which FEBTC and HBSTC are bound as participants in the
regional clearing operations administered by the PCHC. While the arbitration
proceeding was still pending, FEBTC filed an action for sum of money and damages
with preliminary attachment against HBSTC. HBSTC moved to dismiss on the ground

that there is no cause of action and because it seeks to enforce an arbitral award which
as yet does not exist. The trial court denied the motion to dismiss and the motion for
reconsideration. Petitioner then filed a petition for certiorari with respondent CA to which
it had dismissed.
Issue:
Whether or not private respondent which commenced an arbitration proceeding under
the auspices of the PCHC may subsequently file a separate case in court over the same
subject matter despite the pendency of that arbitration, simply to obtain the provisional
remedy of attachment against the adverse party in the arbitration proceeding.
Ruling:
We find no merit in the petition. Section 14 of Republic Act 876, otherwise known as the
Arbitration Law, allows any party to the arbitration proceeding to petition the court to
take measures to safeguard and/or conserve any matter which is the subject of the
dispute in arbitration.
Petitioners exposition of the foregoing provision deserves scant consideration. Section
14 simply grants an arbitrator the power to issue subpoena and subpoena duces
tecum at any time before rendering the award. The exercise of such power is without
prejudice to the right of a party to file a petition in court to safeguard any matter which is
the subject of the dispute in arbitration. In the case at bar, private respondent filed an
action for a sum of money with prayer for a writ of preliminary attachment. Undoubtedly,
such action involved the same subject matter as that in arbitration, i.e., the sum of
P25,200,000.00 which was allegedly deprived from private respondent in what is known
in banking as a kiting scheme. However, the civil action was not a simple case of a
money claim since private respondent has included a prayer for a writ of preliminary
attachment, which is sanctioned by section 14 of the Arbitration Law.
Simply put, participants in the regional clearing operations of the Philippine Clearing
House Corporation cannot bypass the arbitration process laid out by the body and seek
relief directly from the courts. In the case at bar, undeniably, private respondent has

initiated arbitration proceedings as required by the PCHC rules and regulations, and
pending arbitration has sought relief from the trial court for measures to safeguard
and/or conserve the subject of the dispute under arbitration, as sanctioned by section
14 of the Arbitration Law, and otherwise not shown to be contrary to the PCHC rules
and regulations.
At this point, we emphasize that arbitration, as an alternative method of dispute
resolution, is encouraged by this Court. Aside from unclogging judicial dockets, it also
hastens solutions especially of commercial disputes. The Court looks with favor upon
such amicable arrangement and will only interfere with great reluctance to anticipate or
nullify the action of the arbitrator. Wherefore, premises considered, the petition is hereby
dismissed and the decision of the court a quo is affirmed.

LM POWER ENGINEERING CORPOR ATION,


petitioner, vs
.CAPITOLINDUSTRIALCONSTRUCTIONGROUPS,INC.,
respondent

FACTS: Petitioner and Respondent entered into a


Subcontract Agreement involving electrical work at
the Third Port of Zamboanga. Two years thereafter,
Respondent took over some of the work contracted to
Petitioner. Allegedly, the latter had failed to finish it
because of its inability to procure materials.
Upon completing its task under the Contract,
Petitioner billed Respondent in the amount of P6.7M.
Respondent, however, refused to pay and contested
the accuracy of the amount of advances and billable
accomplishments listed by Petitioner. Respondent also
took refuge in the termination clause of the
Agreement. That clause allowed it to set off the cost
of the work that Petitioner had failed to undertake

due to termination or take-over against the amount


it owed the latter.
Because of the dispute, Petitioner filed with the RTC of
Makati aComplaint for Collection of the amount
representing the alleged balance due it under the
Subcontract.
Instead
of
submitting
anAnswer,
Respondent filed a Motion to Dismiss, alleging that
the Complaint was premature because there was no
prior recourse to arbitration.
RTC denied the Motion to Dismiss on the ground that
the dispute did not involve the interpretation or the
implementation of the Agreement and was, therefore,
not covered by the arbitral clause. The RTC ruled that
the take-over of some work items by Respondent was
not equivalent to a termination, but a mere
modification, of the Subcontract. The latter was
ordered to give full payment for the work completed
by Petitioner.
On appeal, the CA reversed the RTC and ordered the
referral of the case to arbitration. The CA held as
arbitrable the issue of whether Respondents takeover of some work items had been intended to be a
termination of the original contract under Letter K
of the Subcontract.
Hence, this Petition for Review on Certiorari under Rule 45.
ISSUES:
1. Whether or not there exists a controversy/dispute
between Petitioner and Respondent regarding the
interpretation and implementation of the Subcontract
Agreement that requires prior recourse to voluntary
arbitration?;

