G.R. No. 180640 ; April 24, 2009
HUTAMA-RSEA JOINT OPERATIONS, INC., Petitioner, vs. CITRA METRO MANILA TOLLWAYS CORPORATION, Respondent.

FACTS

Petitioner HUTAMA-RSEA Joint Operations, Inc. and respondent Citra Metro Manila Tollways Corporation entered into an Engineering Procurement Construction Contract (EPCC) on September 25, 1996, for the construction of Stage 1 of the South Metro Manila Skyway Project. Respondent, as general contractor, agreed to pay petitioner a total amount of US$369,510,304.00. During construction, petitioner requested payment for interim billings, but respondent only made partial payments. After the Skyway Project opened to the public on December 15, 1999, petitioner demanded payment of the outstanding balance on the interim billings, the final billing amount, an “Early Completion Bonus,” and interest charges. Despite negotiations, the parties failed to settle amicably. Petitioner filed a Request for Arbitration with the Construction Industry Arbitration Commission (CIAC), docketed as CIAC Case No. 17-2005. Respondent moved to dismiss, arguing that CIAC lacked jurisdiction because a condition precedent under Clause 20.4 of the EPCC—referral of the dispute to a Dispute Adjudication Board (DAB)—had not been complied with. The CIAC asserted jurisdiction, ruling the issue of compliance with Clause 20.4 was a factual matter for trial. The Court of Appeals reversed the CIAC, annulling its order and enjoining further proceedings until the dispute was referred to and decided by a DAB constituted pursuant to the EPCC.

ISSUE

Whether the CIAC has jurisdiction over CIAC Case No. 17-2005 despite the parties’ failure to initially refer their dispute to the Dispute Adjudication Board as required under Clause 20.4 of their Engineering Procurement Construction Contract.

RULING

Yes. The Supreme Court granted the petition, reversed the Court of Appeals’ Decision and Resolution, and remanded the case to the CIAC for further proceedings. The Court held that the CIAC has jurisdiction over the dispute. The EPCC contains an arbitration clause where the parties explicitly agreed to submit disputes to arbitration. Under Section 4 of Executive Order No. 1008 (the Construction Industry Arbitration Law) and Section 1, Article III of the CIAC Rules of Procedure, the CIAC has original and exclusive jurisdiction over disputes arising from construction contracts when the parties agree to submit to arbitration. The failure to constitute a DAB or to refer the dispute to it does not negate the CIAC’s jurisdiction. The provision for a DAB is merely a preliminary, non-adversarial step designed for expediency, not a jurisdictional prerequisite to arbitration. Requiring strict compliance with the DAB provision before arbitration could proceed would contradict the intent of the law to provide a speedy and inexpensive method of settling construction disputes. The CIAC correctly assumed jurisdiction, and the issue of whether prior resort to the DAB was required is a procedural matter that the arbitral tribunal can determine during arbitration.