G.R. No. 219708. October 03, 2018
TOURISM INFRASTRUCTURE AND ENTERPRISE ZONE AUTHORITY, PETITIONER, VS. GLOBAL-V BUILDERS CO., RESPONDENT.

FACTS

The Philippine Tourism Authority (PTA), whose functions were later assumed by the Tourism Infrastructure and Enterprise Zone Authority (TIEZA), entered into five Memoranda of Agreement (MOAs) with Global-V Builders Co. (Global-V) for various infrastructure projects in Boracay and Banaue between 2007 and 2008. These projects were procured either through competitive bidding or negotiated procurement under Republic Act (R.A.) No. 9184, the Government Procurement Reform Act. In 2012, Global-V filed a Request for Arbitration before the Construction Industry Arbitration Commission (CIAC) to collect unpaid bills, interest, and damages totaling over P16 million from TIEZA.
TIEZA refused arbitration and moved to dismiss the case for lack of jurisdiction. It argued that the CIAC could not acquire jurisdiction because the MOAs did not contain a specific arbitration clause, as required by the CIAC Rules. TIEZA also contended that Global-V failed to exhaust administrative remedies by not first filing a money claim with the Commission on Audit (COA). Global-V countered that Section 59 of R.A. No. 9184, which mandates arbitration for disputes arising from government procurement contracts, is deemed written into their agreements by operation of law, satisfying the arbitration agreement requirement.

ISSUE

Whether the CIAC validly acquired jurisdiction over the dispute despite the absence of a specific arbitration clause in the parties’ contracts and Global-V’s non-exhaustion of administrative remedies before the COA.

RULING

Yes, the CIAC validly acquired jurisdiction. The Supreme Court affirmed the rulings of the Arbitral Tribunal and the Court of Appeals. On the first ground, the Court held that the legal provision of Section 59 of R.A. No. 9184 is read into and forms an integral part of all government procurement contracts. This section explicitly provides that all disputes arising from the implementation of contracts covered by the Act shall be submitted to arbitration, and disputes within the CIAC’s competence shall be referred thereto. Therefore, by virtue of this statutory mandate, an arbitration agreement is deemed incorporated into the MOAs between TIEZA and Global-V, satisfying the jurisdictional requirement under the CIAC Rules.
On the second ground, the Court ruled that the doctrine of exhaustion of administrative remedies does not apply to prevent CIAC arbitration. A money claim against a government agency arising from a contract is distinct from a claim for audit disallowance. The COA’s primary jurisdiction is over the audit and settlement of public funds, not the adjudication of contractual disputes between the government and private contractors. The remedy of arbitration under R.A. No. 9184 is precisely the forum for resolving such implementation disputes. Consequently, Global-V was correct in directly resorting to CIAC arbitration without first seeking a ruling from the COA. The CIAC’s assumption of jurisdiction was proper.