Heunghwa Industry v. DJ Builders
REITERATIONFacts
The Antecedents: Heunghwa Industry Co., Ltd. (petitioner), a Korean corporation, entered into a subcontract agreement with DJ Builders Corporation (respondent), a Philippine corporation, for earthwork and construction of a road project. The subcontract contained an arbitration clause. Respondent filed a collection case against petitioner for unpaid amounts. Petitioner counterclaimed, alleging poor performance by respondent caused work stoppage and non-payment from the DPWH. Procedural History: Parties jointly moved to submit specific issues to the Construction Industry Arbitration Commission (CIAC). Subsequently, petitioner sought to withdraw the referral, claiming lack of authorization from its counsel. The Regional Trial Court (RTC) and CIAC issued conflicting orders regarding jurisdiction and the referral of issues. The RTC initially recalled the case, then dismissed it without prejudice, and later reinstated it, declaring its prior dismissal order "without force and effect." The CIAC, on the other hand, consistently asserted its jurisdiction, denying petitioner's motions to dismiss. The Petition: Petitioner filed a petition for certiorari with the Court of Appeals (CA) assailing the CIAC's denial of its motion to dismiss and seeking to enjoin the CIAC from proceeding. Respondent also filed a petition for certiorari questioning the RTC's reinstatement of the case. The CA consolidated both petitions and ruled against petitioner, affirming the CIAC's jurisdiction. Petitioner then filed the present petition for review on certiorari with the Supreme Court.
Issue(s)
Whether the Court of Appeals erred in ruling that petitioner's petition for certiorari suffered from procedural infirmities, specifically the non-filing of a motion for reconsideration and the nature of the order denying a motion to dismiss. Whether the Court of Appeals erred in confirming the jurisdiction of the CIAC over the case. Whether the Court of Appeals erred in disregarding petitioner's request to remand the case to the CIAC for further reception of evidence.
Ruling
The petition is denied for lack of merit. The August 20, 2004 Decision and August 1, 2005 Resolution of the Court of Appeals are affirmed.
Ratio Decidendi
On the procedural infirmities: The Supreme Court agreed that the issue of jurisdiction raised by petitioner before the CA was a question of law, which could be an exception to the rule requiring a motion for reconsideration. However, the Court found that the denial of the motion to dismiss by the CIAC did not constitute a patent grave abuse of discretion amounting to lack or excess of jurisdiction, rendering certiorari an improper remedy in this instance. While the CIAC's reliance on Philrock, Inc. v. Construction Industry Arbitration Commission was noted as inaccurate regarding the specific facts of authorization, the Court ultimately found that the CIAC had jurisdiction based on the arbitration clause. On the jurisdiction of the CIAC: The Court affirmed that the CIAC has original and exclusive jurisdiction over construction disputes under Executive Order No. 1008, provided the parties agree to submit such disputes to arbitration. The presence of an arbitration clause in the subcontract agreement, as in this case, is sufficient to vest the CIAC with jurisdiction, irrespective of any reference to a different arbitral body. The Court clarified that the subsequent agreement to submit specific issues to CIAC was not a condition sine qua non for jurisdiction, as the arbitration clause itself already conferred it. The Court also noted that the RTC itself acknowledged the CIAC's expertise in construction disputes. On the remand of the case: The Court found no merit in petitioner's prayer to remand the case. The Court pointed out that petitioner had actively questioned the CIAC's jurisdiction from the outset and refused to participate in the CIAC proceedings. Under Section 4.2 of the CIAC Rules, failure or refusal to arbitrate, despite due notice, does not stay the proceedings. Therefore, petitioner's non-participation was by its own choice, and the Court would not afford a relief inconsistent with the law. The Court also noted that the CA's belated action on petitioner's certiorari petition, which led to the CIAC rendering an award before the injunction was issued, was unfortunate but did not invalidate the CIAC proceedings.
Main Doctrine
The presence of an arbitration clause in a construction contract, by itself, is sufficient to vest the Construction Industry Arbitration Commission (CIAC) with jurisdiction over any construction controversy or claim between the parties, notwithstanding any reference made to another arbitral body. Furthermore, a denial of a motion to dismiss, while generally an interlocutory order not subject to a petition for certiorari, may be assailed if the denial constitutes a patent grave abuse of discretion amounting to lack or excess of jurisdiction.