#1 Licomcen vs.

FSI

Facts:

Licomcen and FSI had a Construction Agreement whereby FSI undertook to

construct and install bored piles foundation for the LCC Citimall project in Legazpi City.
A dispute arose between mall developer (LCC) and contractor (FSI) over the suspension
of certain works and the payment of billings and other amounts.

LICOMCEN assails the CIAC’s jurisdiction, contending that FSI’s claims were
matters not subject to arbitration under their Construction Agreement, but one that
should have been filed before the regular courts of Legaspi City pursuant to their
Contract.

The CIAC issued its decision on July 7, 2003, ruling in favor of FSI. LICOMCEN
appealed the CIAC’s decision before the (CA), whereby it upheld the CIAC’s decision.

Issue: W/N FSI’s Claims are non-arbitrable pursuant to their contract?

Ruling:

No. The Supreme Court ruled that the CIAC’s jurisdiction cannot be limited by
the parties’ stipulation that only disputes in connection with or arising out of the
execution of the Works are arbitrable before the said agency.

According to the Supreme Court, the mere fact that the parties incorporated an
arbitration clause in their contract ipso facto vested the CIAC with jurisdiction over any
construction controversy or claim between the parties.

The Supreme Court also added that the parties did not intend to limit resort to
arbitration only to disputes relating to physical construction activities, holding that “an
arbitration clause pursuant to E.O 1008 [Construction Industry Arbitration Law] should
be interpreted at its widest signification.” The Tribunal liberally applied the parties’
arbitration clause so that FSI’s money claims were considered connected with or arising
out of construction activities, thereby making such claims arbitrable.

#2 HUTAMA-RSEA Joint Operations, Inc v. Citra Metro Manila Tollways Corp

FACTS:
Respondent is the general contractor and operator of the Skyway project.
Petitioner and respondent entered into an Engineering Procurement Construction
Contract (EPCC) whereby petitioner would undertake the
construction of Stage 1 of the Skyway Project.

During said construction, petitioner wrote respondent on several occasions

requesting payment of the former’s interim billings, pursuant to provisions of the EPCC/
however, respondent only partially paid the interim billings.
 Respondent failed to do so despite demands to pay its outstanding balance.
Petitioner filed with CIAC a request for arbitration to enforce its money claims against
respondent.

CIAC ruled that it had jurisdiction over the same. CA reversed.

Issue: W/N CIAC has jurisdiction despite the EPCC provision requiring prior referral by
the parties of their dispute to the Dispute Adjudication Board?

Ruling:
Yes. EO 1008 provides that CIAC shall have jurisdiction over a dispute involving
a construction contract of said contract contains an arbitration clause,
notwithstanding any reference by the same contract to another arbitration
institution or arbitral body, or even in in the absence of such a clause in the
construction contract, the parties still agree to submit their dispute to arbitration.

Since the jurisdiction of the CIAC is conferred by law, it cannot be subjected to

any condition, nor can it be waived or diminished by the stipulation, act, or omission of
the parties, as long as the parties agreed to submit their construction contract dispute
to arbitration, or if there is an arbitration clause in the construction contract.

#3 HEUNGHWA INDUSTRY CO. vs. DJ BUILDERS CORPORATION

Facts:

Petitioner entered into a subcontract agreement with respondent DJ

Builders Corporation to do earthwork, sub base course and box culvert of
said project. The agreement contained an arbitration clause. The agreed price was
not fully paid, hence, respondent filed before the RTC for Breach of Contract,
Collection of sum of money and Damage

Petitioner averred that it was not obliged to pay respondent because the
latter caused the stoppage of work. Petitioner further claimed that it failed to collect
from the DPWH due to respondent/s poor equipment performance.

Parties submit specificissues, such as manpower and equipment stan

dby time, unrecouped mobilization expenses, retention, discrepancy of billings,
and price escalation for fuel and oil usage.

The said motion was granted by the RTC. Petitioner, filed with the RTC a motion to
withdraw the order which referred the case to the CIAC, claiming it never authorized the
referral. Respondent opposed the motion contending that petitioner was already
estopped from asking for the recall of the order.

Issue: w/n the CIAC or the RTC has jurisdiction over the case?

Ruling:
 CIAC has jurisdiction over the case. The bare fact that the parties incorporated
an arbitration clause in their contract is sufficient to vest the CIAC with jurisdiction
over any construction controversy or claim between the parties. The rule is explicit that
the CIAC has jurisdiction notwithstanding any reference made to another arbitral body.

