8/13/2019 SC Clarifies CIAC

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SC clarifies CIACs jurisdictionIn the midst of the economic crisis that the world is currently facing, arbitration offers the

most practical, expedient and cost-efficient mode of settling disputes between contendingparties. It does away with long, drawn-out court action and saves the parties from incurring

unnecessary expenses. This is especially true in the construction industry where the

complexity of the dispute and the technical nature of the issues involved make construction

litigation a cumbersome process. By reason thereof, the judicial attitude towards arbitration

is one of encouragement or support.

Incidentally, in the recent case of Heunghwa Industry Co., Ltd. v. DJ Builders Corporation

(G.R. No. 169095, 8 December 2008), the Supreme Court (SC) laid down important

guidelines in the interpretation of an arbitration clause contained in a construction contract

and, in effect, further clarified the jurisdiction of the Construction Industry Arbitration

Commission (CIAC).

The SC ruled that an arbitration clause in a construction contract or the submission to

arbitration of a construction dispute shall be deemed an agreement to submit an existing or

future controversy to the CIAC jurisdiction, notwithstanding the reference to a different

arbitration institution or arbitral body in such contract or submission.

Thus, for a particular construction contract to fall within the jurisdiction of the CIAC, it is

merely required that the parties agree to submit the same to voluntary arbitration. It is not

necessary that the parties specifically name the CIAC for the latter to acquire jurisdictionover the contract. As long as the parties stipulate on voluntary arbitration, regardless of

what forum they choose, their agreement will fall within the jurisdiction of the CIAC, such

that, even if they specifically choose another forum, the parties will not be precluded from

electing to submit their dispute before the CIAC because this right has been vested upon

each party by law, i.e., E.O. No. 1008 (National Irrigation Administration v. Court of Appeals,

G.R. No. 129169, 17 November 1999, citing the 1988 CIAC Rules of Procedure, as amended

by CIAC Resolution Nos. 2-91 and 3-93).

It can be gleaned from the foregoing that there are two (2) acts which may vest the CIAC

with jurisdiction over a construction dispute, to wit:

(a) The presence of an arbitration clause in a construction contract; or

(b) In the absence of such arbitration clause, the agreement by the parties to submit the

construction dispute to arbitration.

If any of the abovementioned acts exists, the CIAC has jurisdiction over the dispute.

Jurisdiction is conferred by law and cannot be waived by agreement or acts of the parties.

(Atty. Archivald De Mata)