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HUTAMA-RSEA JOINT OPERATIONS,

INC., vs. CITRA METRO MANILA


TOLLWAYS CORPORATION
G.R. No. 180640.
April 24, 2009
Section 4 of Executive Order No. 1008
defines the jurisdiction of CIAC, thus:
The CIAC shall have original and exclusive
jurisdiction over disputes arising from, or
connected with, contracts entered into by the
parties involved in construction in the Philippines,
whether the disputes arises before or after the
completion of the contract, or after the
abandonment or breach thereof. These disputes
may involve government or private contracts. For
the Board to acquire jurisdiction, the
parties to a dispute must agree to submit
the same to voluntary arbitration.
The jurisdiction of CIAC may include but is
not limited to:
1. Violation of the specification of materials or
workmanship;
2. Violation of the terms of agreement;
3. Interpretation and/or application of
contractual provisions;
4. Amount of damages and penalties;
5. Commencement and time delays;
6. Maintenance and defects;
7. Payment default of employer or
contractor and changes in contract cost.
Section 1, Article III of the (CIAC Rules),
provides:
An arbitration clause in a construction
contract or a submission to arbitration of a
construction dispute shall be deemed an
agreement to submit an existing or future
controversy to CIAC jurisdiction, notwithstanding
the reference to a different arbitration institution
or arbitral body in such contract or submission.
When a contract contains a clause for the
submission of a future controversy to arbitration,
it is not necessary for the parties to enter into a
submission agreement before the claimant may
invoke the jurisdiction of CIAC.
FACTS:

Citra Metro Manila Tollways Corporation


General Contractor Respondent

Engineering
Procurement
Construction Contract
(EPCC)

HUTAMA-RSEA Joint Operations Incorporation


Sub-contractor Petitioner
US$369,510,304.00
During the construction of the Skyway
Project, petitioner Hutama wrote respondent
Citra on several occasions requesting
payment of the formers interim billings,
pursuant to the provisions of the EPCC.
Respondent Citra only partially paid the
interim billings, thus, prompting petitioner
Hutama to demand the payment of the
outstanding balance. Respondent Citra
however still failed to do so.
On December 15, 1999, the Skyway
Project was opened for public use, and toll
fees were accordingly collected. After
informing respondent Citra that the
construction of the Skyway Project was
already complete, petitioner Hutama
reiterated its demand that respondent Citra
pay the outstanding balance on the interim
billings, as well as the Early Completion
Bonus agreed upon in the EPCC. Respondent
Citra refused to comply with petitioners
demands.
On May 24, 2004, petitioner, through
counsel, sent a letter to respondent Citra
demanding payment of the following:
(1) the outstanding balance on the interim
billings;
(2) the amount of petitioners final billing;
(3) early completion bonus; and
(4) interest charges on the delayed payment.
BEFORE THE CIAC
Petitioner Hutama filed a Request for
Arbitration, seeking to enforce its money
claims against respondent.
Respondent Citra averred that the CIAC
had no jurisdiction over the case as the
filing by petitioner was premature because a
condition precedent, i.e., prior referral by
the parties of their dispute to the Dispute
Adjudication Board (DAB), required by
Clause 20.4 of the EPCC, had not been
satisfied or complied with.
Clause 20.4 of the EPCC
If a dispute arises between the
Employer and the Contractor in connection
with, or arising out of, the Contract or the
execution of the Works, including any
dispute as to any opinion, instruction,
determination, certification or valuation of
the Employers Representative, the dispute
shall initially be referred in writing to
the Dispute Adjudication Board for its
decision, with a copy to the other
party.
CIAC RULING
The CIAC ruled that it had jurisdiction
over the case, and that the determination
of whether petitioner had complied with
Clause 20.4 of the EPCC was a factual
issue that may be resolved during the
trial.
Respondent Citra filed a Motion for
Reconsideration of the CIAC Order.

CIAC however denied the motion as


prior resort by the parties to DAB was not a
condition precedent for it to assume
jurisdiction over CIAC.
BEFORE THE CA

Respondent Citra filed a special civil


action for certiorari and prohibition.
CA Ruling
- ruled in favour of respondent
Citra.
- it annulled the Order of the CIAC,
and enjoined the said Commission from
proceeding with the case until the dispute
between petitioner and respondent had
been referred to and decided by the DAB.
Petitioner Hutama filed a Motion for
Reconsideration. Denied.

Petitioner filed the instant petition for


review before the Supreme Court raising
the issue of whether CIAC has
jurisdiction over the case.
BEFORE THE SC
Respondent’s Contention:
The CIAC still cannot assume
jurisdiction over the case as petitioner has
not yet referred its dispute with respondent
to the DAB, as directed by Clause 20.4 of the
EPCC.
Prior resort of the dispute to DAB is a
condition precedent and an indispensable
requirement for the CIAC to acquire
jurisdiction over the case.
ISSUE:
Whether prior referral to DAB as
provided for in Clause 20.4 of EPCC
is a condition precedent before CIAC
can assume jurisdiction over the
dispute in the case.
SC RULING:

Prior referral to DAB as provided for


in Clause 20.4 of EPCC is not a condition
precedent before CIAC can assume
jurisdiction over the dispute in the case.
The CIAC shall have jurisdiction over a
dispute involving a construction contract if:
1. The contract contains an arbitration
clause (notwithstanding any reference by
the same contract to another arbitration
institution or arbitral body);
2. Even in the absence of such a clause in
the construction contract, the parties still
agree to submit their dispute to
arbitration.
In the case, it is true that Clause 20.4
of the EPCC states that a dispute between
petitioner and respondent as regards the
EPCC shall be initially referred to the DAB
for decision, and only when the parties are
dissatisfied with the decision of the DAB
should arbitration commence. This does not
mean, however, that the CIAC is barred
from assuming jurisdiction over the
dispute if such clause was not
complied with.
The bare fact that the parties herein
incorporated an arbitration clause in the
EPCC is sufficient to vest the CIAC with
jurisdiction over any construction
controversy or claim between the
parties. The arbitration clause in the
construction contract ipso facto vested the
CIAC with jurisdiction.
Since the jurisdiction of 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.
China Chang Jiang Energy
Corporation (Philippines) v. Rosal
Infrastructure Builders

What the law merely requires for a


particular construction contract to fall within
the jurisdiction of CIAC is for the parties to
agree to submit the same to voluntary
arbitration.
As long as the parties agree to submit
to voluntary arbitration, regardless of what
forum they may choose, their agreement
will fall within the jurisdiction of the CIAC,
such that, even if they specially 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.
(National Irrigation Administration v.
Court of Appeals).
It bears to emphasize that the mere
existence of an arbitration clause in the
construction contract is considered by law
as an agreement by the parties to submit
existing or future controversies between
them to CIAC jurisdiction, without any
qualification or condition precedent.
A condition precedent in the
construction contract, which would
effectively suspend the jurisdiction of the
CIAC until compliance therewith, would
be in conflict with the recognized intention
of the law and rules to automatically vest
CIAC with jurisdiction over a dispute should
the construction contract contain an
arbitration clause.