CIAC’s Jurisdiction on action for collection of sum of money arising from a construction dispute.

CASES:

1.      EXCELLENT QUALITY APPAREL INC., vs. WIN MULTI RICH BUILDERS, INC., GR. No. 175048.  February 10, 2009

2.      EXCELLENT QUALITY APPAREL INC., vs. VISAYAN SURETY & INSURANCE CORPORATION AND FAR EASTERN SURETY & INSURANCE CO., INC.,(FESICO) GR. No. 212025. July 1, 2015.

SUMMARY:

Petitioner entered into a contract on March 26, 1996, with respondent for the construction of a garment factory within Cavite Philippine Economic Zone Authority (CPEZ) for a maximum period of 5 months. Included in the contract is an arbitration clause stating that any disputes, controversy or differences between the parties arising out of the Contract that may not be resolved by the parties to their mutual satisfaction shall be submitted to an Arbitration Committee chosen by the parties and whose decision shall be final and binding on both of them. The Arbitration Law (RA 876) will govern the arbitration proceedings.

Respondent completes the project on November 27, 1996. Respondent filed in RTC of Manila, a complaint for a sum of money amounting to P8634,448.20, with prayer for the issuance of a writ of attachment claiming that Mr. Ying, the representative of petitioner, was about to abscond. Respondent obtained a surety bond issued by Visayan Surety & Insurance Corporation. RTC later on issued the writ of attachment against the properties of petitioner. 

The sheriff served the Writ, summons and complaint to petitioner. To prevent the taking of petitioner’s properties, the latter issued a check amounting to P8634,448.20  and made payable to the RTC of Manila for whatever liability there may be against petitioner. The RTC issued the order directing the deposit of the garnished funds of petitioner to the Clerk of Court of RTC. Multi Rich then filed a motion to release petitioner’s cash deposit to it. It is granted by the RTC. Multi-Rich posted surety bond issued by FESICO and secure the withdrawal of the cash deposit.

SUPREME COURT’s RESOLUTION on the RTC’s Jurisdiction over action for collection of the sum of money arising from a construction dispute.

On the issue of RTC’s Jurisdiction over the action for sum of money, the petitioner filed an Omnibus Motion claiming that RTC has no jurisdiction from taking cognizance of the case and pointed out the presence of an Arbitration Clause and thus the case should be referred to the CIAC pursuant to E.O. 1008.

RTC denied the motion. The case was elevated to CA and the latter ruled that RTC had jurisdiction over the case since it is a suit for collection of sum of money.

The issue reaches the Supreme Court and held that the RTC has no jurisdiction over the case for collection of sum of money. CIAC acquires jurisdiction over a construction contract by the mere fact that the parties agreed to submit to voluntary arbitration. It does not distinguish between claims involving payment of money or not. It cited the provision in E.O. 1008 laying down the Jurisdiction of CIAC, to wit:

Sec. 4. Jurisdiction. - The CIAC shall have original and exclusive jurisdiction over disputes arising from, or connected with, contracts entered into by parties involved in construction in the Philippines, whether the disputes arise 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 the CIAC may include but is not limited to violation of specifications for materials and workmanship; violation of the terms of agreement; interpretation and/or application of contractual time and delays; amount of damages and penalties; commencement time and delays; maintenance and defects; payment, default of employer or contractor and changes in contract cost.

Excluded from the coverage of this law are disputes from employer-employee relationships, which shall continue to be covered by the Labor Code of the Philippines.

The RTC should not have taken cognizance of the case of the collection suit. The presence of the arbitration clause vested jurisdiction to the CIAC overall construction disputes between the contracting parties. 

Having no jurisdiction over the case, the RTC has no authority to issue the writ and garnished the funds in the first place. 

Thus in the case of G.R. No. 212025, July 1, 2015, the petitioner seeks the recovery of the funds wrongfully attached and released to the respondent Win Multi Rich. The court ruled in favor of the petitioner and order the return of the funds obtained.