PHILROCK, INC. vs.

CONSTRUCTION INDUSTRY ARBITRATION

COMMISSION
GR Nos. 132848-49, June 26, 2001

FACTS:

Private respondent Cid spouses filed a complaint for damages against Philrock

and its officers. At the initial trial date, both parties agreed to refer the matter
to the Construction Industry Arbitration Commission (CIAC). A preliminary
conference was held among the parties and their appointed arbitrators. At
these conferences, disagreements arose as to whether moral and exemplary
damages and tort should be included as an issue along with breach of
contract, and whether the seven officers and engineers of Philrock who are
not parties to the Agreement to Arbitrate should be included in the arbitration
proceedings. So common ground could be reached by the parties" hence, both
the Cid spouses and Philrock requested that the case be remanded to the trial
court. The Court ordered that it no longer had jurisdiction over the case and
remanded the same to CIAC for arbitral proceeding. The parties proceeded to
finalize, approve and sign the terms of reference which stated that the parties
agree that their differences be settled by an Arbitral tribunal. $hereafter, the
petitioner filed a motion to dismiss alleging that the CIAC has lost jurisdiction
over the case.

ISSUE:

 Whether or not the Construction Industry Arbitration Commission (CIAC) has

jurisdiction over the case?

RULING:

 The petition has no merit. 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 Petitioner1s contention is untenable because 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. It even concluded and signed the
terms of' reference in which the parties stipulated the circumstances leading to
the dispute summarized their respective positions, issues, and claims" and
identified the composition of the tribunal of arbitrators. The document clearly
confirms both parties1 intention and agreement to submit the dispute to
voluntary arbitration. In view of this fact, we fail to see how the CIAC could
have been divested of its jurisdiction. The Court will not countenance the effort
of any party to subvert or defeat the objective of voluntary arbitration for its
own private motives. 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.
EXCELLENT QUALITY APPAREL, INC., vs. WIN MULTI RICH BUILDERS, INC.
GR No. 175048, February 10, 2009

Facts:

Petitioner Excellent Quality Apparel, Inc. then represented by Max L.F.

Ying,Vice-President for Productions, and Alfiero R. Orden, Treasurer, entered
into a contract with Multi-Rich Builders (Multi-Rich) represented by Wilson G.
Chua(Chua), its President and General Manager, for the construction of a
garment factory within the Cavite Philippine Economic Zone Authority (CPEZ).

The duration of the project was for a maximum period of five (5) months or 150
consecutive calendar days. Included in the contract is an arbitration clause.

Respondent Win Multi-Rich Builders, Inc. (Win) was incorporated with the
Securities and Exchange Commission (SEC) on 20 February 1997 with Chua
as its President and General Manager.-

On 26 January 2004, Win filed a complaint for a sum of money against

petitioner and Mr. Ying amounting to P8,634,448.20.

Petitioner filed an Omnibus Motion claiming that it was neither about to close.
It also denied owing anything to Win, as it had already paid all its obligations
to it.-

Petitioner pointed to the presence of the Arbitration Clause and it asserted that

the case should be referred to the Construction Industry Arbitration
Commission(CIAC) pursuant to Executive Order (E.O.) No. 1008.

 In the hearing held, the counsel of Win moved that its name in the case be
changed from "Win Multi-Rich Builders, Inc." to "Multi-Rich Builders, Inc."-

It was only then that petitioner apparently became aware of the variance in the
name of the plaintiff.-

In the Reply filed by petitioner, it moved to dismiss the case since Win was not
the contractor and neither a party to the contract, thus it cannot institute the
case.

Petitioner obtained a Certificate of Non-Registration of Corporation/Partnership

from the SEC which certified that the latter did not have any records of
a "Multi-Rich Builders, Inc."

Moreover, Win in its Rejoinder did not oppose the allegations in the Reply. Win
admitted that it was only incorporated on 20 February 1997 while the
construction contract was executed on 26 March 1996. Likewise, it admitted
that at the time of execution of the contract, Multi-Rich was a registered sole
proprietorship and was issued a business permit by the Office of the Mayor of
Manila.

RTC denied the motion but was reversed by CA.-

Hence, this petition.

