Chua v. De Castro
REITERATIONFacts
The Antecedents: Petitioner Karen Baldovino Chua engaged the services of respondent Jose Noel B. De Castro for the construction of a two-storey residential building. No written contract was executed. Petitioner and her husband provided funding amounting to PHP 2,241,600.00. After moving in, they discovered structural and architectural defects, prompting them to hire another foreman and engineer. Inspections revealed compromised work and materials, and deviation from the agreed structural plan. The dispute was referred to the Lupong Tagapamayapa, but no settlement was reached. Procedural History: Petitioner filed a complaint for rescission, breach of contract, and damages before the Regional Trial Court (RTC). Respondent failed to file an answer, leading petitioner to file a Motion to Declare Defendant in Default. The RTC, citing OCA Circular No. 103-2015, dismissed the case motu proprio for lack of jurisdiction, referring it to the Construction Industry Arbitration Committee (CIAC). Petitioner's Motion for Reconsideration was denied. The Petition: Petitioner filed a Petition for Review on Certiorari before the Supreme Court, arguing that the RTC erred in dismissing the complaint for want of jurisdiction, as there was no agreement to submit the dispute to voluntary arbitration as required by Executive Order (E.O.) No. 1008.
Issue(s)
Whether the Regional Trial Court (RTC) erred in dismissing the complaint for lack of jurisdiction and referring the dispute to the Construction Industry Arbitration Committee (CIAC) despite the absence of an arbitration agreement.
Ruling
The Petition is GRANTED. The challenged Orders dated August 11, 2017 and November 17, 2017 of the RTC are SET ASIDE. The case is REMANDED to the RTC for adjudication on the merits. Respondent Jose Noel B. De Castro is ordered to pay a fine of PHP 1,000.00.
Ratio Decidendi
On Issue 1: The Supreme Court (SC) ruled that the Regional Trial Court (RTC) committed a reversible error in divesting itself of jurisdiction. Applying Section 4 of Executive Order (E.O.) No. 1008, the Court clarified that while the Construction Industry Arbitration Committee (CIAC) is the 'professionally authoritative venue' for construction disputes, its jurisdiction is not universal; it requires the 'consent or acquiescence' of the parties through a voluntary arbitration agreement. The Court emphasized that 'for the Board to acquire jurisdiction, the parties to a dispute must agree to submit the same to voluntary arbitration.' In this specific case, there was no written construction contract executed, and consequently, no arbitration clause existed from which consent could be inferred. Furthermore, the petitioner explicitly rejected the notion of arbitration, and the respondent never acquiesced to it. The Court cautioned trial courts against the overzealous application of Office of the Court Administrator (OCA) Circular No. 103-2015, reminding them that such circulars cannot override the clear letter of the law which mandates party consent for CIAC jurisdiction. Consequently, the RTC had the legal authority and duty to hear the case on the merits rather than dismissing it motu proprio.
Main Doctrine
The jurisdiction of the Construction Industry Arbitration Committee (CIAC) over construction disputes is original and exclusive, but it can only acquire jurisdiction if the parties agree to submit the dispute to voluntary arbitration. Without such agreement, the Regional Trial Court retains jurisdiction.