THIRD DIVISION
G.R. No. 211504, March 08, 2017
FEDERAL BUILDERS, INC., Petitioner, v. POWER FACTORS, INC., Respondent.
D E C I S I O N
BERSAMIN, J.:
An agreement to submit to voluntary arbitration for purposes of vesting jurisdiction over a construction dispute in the Construction Industry Arbitration Commission (CIAC) need not be contained in the construction contract, or be signed by the parties. It is enough that the agreement be in writing.
15. ARBITRATION COMMITTEE - All disputes, controversies or differences, which may arise between the parties herein, out of or in relation to or in connection with this Agreement, or for breach thereof shall be settled by the Construction Industry Arbitration Commission (CIAC) which shall have original and exclusive jurisdiction over the aforementioned disputes.5On November 20, 2009, Atty. Vivencio Albano, the counsel of Federal, submitted a letter to the CIAC manifesting that Federal agreed to arbitration and sought an extension of 15 days to file its answer, which request the CIAC granted.
In summary: Respondent Federal Builders, Inc. is hereby ordered to pay claimant Power Factors, Inc. the following sums:The foregoing amount shall earn legal interest at the rate of 6% per annum from the date of this Final Award until this award becomes final and executory, Claimant shall then be entitled to 12% per annum until the entire amount is fully satisfied by Respondent.
1. Unpaid balance on the original contract P4,276,614.75;2. Unpaid balance on change order nos. 1, 2, 3, 4, 5, 6, 7, 8, & 9 3,006,970.32;3. Interest to May 13, 2010 1,686,149.94;4. Attorney's Fees 250,000.00;5. Cost of Arbitration 149,503.86; P9,369,238.87
WHEREFORE, the CIAC Final Award dated 12 May 2010 in CIAC Case No. 31-2009 is hereby AFFIRMED with MODIFICATION.Anent jurisdiction, the CA explained that the CIAC Revised Rules of Procedure stated that the agreement to arbitrate need not be signed by the parties; that the consent to submit to voluntary arbitration was not necessary in view of the arbitration clause contained in the Contract of Service; and that Federal's contention that its former counsel's act of manifesting its consent to the arbitration stipulated in the draft Contract of Service did not bind it was inconsequential on the issue of jurisdiction.12
As modified, FEDERAL BUILDERS, INC. is ordered to pay POWER FACTORS, INC. the following:The interest to be imposed on the net award (unpaid balance on the original contract and change order) amounting to P7,140,728.07 awarded to POWER FACTORS INC. shall be six (6%) per annum, reckoned from 4 July 2006 until this Decision becomes final and executory. Further, the total award due to POWER FACTORS INC. shall be subjected to an interest of twelve percent (12%) per annum computed from the time this judgment becomes final and executory, until full satisfaction.
1. Unpaid balance on the original contract P4,276,614.75;2. Unpaid balance on change orders 2,864,113.32;3. Attorney's Fees 250,000.00;4. Cost of Arbitration 149,503.86;
SO ORDERED.11
Sec. 4. Jurisdiction. — The CIAC shall have original and exclusive jurisdiction over disputes arising from, or connected with, contracts entered into by parties involved in construction in the Philippines, whether the dispute arises before or after the completion of the contract, or after the abandonment or breach thereof. These disputes may involve government or private contracts. For the Board to acquire jurisdiction, the parties to a dispute must agree to submit the same to voluntary arbitration. x x xUnder the CIAC Revised Rules of Procedure Governing Construction Arbitration (CIAC Revised Rules), all that is required for the CIAC to acquire jurisdiction is for the parties of any construction contract to agree to submit their dispute to arbitration.15 Also, Section 2.3 of the CIAC Revised Rules states that the agreement may be reflected in an arbitration clause in their contract or by subsequently agreeing to submit their dispute to voluntary arbitration. The CIAC Revised Rules clarifies, however, that the agreement of the parties to submit their dispute to arbitration need not be signed or be formally agreed upon in the contract because it can also be in the form of other modes of communication in writing, viz.:
The liberal application of procedural rules as to the form by which the agreement is embodied is the objective of the CIAC Revised Rules. Such liberality conforms to the letter and spirit of E.O. No. 1008 itself which emphasizes that the modes of voluntary dispute resolution like arbitration are always preferred because they settle disputes in a speedy and amicable manner. They likewise help in alleviating or unclogging the judicial dockets. Verily, E.O. No. 1008 recognizes that the expeditious resolution of construction disputes will promote a healthy partnership between the Government and the private sector as well as aid in the continuous growth of the country considering that the construction industry provides employment to a large segment of the national labor force aside from its being a leading contributor to the gross national product.16RULE 4 - EFFECT OF AGREEMENT TO ARBITRATE
SECTION 4.1. Submission to CIAC jurisdiction - An arbitration clause in a construction contract or 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 a different arbitration institution or arbitral body in such contract or submission.
