CASE DIGEST : PHILROCK VS CONSTRUCTION
INDUSTRY ARBITRATION COMMISSION (CIAC)
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 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, 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 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.
PHILROCK V. CONSTRUCTION INDUSTRY
ARBITRATION COMMISSION (G.R. NO. 132848-49)
Facts:
The Cid spouses, herein private respondents, were
purchasers of ready-mix concrete from petitioner
herein, PhilRock, Inc. The concrete delivered by the
latter turned out to be of substandard quality, and as a
result the structures built using such cement developed
cracks and honey combs. Respondents, thus, filed a
Complaint for Damages against petitioner with the RTC
of Quezon City, which then issued an order dismissing
the case and referring the same to CIAC because the
spouses and petitioner had filed an Agreement to
Arbitrate. Since no common ground can be reached by
the parties, they requested the case be remanded back
again to court, to which it had declared it no longer had
jurisdiction over the case and ordered the records of the
case to be remanded back again to CIAC. Petitioner
while contending the supposed jurisdiction of CIAC, the
latter rendered a decision in favor of the spouses. Thus,
petitioner filed a Petition for Review before the CA, to
which the latter dismissed. Hence this petition.
Issue:
Whether or not the CIAC could take jurisdiction over the
case of respondent spouses and petitioner after it had
been dismissed by both the RTC and CIAC.
Ruling:
The petition has no merit. Section 4 of EO 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 disputes to voluntary arbitration.
Further, petitioner continued participating in the
arbitration even after the CIAC order has been issued
as evidenced by their concluding and signing of the
Terms of Reference. The Court will not countenance
any effort of any party to subvert or defeat the objective
of voluntary arbitration for its own private motives.
Petitioner is stopped from assailing the jurisdiction of
the CIAC, merely because the latter rendered an
adverse decision.
EXCELLENT QUALITY APPAREL V. WIN MULTI
RICH BUILDERS (G.R. NO. 175048)
Facts:
Petitioner herein, Excellent Quality Apparel, entered
into a contract with Multi-Rich Builders for the
construction of a garment factory within the CPEZ. The
duration of the project was for a maximum of 5 months
and included in the contract is an arbitration clause that
any dispute among the parties shall be submitted to an
Arbitration Committee for its resolution. Respondent,
Win Multi-Rich Builders filed a complaint for sum of
money against petitioner, to which the latter then filed
an Omnibus Motion questioning the jurisdiction of the
trial court and pointing out the presence of an Arbitration
Clause in their contract. Petitioner also moved to
dismiss the case since respondent herein is neither a
contractor nor a party to the contract. Both the trial court
and CA found in favor of respondent herein. Hence the
present petition.
Issue:
Whether or not the RTC have jurisdiction over the case
notwithstanding the presence of an arbitration clause in
the contract.
Ruling:
The petition is granted. 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. EO 1008 does not distinguish between
claims involving payment of money or not. The CIAC
acquires jurisdiction over a construction contract by the
mere fact that the parties agreed to submit to voluntary
arbitration. The law doesn’t preclude parties from
stipulating a preferred forum or arbitral body but they
may not divest the CIAC of jurisdiction as provided by
law. 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.
METROPOLITAN CEBU WATER DISTRICT V.
MACTAN ROCK INDUSTRIES (G.R. NO. 172438)

Facts:
Petitioner Metropolitan Cebu Water District (MCWD), a
government-owned and controlled corporation, entered
into a Water Supply Contract with herein respondent,
Mactan Rock Industries, Inc. (MRII), wherein the latter
would supply MCWD with potable water with a minimum
guaranteed annual volume. Respondent filed a
complaint against MCWD with the CIAC citing the
arbitration clause of the contract and seeking 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.
MCWD filed its Answer, including a motion to dismiss
the complaint on the ground that CIAC had no
jurisdiction over the case, as the contract was not one
for construction or infrastructure. Petitioner then filed
two petitions before the CA which were both denied,
hence this petition.
Issues:
(1) Whether or not CIAC may exercise jurisdiction over
disputes arising from a water supply contract; and if so,
(2) Whether or not CIAC have a jurisdiction over a
complaint praying for a reformation of a water supply
contract.
Ruling:
(1) The Court finds in the affirmative. The motion for
reconsideration was denied by CA and MCWD never
appealed the case. Thus, the decision of the CA
became final and executory. The Court has held time
and again that a final and executory judgment, no
matter how erroneous, cannot be changed even by this
Court. The CA affirming the CIAC’s jurisdiction and it
becoming final, is now beyond the jurisdiction of the
Court to review or modify, even supposing for the sake
of argument, that it is indeed erroneous.
