G.R. No. 169095 December 8, 2008
HEUNGHWA INDUSTRY CO., LTD., petitioner, vs. DJ BUILDERS CORPORATION, respondent.

FACTS

Petitioner Heunghwa Industry Co., Ltd. (a Korean corporation) and respondent DJ Builders Corporation (a Philippine corporation) entered into a subcontract agreement for a DPWH road construction project in Palawan. The agreement contained an arbitration clause. Due to alleged non-payment, respondent filed a Complaint for breach of contract and collection of sum of money with the RTC of Puerto Princesa (Civil Case No. 3421). Petitioner filed an Amended Answer with a counterclaim. Subsequently, both parties, through their respective counsels, filed a “Joint Motion to Submit Specific Issues To The Construction Industry Arbitration Commission (CIAC),” identifying five specific issues for arbitration (manpower/equipment standby time, unrecouped mobilization expenses, retention, billing discrepancies, and price escalation for fuel/oil), while leaving other claims with the RTC. The RTC granted the motion. Petitioner later filed an “Urgent Manifestation” praying for additional matters to be referred to CIAC. Respondent then filed a Request for Adjudication with the CIAC. Petitioner filed a “Reply/Manifestation” with the CIAC stating it was abandoning the submission to CIAC and would pursue the case before the RTC. The CIAC issued orders directing actions related to the dismissal of the civil case and the filing of a revised complaint. Petitioner, through new counsel, filed a motion with the RTC to withdraw the order referring the case to CIAC, claiming lack of authorization for the referral. The RTC initially granted the motion to recall the referral. Respondent moved for reconsideration and later filed a Motion to Dismiss the civil case without prejudice to filing with CIAC, which the RTC granted. Petitioner moved for reconsideration of this dismissal order. The RTC later issued a Resolution declaring its dismissal order “without force and effect” and reinstated the civil case. Meanwhile, the CIAC, acting on respondent’s filings, asserted jurisdiction and denied petitioner’s motion to dismiss. Both parties filed separate petitions for certiorari with the Court of Appeals (CA), which were consolidated. The CA ruled against petitioner, upholding CIAC’s jurisdiction and dismissing petitioner’s procedural challenges.

ISSUE

Whether the Court of Appeals erred in ruling that the Construction Industry Arbitration Commission (CIAC) validly acquired jurisdiction over the dispute between the parties.

RULING

No, the Court of Appeals did not err. The Supreme Court denied the petition and affirmed the CA’s decision. The CIAC validly acquired jurisdiction over the dispute. The jurisdiction of the CIAC is conferred by law (Executive Order No. 1008) and by the agreement of the parties. The subcontract agreement contained a general arbitration clause. Furthermore, the parties, through their counsels, voluntarily executed a Joint Motion to Submit Specific Issues to the CIAC, which the RTC approved. This joint motion constituted a written submission to arbitration, satisfying the requirement for CIAC jurisdiction. Petitioner’s subsequent attempts to withdraw from the arbitration and its claim that its previous lawyer was unauthorized to submit to arbitration are unavailing. A client is bound by the acts of its counsel in the realm of procedural technique. The Joint Motion was a procedural submission that did not require a special power of attorney. Petitioner’s active participation in the CIAC proceedings, including filing motions and seeking suspension, estopped it from denying the CIAC’s jurisdiction. The CIAC correctly assumed jurisdiction over the entire dispute, as the parties’ agreement to arbitrate was not limited to the five specific issues but encompassed all disputes arising from the construction contract. The pendency of the civil case did not divest the CIAC of jurisdiction once a valid submission was made.