It is well-settled that jurisdiction is conferred by law and cannot be waived by

agreement or acts of the parties. Thus, the contention of petitioner that it never
authorized its lawyer to submit the case for arbitration must likewise fail. Petitioner
argues that notwithstanding the presence of an arbitration clause, there must be a
subsequent consent by the parties to submit the case for arbitration. To stress, the CIAC
was already vested with jurisdiction the moment both parties agreed to incorporate an
arbitration clause in the sub-contract agreement. Thus, a subsequent consent by the
parties would be superfluous and unnecessary.

FORT BONIFACIO DEVELOPMENT vs. HON. EDWIN D. SORONGON

Facts:

Petitioner Fort Bonifacio Development Corporation (petitioner), a corporation

registered under Philippine laws, is engaged in the business of real estate development.
Respondent, Valentin Fong (respondent) doing business under the name VF Industrial
Sales is the assignee of L & M Maxco Specialist Constructions (Maxco) retention money
from the Bonifacio Ridge Condominium Phase 1 (BRCP 1).

Petitioner entered into a trade contract with Maxco wherein Maxco would
undertake the structural and partial architectural package of the BRCP 1.

Later petitioner accused Maxco of delay in completion of its work and on August
24, 2004 sent the latter a notice of termination.

Subsequently, Maxco was sued by its creditors including respondent for debts
unrelated to BRCP 1.

On February 13, 2006, respondent filed a complaint for a sum of money against
petitioner and Maxco in the Regional Trial Court of Mandaluyong City.

Petitioner argued that since respondent merely stepped into the shoes of Maxco
as its assignee, it was the CIAC and not the regular courts that had jurisdiction over the
dispute as provided in the Trade Contract.

Judge Edwin Sorongon issued an Order dated June 27, 2006 denying the motion
to dismiss.

ISSUE: W/N the RTC or the CIAC has jurisdiction?

Ruling:

The RTC has jurisdiction. Although the jurisdiction of the CIAC is not limited to
the instances enumerated in Section 4 of E. O. No. 1008, Fongs claim is not even
construction-related at all. This court has held that: Construction is defined as referring
to all on-site works on buildings or altering structures, from land clearance through
completion including excavation, erection and assembly and installation of components
and equipment.[14] Thus, petitioners insistence on the application of the arbitration
clause of the Trade Contract to Fong is clearly anchored on an erroneous premise that
the latter is seeking to enforce a right under the trade contract. This premise cannot
stand since the right to the retention money of Maxco under the Trade Contract is not
being impugned herein. It bears mentioning that petitioner readily conceded the
existence of the retention money. Fongs demand that the portion of retention money
should have been paid to him before the other creditors of Maxco clearly, does not
require the CIACs expertise and technical knowledge of construction.

The adjudication of Civil Case necessarily involves the application of pertinent

statutes and jurisprudence to matters of assignment and preference of credits. As this
Court held in Fort Bonifacio Development Corporation v. Domingo,[15] this task more
suited for a trial court to carry out after a full-blown trial, than an arbitration body
specifically devoted to construction contracts.

Metropolitan Cebu Water District v. Mactan Rock Industries

(G.R. No. 172438)

Facts:

Petitioner Metropolitan Cebu Water District (MCWD), a government-owned and

controlled corporation, entered into a Water Supply Contract with herein respondent,
Mactan Rock Industries, Inc. (MRII), wherein the latter would supply MCWD with
potable water with a minimum guaranteed annual volume. Respondent filed a complaint
against MCWD with the CIAC citing the arbitration clause of the contract and seeking
the reformation of Clause 17 of the Contract or the Price Escalation/De-Escalation
Clause in order to include Capital Cost Recovery in the price escalation formula. MCWD
filed its Answer, including a motion to dismiss the complaint on the ground that CIAC
had no jurisdiction over the case, as the contract was not one for construction or
infrastructure. Petitioner then filed two petitions before the CA which were both denied,
hence this petition.

Issues:

(1) Whether or not CIAC may exercise jurisdiction over disputes arising from a water
supply contract; and

(2) Whether or not CIAC have a jurisdiction over a complaint praying for a reformation
of a water supply contract.

Ruling:

(1) The Court finds in the affirmative. The motion for reconsideration was denied by CA
and MCWD never appealed the case. Thus, the decision of the CA became final and
executory. The Court has held time and again that a final and executory judgment, no
matter how erroneous, cannot be changed even by this Court. The CA affirming the
CIAC’s jurisdiction and it becoming final, is now beyond the jurisdiction of the Court to
review or modify, even supposing for the sake of argument, that it is indeed erroneous.

