a e ® S ° Republic of the Philippines Supreme Court atl ROWULO LAW Lionany ‘THIRD DIVISION Gentlemen: ot hereunder 2 am of this Court dated sion, isa résolution of the Third Division. 2 Gs RR, Now 125706 (China » Chany corporation (Phits-1 v8. Coush of Appeals, ns 5 2 this case was deliberated upon and’; fue |) | Court's conelusions were reached “in ‘consultations? Court hesecfter the case was assigned ito ‘cthe aan eneree the writing of the Court's resolution. ® Pimtersal Resolution ~ ot for releas : qhe Clerk of Court Taira Division Besrene Court, wanile® Be 7 6 Republic of the Philippines Supreme Court Manila TuiRp Division Geaslemen: ‘Quoted hereunder, for your information, is resolution of the Third Division “of this Court dated SEP 3 9 1996 * | "GRSNo. 128706 «CHINA CHANG JIANG EQERGY CORPORATION (PHILIPPINES) oP yersye 2 ROSAL - INFRASTRUCTURE BUILDERS, représented by its General Manager, ALBERTO" S." SURLA, CONSTRUCTION INDUSTRY "ARBITRATION COMMISSION, PRUDENCIO F. BARANDA, nd the COURT OF APPEALS. , * Petitioner questions the validity of Construction Industry A “itration ‘Commission (CLAC) Resolution 3-93 amending Section 1, Article I of CAC Rules of Procedure Governipg Construction Arbitration promulgated’ by CIAC ! No. 1008, which pertinendly provides as follows: ARTICLE IL On rehabilitation of the power plant, inciuding he comsucion of check dams al February 21 1994, petidoner engiged the scvigey A sespondent” Few Infrastucnure Builders ("RIB") as sub- contactor,@ mh @ a5iHe construction of Check Damn No. 1 al Sadyo River, Binga, Hogon. Benguet, in this conmact the parties agreed to submit disputes arising therefrom to arbitration ctore tne Arbitration of tne Intemational Chamber of Commerce. \when a dispute arose benween the pares, respondent RIB filed 2 compat before respondem CIAC for arbitration, Petitioner filed its answer with compulsory counterclaim and raised therein the issue of lack of juristeton onthe par of IAC. Init order dated August 1, 1995, respondent CLAC consider the question of jurisdiction merely as a special defense which can be included as part of the issues in the Terms of Reference, Petitioner filed » motion for reconsideration which was denied by respondent CLAC in its order dated October 4, 1998 Petitioner raised the sole issue of lack of jurisdiction in a petition for sentiorar and prohibition, witha prayer for a temporary retaining oer and writ of preliminary inuneton with respondent Court of Appeals. Ina decision dated February 27,'1996, respondent court dismissed the petition. Pettdoner filed a motion for reconsideration but the same was denied by respondent court in a resolution dated July 22, 1996. Hence, the instant petition, We find no meritorious basis in the petition to sustain a reversal of the ruling of respondent court upholding the jurisdietion of the CLAC ‘in this case. Executive Order No. 1008, otherwise known as the "Construction Industry Arbitration Law," defines the jurisdiction of CAC busi:e 72 @ psr% 0 Section 4. Jurisdiction. - The CIAC shall bave original end exclusive jurisdiction over disputes arising from, or connected with consracts entered into by parties involved in construction in the Philippines. whether the dispute arises before or ater the competion of the coniracs, oF after the abandonment or breach thereof. These disputes may invelve goverment or private contracts. For the Board to squire jurisdiction, the parties to a dispute must agree 19 subst the same to voluntary arbitration, Petitioner contends that is Court had already interpreted this particular provision of the law in the case of Tesey Services Incorporated vs, Feri, 20Y SERA 440°]1992/ 10 mean that respondent CLAC can acquire jurisdiction ove the dispute only when the parties have agreed to submit their dispute 10 volustary surbitration before respondent CLAC itself. This contention is erroneous, ‘The ruling of this Court in tig above-cited Tesco case must be réad in the light of facts obtsining and the governing law in relation to the applicable rules in period. When we nuled in Tesco that CLAC had no jurisdiction force during cover the dispute, we were applying the prevailing rules of procedure duly promulgated by the CIAC pursuant to its rule-making power provided in Section 21 offits enabling law. Section I ofthe said rules specifically required that a party to a construction contract wishing fo have recourse to arbitration by the CIAC shall submit its Request for Arbitratin in sufficient copies to the Secretariat of the CIAC. Since the Court found that there was no Request for Arbitration filed with the Seeretariat of the CIAC because private respondent LAROSA in the ease fil a petition for, injunction with the Regional. Trial Court of Quezon City, * inevitable conclusion Kad to be that CIAC did not acquire jurisdiction ov 4 disputes arising froma the sub-contract agreement berween TESCO a4 LAROS!