HEUNGHWA INDUSTRY CO., LTD. vs.

DJ BUILDERS CORPORATION
G.R. NO. 169095, December 8, 2008
AUSTRIA-MARTINEZ, J.

Facts:
Petitioner secured a contract with DPWH to construct a road in Palawan.
Petitioner entered a sub-contract with respondent for earthwork which contained an
arbitration clause. Petitioner failed to pay respondent the agreed price hence
respondent filed a case for breach of contract. Petitioner alleged that it was not
obliged to pay respondent because the latter caused the latter caused the halting of
work due to their poor equipment. Parties underwent arbitration under CIAC but
some of their issues were left to the RTC to resolve.

CIAC ordered respondent to dismiss cases filed under the RTC. Petitioner filed
with the RTC a motion to withdraw the dismissal as it never authorized the referral
to CIAC. Later Petitioner filed a motion to dismiss and informed CIAC that petitioner
wished to have RTC rule on the issues.

Issue: Who has jurisdiction?

Ruling: CIAC has jurisdiction.

The arbitration clause in a construction contract or the submission to

arbitration of a construction dispute shall be deemed an agreement to submit said
controversy to the CIAC’s jurisdiction, notwithstanding the reference to other
arbitration institutions in said contract or submission. Thus, for a construction
contract to fall within the jurisdiction of the CIAC, the parties only need to agree to
submit the same to voluntary arbitration.

It is not necessary that the parties name CIAC for the latter to acquire
jurisdiction over the contract. If the parties stipulate on voluntary arbitration, their
agreement will fall within the jurisdiction of the CIAC 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

Hence, the two (2) acts which may vest CIAC with jurisdiction over a
construction dispute are:
(a) The presence of an arbitration clause in a construction contract; or
(b) In the absence of such arbitration clause, the agreement by the parties to
submit the construction dispute to arbitration.

CIAC’s jurisdiction is conferred by law and cannot be waived by agreement or

acts of the parties.