LICOMCEN INCORPORATED V. FOUNDATION SPECIALISTS, INC. | G.R. No.

167022 & 169678 | AUGUST 31,

2007

[FACTS]
LICOMCEN is a corporation engaged in the business of operating shopping malls. The City Government of Legaspi
leased its lot to LICOMCEN with a contract to construct a city mall (CITIMALL). LICOMCEN engaged ES De Castro
and Associates (ESCA) as its engineering consultant.

LICOMCEN and Foundation Specialist, Inc. (FSI) signed a construction agreement for the bored pile foundation of
CITIMALL. Salient provisions of the General Conditions of Contract (GCC) is that LIMCONCEN was given the right to
suspend the work or terminate the contract and questions arising out or in connection with the contract or its breach
should be litigated in the courts of Legaspi, except where otherwise stated, or when such question is submitted for
settlement through arbitration. GC-61 also provided that disputes arising out of the execution of the work should first
be submitted to LICOMCEN for resolution, whose decision shall be final and binding, if not contested within thirty (30)
days from receipt. Otherwise, the dispute shall be submitted to the Construction Industry Arbitration Commission
(CIAC) for arbitration.

FSI commenced work. But, LIMCOMCEN ordered construction activities to be suspended due to filed criminal
complaints with the Ombudsman for violation of the Anti-Graft an Corrupt Practices Act against LIMCOMCEN and
Legaspi. However, steel bars ordered by LIMCOMCEN from FSI arrived at the Legaspi port and was delivered to the
jobsite. LIMCOMCEN ordered demobilization of the materials and equipment for the project. FSI demanded payment
for its work accomplishments amounting to P22,667,026.97 but LIMCOMCEN took no heed.

Ombudsman dismissed the cases filed but LIMCOMCEN did not lift the suspension. Instead, it hired Designtech as
its new project consultant. FSI reiterated demand for payment, but LIMCOMCEN refused to pay, prompting FSI to file
a petition for arbitration with the CIAC.

LIMCOMCEN denied the claim of FSI, arguing lacks factual and legal basis and avers that CIAC has no jurisdiction to
the suit, claiming that the jurisdiction was vested in the regular courts and that disputes to CIAC concerns the
execution of works, not if it concerns breach of contract.

The parties agreed to submit the controversy to the Arbitral Tribunal and signed the Terms of Reference.
LIMCOMCEN filed an Ex Abundati Ad Cautela Omnibus Motion and reiterated its claims.

[LOWER COURT’S RULING]

CIAC: denied LIMCOMCEN’s omnibus motion on the ground that it runs counter to the stipulations in the Terms of
Reference and rendered a decision in favor of FSI. LIMCOMCEN elevated the decision to CA and faulted CIAC for
taking cognizance of the case.

CA: affirmed CIAC but modified the amount to be paid. Parties filed MRs but was denied. Hence these petitions.

[ISSUE/S]
WON the Tribunal had jurisdiction over the dispute.

[HELD]
Yes. Jurisdiction is conferred by the constitution or by law. Sec. 4 of EO 1008 or the Construction Industry Arbitration
Law:

SECTION 4. Jurisdiction. — 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, whether the dispute arises before or after the completion of the contract, or
after the abandonment or breach thereof. These disputes may involve 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 law are disputes arising from employer- employee relationships which shall continue to be covered by the
Labor Code of the Philippines.

Moreover, Sec. 1, Art. III of the Rules of Procedure Governing Construction Arbitration:

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.

Clearly, the CIAC has original and exclusive jurisdiction over disputes arising from or connected with construction
contracts.

Moreover, LICOMCEN submitted itself to the jurisdiction of the CIAC when its president signed the TOR during the
preliminary conference; the suit itself arose from the execution of works defined in the contract; FSI complied with the
condition precedent in GC-61; the issue of jurisdiction was rendered moot by LIMCOMCEN’s active participation in
the proceedings before the CIAC; LIMCOMCEN did not seek relief from the ruling thus, making LIMCOMCEN
estopped from assailing the jurisdiction of the CIAC.

Thus, petition is denied.