(2) Where the law does not delineate, neither should we. Neither the provisions of the
Civil Code on reformation of contracts nor the law creating CIAC exclude reformation in
its jurisdiction. Therefore, because the CIAC has been held to have jurisdiction over the
contract, it follows that it has jurisdiction to order the reformation of the contract as
well.

J PLUS ASIA DEVELOPMENT CORPORATION vs. UTILITY ASSURANCE

CORPORATION
G.R. No. 199650 June 26, 2013

Facts:
On the target date as specified in the Construction Agreement, Mabunay
accomplished only 31.39% of the construction; hence, petitioner terminated their
contract and sent demand letters to Mabunay and respondent surety.

But as the demands went unheeded, petitioner filed a Request for Arbitration
before the CIAC who rendered its decision in favor of petitioner. The CA reversed the
CIAC’s ruling that Mabunay had incurred delay hat not all requisites in order to consider
the obligor or debtor in default were present in this case

Issue: Whether or Not Mabuhay is in default?

Held:
Yes. Default or mora on the part of the debtor is the delay in the fulfillment of
the prestation by reason of a cause imputable to the former. It is the nonfulfillment of
an obligation with respect to time. It is a general rule that one who contracts to complete
certain work within a certain time is liable for the damage for not completing it within
such time, unless the delay is excused or waived.

In this jurisdiction, the following requisites must be present in order that the
debtor may be in default: (1) that the obligation be demandable and already liquidated;
(2) that the debtor delays performance; and (3) that the creditor requires the
performance judicially or extrajudicially.

Excellent Quality Apparel vs. Win Multi Rich Builders (G.R. No. 175048)
 Facts:

Petitioner herein, Excellent Quality Apparel, entered into a contract with Multi-
Rich Builders for the construction of a garment factory within the CPEZ. The duration
of the project was for a maximum of 5 months and included in the contract is an
arbitration clause that any dispute among the parties shall be submitted to an
Arbitration Committee for its resolution. Respondent, Win Multi-Rich Builders filed a
complaint for sum of money against petitioner, to which the latter then filed an Omnibus
Motion questioning the jurisdiction of the trial court and pointing out the presence of
an Arbitration Clause in their contract. Petitioner also moved to dismiss the case since
respondent herein is neither a contractor nor a party to the contract. Both the trial court
and CA found in favor of respondent herein. Hence the present petition.

Issue: Whether or not the RTC have jurisdiction over the case notwithstanding the
presence of an arbitration clause in the contract.

Ruling:

NO. Section 4 of EO 1008 provides for the jurisdiction of the CIAC, and excluded
only from the coverage of this law are disputes from employer-employee relationships
which shall be governed by the Labor Code. EO 1008 does not distinguish between
claims involving payment of money or not. The CIAC acquires jurisdiction over a
construction contract by the mere fact that the parties agreed to submit to voluntary
arbitration. The law doesn’t preclude parties from stipulating a preferred forum or
arbitral body but they may not divest the CIAC of jurisdiction as provided by law.
Clearly, the RTC should not have taken cognizance of the collection suit. The presence
of the arbitration clause vested jurisdiction to the CIAC over all construction disputes
between petitioner and Multi-Rich. The RTC does not have jurisdiction.

FIRST LEPANTO CERAMICS V. CA DIGEST

Facts:

1. Petitioner assailed the conflicting provisions of B.P. 129, EO 226 (Art. 82) and a
circular, 1-91 issued by the Supreme Court which deals with the jurisdiction of courts
for appeal of cases decided by quasi-judicial agencies such as the Board of Investments
(BOI).

2. BOI granted petitioner First Lepanto Ceramics, Inc.'s application to amend its BOI
certificate of registration by changing the scope of its registered product from "glazed
floor tiles" to "ceramic tiles." Oppositor Mariwasa filed a motion for reconsideration of
the said BOI decision while oppositor Fil-Hispano Ceramics, Inc. did not move to
reconsider the same nor appeal therefrom. Soon rebuffed in its bid for reconsideration,
Mariwasa filed a petition for review with CA.
4. CA temporarily restrained the BOI from implementing its decision. The TRO lapsed by
its own terms twenty (20) days after its issuance, without respondent court issuing any
preliminary injunction.

5. Petitioner filed a motion to dismiss and to lift the restraining order contending that CA
does not have jurisdiction over the BOI case, since the same is exclusively vested with
the Supreme Court pursuant to Article 82 of the Omnibus Investments Code of 1987.

6. Petitioner argued that the Judiciary Reorganization Act of 1980 or B.P. 129 and
Circular 1-91, "Prescribing the Rules Governing Appeals to the Court of Appeals from a
Final Order or Decision of the Court of Tax Appeals and Quasi-Judicial Agencies" cannot
be the basis of Mariwasa's appeal to respondent court because the procedure for appeal
laid down therein runs contrary to Article 82 of E.O. 226, which provides that appeals
from decisions or orders of the BOI shall be filed directly with the Supreme Court.

