ALTERNATIVE DISPUTE RESOLUTION | DPWH VS. CMC/MONARK/PACIFIC/HI-TRI JOINT VENTURE, G.R NO. 179372, SEPTEMBER 13, 2017

DPWH VS. CMC/MONARK/PACIFIC/HI-TRI JOINT VENTURE,

G.R NO. 179372, SEPTEMBER 13, 2017

 

TOPIC/DOCTRINE

As a general rule, findings of fact of Construction Industry Arbitration Commission (CIAC), a quasi-judicial tribunal which has expertise on matters regarding the construction industry, should be respected and upheld.

 

FACTS

Republic of the Philippines, through the Department of Public Works and Highways (DPWH), and CMC/Monark/Pacific/Hi-Tri J.V. (the Joint Venture) executed "Contract Agreement for the Construction of Contract Package 6MI-9, Pagadian-Buug Section, Zamboanga del Sur, Sixth Road Project, Road Improvement Component Loan No. 1473-PHI.” The Joint Venture's truck and equipment were set on fire.

On March 11, 2003, a bomb exploded at Joint Venture's hatching plant located at Brgy. West Boyogan, Kumalarang, Zamboanga del Sur. According to reports, the bombing incident was caused by members of the Moro Islamic Liberation Front.

The Joint Venture made several written demands for extension and payment of the foreign component of the Contract. There were efforts between the parties to settle the unpaid Payment Certificates amounting to P26,737,029.49. Thus, only the foreign component of US$358,227.95 was up for negotiations subject to further reduction of the amount on account of payments subsequently received by the Joint Venture from DPWH.  In a letter dated September 18, 2003, BCEOM French Engineering Consultants recommended that DPWH promptly pay the outstanding monies due the Joint Venture. The letter also stated that the actual volume of the Joint Venture's accomplishment was "2,732m2 of hardrock and 4,444m3 of rippable rock," making the project 80% complete when it was halted.

The Joint Venture filed a Complaint against DPWH before CIAC. Meanwhile, the Joint Venture sent a "Notice of Mutual Termination of Contract", to DPWH requesting for a mutual termination of the contract subject of the arbitration case.

CIAC promulgated an Award directing DPWH to pay the Joint Venture its money claims plus legal interest. CIAC, however, denied the Joint Venture's claim for price adjustment due to the delay in the issuance of a Notice to Proceed under Presidential Decree No. 1594 or the "Policies, Guidelines, Rules, and Regulations for Government Infrastructure Contracts."

The Court of Appeals held that CIAC did not commit reversible error in not awarding the price adjustment sought by the Joint Venture under Presidential Decree No. 1594 and that CIAC did not err in not awarding actual damages in the form of interest at the rate of 24%. However, the Court of Appeals ruled that CIAC was correct when it awarded legal interest. The Court of Appeals sustained the Joint Venture's argument on the non-inclusion of a clear finding of its entitlement to time extensions in the dispositive portion of the CIAC Award. Petitioner DPWH filed the present Petition for Review assailing the Court of Appeals Decision.

 

ISSUE

Whether the Court of Appeals gravely erred in rendering the assailed decision because it completely ignored, overlooked, or misappreciated facts of substance, which, if duly considered, would materially affect the outcome of the case.

 

RULING

No.

The court ruled that as a general rule, findings of fact of CIAC, a quasi-judicial tribunal which has expertise on matters regarding the construction industry, should be respected and upheld. In National Housing Authority v. First United Constructors Corp., 657 SCRA 175 (2011), this Court held that CIAC’s factual findings, as affirmed by the Court of Appeals, will not be overturned except as to the most compelling of reasons: As this finding of fact by the CIAC was affirmed by the Court of Appeals, and it being apparent that the CIAC arrived at said finding after a thorough consideration of the evidence presented by both parties, the same may no longer be reviewed by this Court.


Arbitration; “Commercial Arbitration” and “Voluntary Arbit­ration,” Distinguished.—In distinguishing between commercial arbitration, voluntary arbitration under Article 219(14) of the Labor Code, and construction arbitration, Freuhauf Electronics Philippines Corporation v. Technology Electronics Assembly and Management Pacific, 810 SCRA 280 (2016), ruled that commercial arbitral tribu­nals are purely ad hoc bodies operating through contractual consent, hence, they are not quasi-judicial agencies. In contrast, voluntary arbitration under the Labor Code and construction arbitration derive their authority from statute in recognition of the public interest inherent in their respective spheres. Furthermore, voluntary arbitra­tion under the Labor Code and construction arbitration exist independently of the will of the contracting parties: Voluntary Arbitrators resolve labor disputes and grievances arising from the interpretation of Collective Bargaining Agreements. These disputes were specifically excluded from the coverage of both the Arbitration Law and the ADR Law. Unlike purely commercial relationships, the relationship between capital and labor are heavily impressed with public interest. Because of this, Voluntary Arbitrators authorized to resolve labor disputes have been clothed with quasi-judicial authority. On the other hand, commercial relationships covered by our commercial arbitration laws are purely private and contractual in nature. Unlike labor relationships, they do not possess the same compelling state interest that would justify state interference into the autonomy of contracts. Hence, commercial arbitration is a purely private system of adjudication facilitated by private citizens instead of government instrumentalities wielding quasi-judicial powers. Moreover, judicial or quasi-judicial jurisdiction cannot be conferred upon a tribunal by the parties alone. The Labor Code itself confers subject-matter jurisdiction to Voluntary Arbitrators. Notably, the other arbitration body listed in Rule 43 — the Construction Industry Arbitration Commission (CIAC) — is also a government agency attached to the Department of Trade and Industry. Its jurisdiction is likewise conferred by statute. By contrast, the subject matter jurisdiction of commercial arbitrators is stipulated by the parties.







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