2. In the affirmative, whether or not there is a need to file a


request first with the CIAC in order to vest it with
jurisdiction to decide a construction dispute?
ARGUMENTS:
1.Petitioner claims that there is no conflict regarding the
interpretation or the implementation of the Agreement.
Thus, without having to resort to prior arbitration, it is
entitled to collect the value of the services it rendered
through an ordinary action for the collection of a sum of
money from Respondent.
On the other hand, Respondent contends that there is a
need for prior arbitration as provided in the Agreement.
This is because there are some disparities between the
parties positions regarding the extent of the work done,
the amount of advances and billable accomplishments,
and the set off of expenses incurred by Respondent in its
take-over of Petitioners work.
2.According to Petitioner, assuming arguendo that the
dispute is arbitrable, the failure to file a formal request
for arbitration with the CIAC precluded the latter from
acquiring jurisdiction over the question.
RULING:
The Petition is unmeritorious; hence, DENIED.
assailed Decision of the CA is AFFIRMED.

The

1.
YES. SC sides with Respondent. The instant case involves
technical discrepancies that are better left to an arbitral body
that has expertise in those areas.
2.
NO. SC is not persuaded with Petitioners contention. Section
1 of Article III of the NEW Rules of Procedure Governing
Construction Arbitration has dispensed with the requirement
to submit a request for arbitration. Recourse to the CIAC may
now be availed of whenever a contract contains a clause for
the submission of a future controversy to arbitration.
RATIO DECIDENDI:
1.
In the instant case, the Subcontract has the following arbitral
clause:
6. The Parties hereto agree that any dispute or conflict as
regards to interpretation and implementation of this
Agreement which cannot be settled between [respondent]
and [petitioner] amicably shall be settled by means of
arbitration x x x.
Clearly, the resolution of the dispute between the parties
herein requires a referral to the provisions of their
Agreement. Within the scope of the arbitration clause are
discrepancies as to the amount of advances and billable
accomplishments, the application of the provision on
termination, and the consequent set-off of expenses.
A review of the factual allegations of the parties reveals that
they differ on the following questions, the resolutions of
which lies in the interpretation of the provisions of the
Subcontract Agreement:
1. Did a take-over/termination occur?

2.
3.

May the expenses incurred by Respondent in the takeover be set off against the amounts it owed Petitioner?
How
much
were
the
advances
and
billable
accomplishments?

Being an inexpensive, speedy and amicable method of


settling disputes, arbitration along with mediation,
conciliation and negotiation is encouraged by the SC. Aside
from unclogging judicial dockets, arbitration also hastens the
resolution of disputes, especially of the commercial kind. It is
thus regarded as the wave of the future in international civil
and commercial disputes. Brushing aside a contractual
agreement calling for arbitration between the parties would
be a step backward.
Consistent with the above-mentioned policy of encouraging
alternative dispute resolution methods, courts should liberally
construe arbitration clauses. Provided such clause is
susceptible of an interpretation that covers the asserted
dispute, an order to arbitrate should be granted. Any doubt
should be resolved in favor of arbitration.
2.
Section 1 of Article III of the NEW Rules of Procedure
Governing Construction Arbitration provides:
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.

As clearly explained in China Chang Jiang Energy Corporation


(Philippines) v. Rosal Infrastructure Builders et al. (an
extended unsigned Resolution) and reiterated in National
Irrigation Administration v. Court of Appeals [1999], from
which SC quote thus:
Under the present Rules of Procedure, for a particular
construction contract to fall within the jurisdiction of CIAC, it
is merely required that the parties agree to submit the same
to voluntary arbitration unlike in the original version of
Section 1, as applied in the Tesco case, the law as it now
stands does not provide that the parties should agree to
submit disputes arising from their agreement specifically to
the CIAC for the latter to acquire jurisdiction over the same.
Rather, it is plain and clear that as long as the parties agree
to submit to voluntary arbitration, regardless of what forum
they may choose, their agreement will fall within the
jurisdiction of the CIAC, such that, even if they specifically
choose another forum, the parties will not be precluded from
electing to submit their dispute before the CIAC because this
right has been vested upon each party by law, i.e., E.O. No.
1008.
Clearly, there is no more need to file a request with the CIAC
in order to vest it with jurisdiction to decide a construction
dispute.
The arbitral clause in the Agreement is a commitment on the
part of the parties to submit to arbitration the disputes
covered therein. Because that clause is binding, they are
expected to abide by it in good faith. And because it covers
the dispute between the parties in the present case, either of
them may compel the other to arbitrate.