7. While Mariwasa maintains that whatever inconsistency there may have been between
B.P. 129 and Article 82 of E.O. 226 on the question of venue for appeal, has already
been resolved by Circular 1-91 of the Supreme Court, which was promulgated on
February 27, 1991 or four (4) years after E.O. 226 was enacted.

ISSUE: Whether or not the Court of Appeals has jurisdiction over the case

Ruling: YES. Circular 1-91 effectively repealed or superseded Article 82 of E.O. 226
insofar as the manner and method of enforcing the right to appeal from decisions of the
BOI are concerned. Appeals from decisions of the BOI, which by statute was previously
allowed to be filed directly with the Supreme Court, should now be brought to the Court
of Appeals.

KEPPEL CEBU SHIPYARD, INC. vs. PIONEER INSURANCE AND SURETY

CORPORATION, PIONEER INSURANCE AND SURETY CORPORATION vs. KEPPEL
CEBU SHIPYARD, INC.

FACTS:

WG & A JEBSENS SHIPMGMT. Owner/Operator of M/V “SUPERFERRY 3” and

KEPPEL CEBU SHIPYARD, INC. (KCSI) enter into an agreement that the Drydocking
and Repair of the above-named vessel ordered by the Owner’s Authorized Representative
shall be carried out under the Keppel Cebu Shipyard Standard Conditions of Contract
for Ship repair, guidelines and regulations on safety and security issued by Keppel Cebu
Shipyard.

In the course of its repair, M/V “Superferry 3” was gutted by fire. Claiming that
the extent of the damage was pervasive, WG&A declared the vessel’s damage as a “total
constructive loss” and, hence, filed an insurance claim with Pioneer.

Pioneer paid the insurance claim of WG&A, which in turn, executed a Loss and
Subrogation Receipt in favor of Pioneer.
 Pioneer tried to collect from KCSI, but the latter denied any responsibility for the
loss of the subject vessel. As KCSI continuously refused to pay despite repeated
demands, Pioneer, filed a Request for Arbitration before the Construction Industry
Arbitration Commission CIAC seeking for payment of U.S.$8,472,581.78 plus interest,
among others.

The CIAC rendered its Decision declaring both WG&A and KCSI guilty of
negligence, the CIAC ordered KCSI to pay Pioneer the amount of P25,000,000.00, with
interest at 6% per annum. Both Keppel and Pioneer appealed to the CA.

The cases were consolidated in the CA. the CA rendered a decision dismissing
petitioner’s claims in its entirety. Keppel was declared as equally negligent.

ISSUE: To whom may negligence over the fire that broke out on board M/V
“Superferry 3” be imputed? What is the extent of the damage, if any?

RULING:

1. The issue of negligence Undeniably, the immediate cause of the fire was the hot work
done by Angelino Sevillejo (Sevillejo) on the accommodation area of the vessel,
specifically on Deck A. As established before the CIAC –
Pioneer contends that KCSI should be held liable because Sevillejo was its employee
who, at the time the fire broke out, was doing his assigned task, and that KCSI was
solely responsible for all the hot works done on board the vessel. We rule in favor of
Pioneer. At the time of the fire, Sevillejo was an employee of KCSI and was subject to
the latter’s direct control and supervision.There was a lapse in KCSI’s supervision of
Sevillejo’s work at the time the fire broke out.

KCSI failed to exercise the necessary degree of caution and foresight called for by the
circumstances. The circumstances, taken collectively, yield the inevitable conclusion
that Sevillejo was negligent in the performance of his assigned task. His negligence
was the proximate cause of the fire on board M/V “Superferry 3.” As he was then
definitely engaged in the performance of his assigned tasks as an employee of KCSI,
his negligence gave rise to the vicarious liability of his employer43 under Article 2180
of the Civil Code.

KCSI failed to prove that it exercised the necessary diligence incumbent upon it to
rebut the legal presumption of its negligence in supervising Sevillejo.44
Consequently, it is responsible for the damages caused by the negligent act of its
employee, and its liability is primary and solidary.

2. Damages

In marine insurance, a constructive total loss occurs under any of the conditions
set forth in Section 139 of the Insurance Code, which provides—
Sec. 139. A person insured by a contract of marine insurance may abandon the thing
insured, or any particular portion hereof separately valued by the policy, or otherwise
separately insured, and recover for a total loss thereof, when the cause of the loss is a
peril insured against:
 (a) If more than three-fourths thereof in value is actually lost, or would have to
be expended to recover it from the peril;

(b) If it is injured to such an extent as to reduce its value more than three-fourths;
x x x.