4.1.1 When a contract contains a clause for the submission of a future controversy to arbitration, it is not necessary for the parties to enter into a submission agreement before the Claimant may invoke the jurisdiction of CIAC.
4.1.2 An arbitration agreement or a submission to arbitration shall be in writing, but it need not be signed by the parties, as long as the intent is clear that the parties agree to submit a present or future eontroversy arising from a construction contract to arbitration. It may be in the form of exchange of letters sent by post or by telefax, telexes, telegrams, electronic mail or any other mode of communication.
15. ARBITRATION COMMITTEE - All disputes, controversies or differences, which may arise between the Parties herein, out of or in relation to or in connection with this Agreement, or for breach thereof shall be settled by the Construction Industry Arbitration Commission (CIAC) which shall have original and exclusive jurisdiction over the aforementioned disputes.20With the parties having no issues on the provisions or parts of the Contract of Service other than that pertaining to the downpayment that Federal was supposed to pay, Federal could not validly insist on the lack of a contract in order to defeat the jurisdiction of the CIAC. As earlier pointed out, the CIAC Revised Rules specifically allows any written mode of communication to show the parties' intent or agreement to submit to arbitration their present or future disputes arising from or connected with their contract.
Endnotes:
* Designated as additional Member of the Third Division per Special Order No. 2417 dated January 4, 2017.
1Rollo, pp. 32-45; penned by Associate Justice Leoncia R. Dimagiba and concurred in by Associate Justice Rosmari D. Carandang and Associate Justice Ricardo R. Rosario.
2 Id. at 98-128.
3 Id. at 33.
4 Id.
5 Id. at 44.
6 Id. at 34-35.
7 Id. at 35.
8 Id.
9 Supra note 2.
10 Supra note 1.
11 Id. at 44-45.
12 Id. at 38.
13 Id. at 42-43.
14Rollo, p. 47.
15 Rule 4, CIAC Revised Rules; LICOMCEN, Inc. v. Foundation Specialists, Inc., G.R. Nos. 167022 & 169678, April 4, 2011, 647 SCRA 83, 97.
16 Sec perambulatory clauses of E.O. No. 1008.
17National Irrigation Administration v. Court of Appeals, G.R. No. 129169, November 17, 1999, 318 SCRA 255, 269.
18 Article 1356. Contracts shall be obligatory, in whatever form they may have been entered into, provided all the essential requisites for their validity are present. However, when the law requires that a contract be in some form in order that it may be valid or enforceable, or that a contract be proved in a certain way, that requirement is absolute and indispensable. In such cases, the right of the parties stated in the following article cannot be exercised.
19 Article 1357. If the law requires a document or other special form, as in the acts and contracts enumerated in the following article, the contracting parties may compel each other to observe that form, once the contract has been perfected. This right may be exercised simultaneously with the action upon the contract.
20Rollo, p. 34.
21 Id.
22 Section 4. Form of arbitration agreement. - A contract to arbitrate a controversy thereafter arising between the parties, as well as a submission to arbitrate an existing controversy, shall be in writing and subscribed by the party sought to be charged, or by his lawful agent.
The making of a contract or submission for arbitration described in section two hereof, providing for arbitration of any controversy, shall be deemed a consent of the parties of the province or city where any of the parties resides, to enforce such contract of submission.
23An Act to Authorize the Making of Arbitration and Submission Agreements, to Provide for the Appointment of Arbitrators and the Procedure for Arbitration in Civil Controversies, and for Other Purposes; June 19, 1953.
24 Subsection 4.1.2, Rule 4 of the CIAC Revised Rules.
25LM Power Engineering Corporation v. Capitol Industrial Construction Groups, Inc., G.R. No. 141833, March 26, 2003, 399 SCRA 562, 569.
26 Id. at 570.