Datem v. Alphaland
REITERATIONFacts
The Antecedents: DATEM Incorporated (DATEM) entered into a construction agreement with Alphaland Makati Place, Inc. and Alphaland Development Incorporated (Alphaland) for the construction of Towers 1, 2, and 3 of Alphaland Makati Place. DATEM claimed unpaid billings and retention money from Alphaland. DATEM also claimed delays due to causes not attributable to it, leading to claims for time extensions. DATEM eventually terminated the balance of construction works for Tower 3 due to Alphaland's alleged inaction on design issues. Procedural History: DATEM filed a complaint before the Construction Industry Arbitration Commission (CIAC) based on an arbitration clause in their contract. Alphaland filed a motion to dismiss, challenging CIAC's jurisdiction due to DATEM's alleged non-compliance with a condition precedent. CIAC denied the motion. Alphaland filed a petition for certiorari before the Court of Appeals (CA), which annulled the CIAC's Final Award for lack of jurisdiction, citing non-compliance with a precondition. DATEM then filed the instant petition for review on certiorari. The Petition: DATEM argued that Executive Order No. (EO) 1008 vests CIAC with automatic jurisdiction when there is an arbitration clause, and non-compliance with a precondition cannot oust CIAC of its jurisdiction.
Issue(s)
Whether or not the Court of Appeals erred in finding that the CIAC lacked jurisdiction over the case. Whether or not a defective verification is a fatal defect to a petition.
Ruling
The petition is GRANTED. The Decision dated 25 October 2018 rendered by the Court of Appeals in CA-G.R. SP Nos. 152827 and 155448 is REVERSED and SET ASIDE. The Final Award dated 05 April 2018 rendered by the Arbitral Tribunal of the Construction Industry Arbitration Commission in CIAC Case No. 21-2017 is REINSTATED.
Ratio Decidendi
On the issue of CIAC's jurisdiction: The Court held that the CA erred in declaring that the CIAC lacked jurisdiction. Under Section 4 of EO 1008, the CIAC has original and exclusive jurisdiction over disputes arising from construction contracts, provided the parties agree to submit to voluntary arbitration. The bare fact that the parties incorporated an arbitration clause in their contract is sufficient to vest the CIAC with jurisdiction. The Court reiterated that since CIAC's jurisdiction is conferred by law, it cannot be subjected to any condition, waived, or diminished by the stipulation, act, or omission of the parties, as long as an arbitration clause exists. The existence of an arbitration clause is considered by law as an agreement to submit disputes to CIAC jurisdiction without any qualification or condition precedent. The CA's affirmation of a condition precedent that would suspend CIAC's jurisdiction conflicts with the law's intention to automatically vest CIAC with jurisdiction. Furthermore, the CIAC Rules of Procedure provide that in case of non-compliance with a contractual precondition, the tribunal shall suspend arbitration proceedings pending compliance within a reasonable period, which the CIAC observed by granting extensions for negotiation. Alphaland's insistence on dismissal instead of filing an Answer after being given extensions demonstrated a change of mind, and the CIAC correctly maintained its jurisdiction. On the issue of defective verification: The Court found Alphaland's contention misplaced. It is settled that the verification of a pleading is a formal, not a jurisdictional, requirement intended to assure the truthfulness of the allegations. Non-compliance or a defect in verification does not necessarily render a pleading fatally defective. The court may order its submission or correction, or act on the pleading if circumstances warrant. Verification is substantially complied with when one with ample knowledge of the allegations signs it, and the matters alleged are made in good faith. The variance between the filing date of the petition and the date of verification, as explained by DATEM, was satisfactorily addressed, showing substantial compliance with the objective of the verification requirement. The explanation provided by DATEM regarding the preparation, verification, and subsequent submission of certified documents demonstrated good faith and adherence to the rule's purpose.
Main Doctrine
The mere existence of an arbitration clause in a construction contract is sufficient to vest the Construction Industry Arbitration Commission (CIAC) with jurisdiction over any construction controversy or claim between the parties, and non-compliance with a stipulated condition precedent does not divest the CIAC of its automatic jurisdiction under Executive Order No. 1008.