ISSUES:

1. Does Win have a legal personality to institute the present case?

2. Does the RTC have jurisdiction over the case notwithstanding the presence
of the arbitration clause?

RULING:

 A suit seeking to enforce the contractual rights of a single proprietorship, that

is, collection of receivables arising from a construction agreement must be
brought in the name of the proprietor himself. Such suit cannot be brought
either in the name of a corporation organized by the proprietor in view of the
separate personality of a corporation there being no showing that the
proprietor assigned the receivables to the corporation, or even in the registered
name of the single proprietorship as a sole proprietorship is not vested with
any juridical personality to file or defend an action.
Metropolitan Cebu Water District vs. Mactan Rock Industries, Inc.,
GR No. 172438, July 4, 2012

FACTS:

Petitioner Metropolitan Cebu Water District (MCWD) is a government-owned

and controlled corporation created pursuant to PD 198, and is mandated to
supply water within its service area. Respondent Metro Rock Industries, Inc.
(MRII) is a domestic corporation. MCWD entered into a water supply contract
with MRII wherein it was agreed that MRII would supply MCWD with potable
water in accordance with WHO standard or the Philippine national standard,
with a minimum guaranteed annual volume. Six years later, MRII filed a
complaint against MCWD with the Construction Industry Arbitration
Commission (CIAC). It sought the reformation of Clause 17 of the water supply
contract (Price Escalation/De-Escalation Clause), payment of the unpaid price
escalation/adjustment and the payment of unpaid variation/extra work order
and interest/cost of money up to December 2003.

ISSUE:

Whether or not the Construction Industry Arbitration Commission has

jurisdiction over disputes arising from a water supply contract.

RULING:

The court finds in the affirmative. The Construction Industry Arbitration

Commission was created under EO 1008 (Creating an Arbitration Machinery
for the Philippine Construction Industry), in recognition of the need to
establish an arbitral machinery that would expeditiously settle construction
industry disputes.

Under Section 4 of EO 1008, “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
disputes arise before or after the completion of the contract, or after the
abandonment or breach thereof… 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.”

 The text of Section 4 of EO 1008 is broad enough to cover any dispute arising
from, or connected with, construction contracts, whether these involve mere
contractual money claims or execution of the works. Unless specifically
excluded, all incidents and matters relating to construction contracts are
deemed to be within the jurisdiction of the CIAC. Moreover, the parties
characterized the water supply contract as one involving construction, as its
arbitration clause specifically refers disputes, controversies or claims arising
out of or relating to the Contract or the breach, termination or validity thereof.
MORAL DAMAGES IN ARBITRAL AWARDS

In “Philrock, Inc. vs. Construction Industry Arbitration Commission (CIAC) and

Spouses Vicente and Nelia Cid” (S.C. G.R. 132848-49, June 26, 2001), the
Supreme

Court declared: “(W)hen parties agree to settle their disputes arising from or

Connected with construction contracts, the CIAC acquires primary jurisdiction.

It may resolve not only the merits of such controversies; when appropriate, it
may also award damages, interests, attorney’s fees and expenses of litigation.”

The spouses Vicente and Nelia Cid purchased ready mix concrete from
petitioner Philrock. The concrete delivered turned out to be of substandard
quality. As a result, respondents sustained damages when the structures they
built using such ready mix concrete developed cracks and honeycombs.
Initially, the spouse Cid filed suit for damages against Philrock and seven of its
officers and engineers with the Regional Trial Court. The Regional Trial Court
dismissed the case and referred the case to the CIAC because the Cid spouses
and Philrock had executed an Agreement to Arbitrate with the CIAC. At the
CIAC, however, Philrock questioned the jurisdiction of CIAC over the 7Philrock
officers and engineers arguing they were not signatories to the agreement to
arbitrate. The CIAC referred back the case to the RTC which, however, refused
to reassume jurisdiction. To break the impasse, the spouses Cid opted to
exclude the seven officers and engineers to pave the way for the resumption of
jurisdiction by the CIAC. 

The CIAC subsequently rendered judgment in favor of the Spouses Ciddirectin
gthe respondent Philrock to reimburse/refund the payments made and
awarded the Spouses Cid P50,000 as moral damages, P50,000 as nominal
damages,P50,000 as attorney’s fees.

Philrock elevated the CIAC decision to the Court of Appeals contesting

the jurisdiction of the CIAC and assailing the propriety
of the monetary awards in favor of the Spouses Cid. The Court of Appeals
sustained the CIAC decision. Respondent filed a petition for review with the
Supreme Court.

 The Supreme Court ruled that “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 arbitrary. IT ruled that
after submitting itself to arbitration proceedings and actively participating
therein, petitioner is estopped from assailing the jurisdiction of the CIAC.
Interestingly, the Supreme Court sustained the award of actual damages.
However, since actual damages were proven and respondents were amply
compensated, the Supreme Court withdrew the award for nominal damages. It
also sustained the award of attorney’s fees even if the respondents represented
themselves before the CIA because they purportedly incurred litigation
expenses in pursuing their action before the CIAC, the Court of Appeals and
also at the Supreme Court.