(2) 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.
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BF Corporation v. CA, 288 SCRA 267 (1998)
Facts:
Petitioner and respondent Shangri-la
Properties, Inc. entered into an agreement whereby the
latter engaged the former to construct the main
structure of the "EDSA Plaza Project," a shopping mall
complex in Mandaluyong. Petitioner incurred delay in
the construction work that SPI considered as "serious
and substantial." On the other hand, according to
petitioner, the construction works "progressed in faithful
compliance with the First Agreement until a fire broke
out damaging Phase I" of the Project. Hence, SPI
proposed the re-negotiation of the agreement between
them.
Petitioner and SPI entered into a written agreement
denominated as "Agreement for the Execution of
Builder's Work for the EDSA Plaza Project." Said
agreement would cover the construction work on said
project as of May 1, 1991 until its eventual completion.
According to SPI, petitioner "failed to complete the
construction works and abandoned the project." This
resulted in disagreements between the parties as
regards their respective liabilities under the contract.
Petitioner filed with the RTC of Pasig a
complaint for collection of the balance due under the
construction agreement. SPI and its co-defendants filed
a motion to suspend proceedings instead of filing an
answer. The motion was anchored on defendants'
allegation that the formal trade contract for the
construction of the project provided for a clause
requiring prior resort to arbitration before judicial
intervention could be invoked in any dispute arising from
the contract. Petitioner opposed said motion claiming
that there was no formal contract between the parties
although they entered into an agreement defining their
rights and obligations in undertaking the project.
Thereafter, upon a finding that an arbitration
clause indeed exists, the lower court denied the motion
to suspend proceedings as the Conditions of Contract
was not duly executed or signed by the parties, and the
failure of the defendants to submit any signed copy of
the said document,.
The lower court then ruled that, assuming that
the arbitration clause was valid and binding, still, it was
"too late in the day for defendants to invoke arbitration.
Considering the fact that under the supposed Arbitration
Clause invoked by defendants, it is required that "Notice
of the demand for arbitration of a dispute shall be filed
in writing with the other party . . . . in no case . . . . later
than the time of final payment . . . "which apparently,
had elapsed because defendants have failed to file any
written notice of any demand for arbitration during the
said long period of one year and eight months. The CA
annulled the orders of the RTC.
Issue: WON a petition for certiorari is proper
Held:
Yes. The rule that the special civil action of
certiorari may not be invoked as a substitute for the
remedy of appeal. The Court has likewise ruled that
"certiorari will not be issued to cure errors in
proceedings or correct erroneous conclusions of law or
fact. As long as a court acts within its jurisdiction, any
alleged errors committed in the exercise of its
jurisdiction will amount to nothing more than errors of
judgment which are reviewable by timely appeal and not
by a special civil action of certiorari."
The question of jurisdiction, which is a question
of law depends on the determination of the existence of
the arbitration clause, which is a question of fact. In the
instant case, the lower court found that there exists an
arbitration clause. However, it ruled that in
contemplation of law, said arbitration clause does not
exist. It is that mode of appeal taken by private
respondents before the CA that is being questioned by
the petitioners before this Court. But at the heart of said
issue is the question of whether there exists an
Arbitration Clause because if an Arbitration Clause does
not exist, then private respondents took the wrong mode
of appeal before the CA.
For this Court to be able to resolve the question
of whether private respondents took the proper mode of
appeal, which, incidentally, is a question of law, then it
has to answer the core issue of whether there exists an
Arbitration Clause which, admittedly, is a question of
fact.
Moreover, where a rigid application of the rule
that certiorari cannot be a substitute for appeal will
result in a manifest failure or miscarriage of justice, the
provisions of the Rules of Court which are technical
rules may be relaxed. As we shall show hereunder, had
the CA dismissed the petition for certiorari, the issue of
whether or not an arbitration clause exists in the
contract would not have been resolved in accordance
with evidence extant in the record of the case.
Consequently, this would have resulted in a judicial
rejection of a contractual provision agreed by the parties
to the contract.
In the same vein, this Court holds that the
question of the existence of the arbitration clause in the
contract between petitioner and private respondents is
a legal issue that must be determined in this petition for
review on certiorari.
William Golangco Construction Corporation v. Ray
Burton
Development Corporation, G.R. No. 163582, August
9, 2010
Facts:
Ray Burton Development Corporation (RBDC)
and William Golangco Construction Corporation
(WGCC) entered into a Contract for the construction of
the Elizabeth Place (Office/Residential Condominium).
WGCC filed a complaint with a request for
arbitration with the Construction Industry Arbitration
Commission (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.
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.
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 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.
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.
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.

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.