It cannot be denied that M/V “Superferry 3” suffered widespread damage from

the fire that occurred on February 8, 2000, a covered peril under the marine insurance
policies obtained by WG&A form Pioneer. The estimates given by the three disinterested
and qualified shipyards show that the damage to the ship would exceed
P270,000,000.00, or ¾ of the total value of the policies – P360,000,000.00. These
estimates constituted credible and acceptable proof of the extent of the damage
sustained by the vessel.

Considering the extent of the damage, WG&A opted to abandon the ship and
claimed the value of its policies. Pioneer, finding the claim compensable, paid the claim,
with WG&A issuing a Loss and Subrogation Receipt evidencing receipt of the payment
of the insurance proceeds from Pioneer.

The Loss and Subrogation Receipt issued by WG&A to Pioneer is the best evidence
of payment of the insurance proceeds to the former, and no controverting evidence was
presented by KCSI to rebut the presumed authority of the signatory to receive such
payment.

AUTOCORP and Rodriguez vs. ISAC and BOC

G.R. No. 166662 June 27, 2008

FACTS:

Autocorp Group, represented by its President, Rodriguez, secured an ordinary re-

export bond from private respondent Intra Strata Assurance Corporation (ISAC) in favor
of public Bureau of Customs (BOC), to guarantee the re-export of 2 units of car (at 2
different dates) and/or to pay the taxes and duties thereon. Petitioners executed and
signed two Indemnity Agreements with identical stipulations in favor of ISAC, agreeing
to act as surety of the subject bonds

In sum, ISAC issued the subject bonds to guarantee compliance by petitioners

with their undertaking with the BOC to re-export the imported vehicles within the given
period and pay the taxes and/or duties due thereon. In turn, petitioners agreed, as
surety, to indemnify ISAC for the liability the latter may incur on the said bonds

Autocorp failed to re-export the items guaranteed by the bonds and/or liquidate
the entries or cancel the bonds, and pay the taxes and duties pertaining to the said
items, despite repeated demands made by the BOC, as well as by ISAC. By reason
thereof, the BOC considered the two bonds forfeited.
 Failing to secure from petitioners the payment of the face value of the two bonds,
ISAC filed with the RTC an action against petitioners to recover a sum of money plus
AF. ISAC impleaded the BOC “as a necessary party plaintiff in order that the reward of
money or judgment shall be adjudged unto the said necessary plaintiff.”

Petitioners filed a MTD, which was denied. RTC ordered Autocorp to pay ISAC
and/or BOC the face value of the subject bonds plus AF. Autocorp’s MR was denied. CA
affirmed the trial court’s decision. MR was denied. Hence this Petition for Review on
Certiorari

ISSUE: WON these bonds are now due and demandable, as there is yet no actual
forfeiture of the bonds, but merely a recommendation of forfeiture, for no writ of
execution has been issued against such bonds, therefore the case was prematurely filed
by ISAC

HELD: PETITION IS WITHOUT MERIT

YES. The Indemnity Agreements give ISAC the right to recover from petitioners
the face value of the subject bonds plus attorney’s fees at the time ISAC becomes liable
on the said bonds to the BOC, (specifically to re-export the imported vehicles within the
period of six months from their date of entry) regardless of whether the BOC had actually
forfeited the bonds, demanded payment thereof and/or received such payment. It must
be pointed out that the Indemnity Agreements explicitly provide that petitioners shall
be liable to indemnify ISAC “whether or not payment has actually been made by the
[ISAC]” and ISAC may proceed against petitioners by court action or otherwise “even
prior to making payment to the [BOC] which may hereafter be done by [ISAC].”

Article 2071 of the Civil Code provides:

Art. 2071. The guarantor, even before having paid, may proceed against the
principal debtor:

(1) When he is sued for the payment;

(2) In case of insolvency of the principal debtor;

(3) When the debtor has bound himself to relieve him from the guaranty within a
specified period, and this period has expired;

(4) When the debt has become demandable, by reason of the expiration of the
period for payment;

(5) After the lapse of ten years, when the principal obligation has no fixed period for its
maturity, unless it be of such nature that it cannot be extinguished except within a
period longer than ten years;

(6) If there are reasonable grounds to fear that the principal debtor intends to abscond;

(7) If the principal debtor is in imminent danger of becoming insolvent.

In all these cases, the action of the guarantor is to obtain release from the guaranty, or
to demand a security that shall protect him from any proceedings by the creditor and
from the danger of insolvency of the debtor.