Case Digest (G.R. No. 211504)
Facts:
Federal Builders, Inc. v. Power Factors, Inc., G.R. No. 211504, March 08, 2017, the Supreme Court Third Division, Bersamin, J., writing for the Court.
Federal Builders, Inc. (petitioner) was the general contractor for the Bullion Mall under a construction agreement with Bullion Investment and Development Corporation (BIDC). In 2004 Federal engaged Power Factors, Inc. (respondent) as subcontractor for electrical works for P18,000,000.00. Disputes arose over unpaid amounts claimed by Power.
On February 19, 2008 Power sent a demand letter claiming P11,444,658.97; Federal replied its outstanding balance was only P1,641,513.94 and said claims for work after June 21, 2005 should be addressed to BIDC. Power repeatedly demanded payment without success.
On October 29, 2009 Power filed a request for arbitration with the Construction Industry Arbitration Commission (CIAC), invoking an arbitration clause appearing in a draft Contract of Service between the parties. The clause provided that disputes “shall be settled by the Construction Industry Arbitration Commission (CIAC) which shall have original and exclusive jurisdiction.” On November 20, 2009 Federal’s then-counsel, Atty. Vivencio Albano, wrote the CIAC manifesting Federal’s agreement to arbitration and sought an extension to file an answer; the CIAC granted the extension. Atty. Albano subsequently withdrew his appearance on December 16, 2009, and Federal engaged new counsel.
Federal moved to dismiss at CIAC, arguing the Contract of Service was only a draft, unsigned and never finalized, so there was no valid arbitration agreement and CIAC lacked jurisdiction. The CIAC set the case for hearing and directed that the motion to dismiss be resolved after reception of evidence. Federal did not participate further and the CIAC rendered a Final Award on May 12, 2010 ordering Federal to pay Power P9,369,238.87 (with interest, attorney’s fees and arbitration costs).
Federal appealed to the Court of Appeals (CA), which, in a decision promulgated August 12, 2013, affirmed the CIAC award but modified the amounts (reducing change-order awards) and fixed interest periods, resulting in a net award of P7,140,728.07 to Power; the CA held CIAC had jurisdiction notwithstanding the unsigned draft and observ...(Subscriber-Only)
Issues:
- Did the Court of Appeals err in holding that the CIAC had jurisdiction over the dispute despite the Contract of Service being an unsigned draft?
- Did the Court of Appeals err in upholding the amounts awarded to Power (as modified), in particular the net award...(Subscriber-Only)
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)