@ Page 4- ® SFO, in Said case. Accordingly, this Court sustained the jurisdiction of the regular court in that parieular instance. ‘The Tesco ruling is not binding in the case at bench, Significantly, tie 1988 CIAC mules of procedure before the CAC which ‘were applied by this Court in Tesco had been duly amended by CIAC Resolutions ‘No, 2-91 and 3-93 to now zead as follows: SECTION |. Submission.to CLAC furisdiction - An arbitration clause in a construction contractor 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 2 different arbitral institution or arbitral body in such contract or submission, When a contract contains a clause for the submission of a future controversy to arbitration, itis not necessary for the parties to enter into" a submission agreéiment before the claimant may invoke the jurisdiction cf the CIAC. : Petitioner submits that CLAC Resolution No. 3-93 is null and void insofar as it prohibits the parties from submitting the dispute for arbitration to an arbitral body other than respondent CIAC because, so it is contended, it goes beyond the basic law it seeks to implement, .O. No. 1008 (Rollo, p.26). We do not agree, ‘A mete cursory reading of Section 1, Article III of the CLAC Rules, as amended by Resolution No, 3-93 reveals no festriction whatsoever on aay party fiom submining a dispute for arbitration to an arbitral body other than the CAC.” * On the contrary, the new rule, a5 amended, merely implements the leer and theay = Page 5 [25700 * © i | + spisit of its enabling law, E.0. No. 1008. which vests jurisdiction upon tt in the following manner Section 4. Jurislicrion, - The CIAC shall have original and exclusive jurisdicion over disputes arising from, or coneected with, Contracts entered into by parties involved in constnuction in the Philippines, whether the dispute arises before or aftr the completion of the contract, oF after the abandonment or breach thereof. These tispates may involve government or private contacts, For the Beard to acquire jurisdiction, (he partis 1o a dispute ost agree 12 (Emphasis spied) cesta stint submit the sameto voluntary arbitration, i vat ew merely eu fra parr conseon ON |) itn the utc o CIAC ifr te psc oa my olny arinaon. Url nthe ogi veson teed or j ‘ disputes arising from their agreement specifically tothe, IAC for, th acquire jurisdiction over such disputes. Rather, itis plain and cee the parties agree to submit to voluntary ay choose, their agreement will fall within the j that, even if they specifically choose another fon precluded from electing to'submit their dispute bef has been vested upon each party by Jaw, .¢. EO} ‘This Cours pronouncements inthe vs. Lim Kim Stoet Builders In. 228 SCRA‘accompany ordinary litigation, especially liligaton which goes theo ‘he entire hierarchy of courts, Executive Order No. 1008 crested an arbitration facility to which the construction indusiry in the Philippines ean have recourse, ‘The Executive Order was enacted to encousaue the arly and expeditious settlement of disputes in the construction industry, a public policy the implementation of which is necessary and imporant for the realization of national development goals, These noble objectives are what Resolusions No, 2-91 and 3:93 seek to implement, which Section’), prior to its amendment, effectively curtsiled, Rather unfortunatly, this particular provision of CIAC Rules was.not the one at issue in the Tesco ease, Thus, no ruling on that point could be passed upon Now that Section 1, Anicle Ill as amended, is submited to lst in the present petition, we rle to uphold is validity with fall cerainy, However, this Should not be understood fo miean that the parties may no longer stpuste to submit their disputes toa different forum of arbitral body. Parties may continue to Stipolte as regards ther preferred forum incase of voluntary abiteation, but in so doi, they mlay not divest the CIAC of jurisdiction as provided by law. Under the elementary principle on te law on contracts that laws obiinng in a jursivon form part of all agreements, whea the Jaw provides tat the Board aquies Jisisdicton when the parties to the contract agree to submit the same o voluntary arbitration, the law in effet, automaticaly gives the parties an alteraaive forum before whom they may suai their disputes, That altemative forum isthe CLAC, “This, to the mind of the Cour, isthe real spirit of E.O. No, 1008, as implemented by Section 1, Arice I ofthe CIAC Rules. ‘The herein interpretation is not, in its strict sense, a reversal of a previous pronouncement in the Tesco case necessitating a ruling by the Court En Banc, ae be| 4 | i i | (ana os , considcring the variance in the factual circumstances, as well as the governing procedural rules applicable to the two distinct cases. ee The Court slso takes this opportunity to dispel any mistaken notion that substantial rights were created or modified by the CIAC ia its Resolutions ®. 91 and 3-95, as reyards matters of jurisdiction, We would also like to clrfy that, such rights ere vested as early as ofthe time E.O. No. 1008 which took effet in February 1985. However, said provision had not been properly implemented in the original version of Section 1 of the CLAC Rules. Thus, amendments through Resolutions No, 2-91 and 3-93 were called for. WHEREFORE, premises considered, the instant petition is hereby’ DISMISSED and the appealed decision is hereby AFFIRMED. SO ORDERED. “ hn uyfia ¥, CARRE Serko Cont LUCTTA A. SORIANO (Clerk of Cut sesres S580 28 a aasan polilts YELEARAZA AND CEUZ” Counsel for Petitioner 5th Moor, UA Building 4116 Ferea'st., Legaspi Village Makati City The Court of Appeals OA GR. No. 38834 Hanila 125708/seres/shake WeLes @ - race - o& CoNsmRucrION mousse ARBITRADTON COMMISSION 6th Fir.. Finnan Gentre Bigg. Fordesiilas St-, Salcedo Vitiage Naketi City Me. Prudencio Baranga Sth Fir.. Finnan Centre Bldg. Tordesiilas 8t., Salcedo Village Haketi city Atty. Woe B. Villanueva SANIDAD Law op#TcS. Counsel tor Private Respondente Suite 205, Laperal Building Session Hoad, Baguio City Tne Judgment Division Suprene Court, Manila 125708/seres/suake