LM POWER vs.

CAPITOL INDUSTRIAL

Facts:
Facts:

 This is a Petition Review on Certiorari fled by the petitioner

Petition for Review petitioner LM Power
Power against
against
Respondent
Respondent Capitol Industrial seeking to set aside the decision o CA

Petitioner
Petitioner LM Power !ngineering Corporation and Respondent
Respondent Capitol Industrial Construction
"roups Inc entered into a #ubcontract Agree$ent
Agree$ent in%ol%ing electrical work at the Third Port
o &a$boanga 'ue to the inability o the petitioner to procure $aterials( Capitol Industial
took o%er so$e o the work contracted to the or$er Ater the co$pletion o the contract(
petitioner billed respondent in the a$ount o P)( *++(,+-./ but the respondent reused to
pay

Petitio
etitioner
ner fled with
with the RTC o Maka
Makati
ti a Co$pla
Co$plaint
int or the colle
collecti
ction
on o the a$ount
a$ount
representing
representing the alleged balance due it under the subcontract Respondent fled a Motion to
'is$iss( alleging
alleging that the Co$plaint was pre$ature(
pre$ature( due to the absence o prior recourse to
arbitration

RTC denied the Motion on the ground that the dispute did not in%ol%e the interpretation or
RTC denied
the i$ple$entation o the Agree$ent and was not co%ered by the arbitral clause and ruled
in a%or o the petitioner

Respondent
Respondent appealed to the CA, the latter re%ersed the decision o the RTC and ordered the
reerral
reerral o the case to arbitration

0ence( this Petition

ISSUE:
ISSUE:

123 there is a need or the prior arbitration beore fling o the co$plaint with the court

ELD:
ELD:

AFFIRMATI!E
AFFIRMATI!E

SC ruled that in the case at hand it in%ol%es technical discrepancies

SC ruled discrepancies that are better let to an
arbitral body that has e4pertise in the sub5ect $atter Moreo%er( the agree$ent between the
parties contains arbitral clause that 6any dispute or con7ict as regards
regards to interpretation
interpretation and
i$ple$
i$ple$ententati
ation
on o this
this agree$
agree$ent
ent which
which cannot
cannot be settl
settled
ed betwe
between
en respo
responde
ndentnt and
petitioner a$icably shall be settled by $eans o arbitration8 The resolution o the dispute
between the parties herein
herein re9uires
re9uires a reerral
reerral to the pro%isions o their agree$ent
agree$ent 1ithin
the scope o the arbitration clause are discrepancies as to the a$ount o ad%ances and
billable acco$plish$ents( the application o the pro%ision on ter$ination( and the
conse9uent seto; o e4penses

1ith respect to the disputes on the takeo%er<ter$ination and the e4penses incurred by
respondent in the takeo%er( the #C ruled that the agree$ent pro%ides specifc pro%isions
that any delay( e4penses and any other acts in %iolation to such agree$ent( the respondent
can ter$inate and can set o; the a$ount it incurred in the co$pletion o the contract

SC tackled also that there=s no need or the prior re9uest or arbitration by the parties with
the Construction Industry Arbitration Co$$ission "CIAC# in order or it to ac9uire
 5urisdiction >ecause pursuant to Section $ of Artic%e III of t&e new R'%es of Proce('re
)overnin* Constr'ction Ar+itration( when a contract contains a clause or the
sub$ission o a uture contro%ersy to arbitration( it is not necessary or the parties to enter
into a sub$ission agree$ent beore the clai$ant $ay in%oke the 5urisdiction o CIAC
?urther$ore( the arbitral clause in the agree$ent is a co$$it$ent on the part o the parties
to sub$it to arbitration the disputes co%ered therein >ecause that clause is binding( they
are e4pected to abide by it in good aith

#ince a co$plaint with the RTC has been fled without prior recourse to arbitration( under RA
,*) @Arbitration Law the proper procedure is to re9uest the stay or suspension o such
action in order to settle the dispute with the CIAC