Case Digest (G.R. No. 141833)
Case Digest (G.R. No. 141833)
Facts:
LM Power Engineering Corporation v. Capitol Industrial Construction Groups, Inc., G.R. No. 141833, March 26, 2003, Supreme Court Third Division, Panganiban, J., writing for the Court.
On February 22, 1983, LM Power Engineering Corporation (petitioner) and Capitol Industrial Construction Groups, Inc. (respondent) entered into a Subcontract Agreement for electrical work at the Third Port of Zamboanga. Disputes arose after respondent allegedly took over some of the work on April 25, 1985, asserting that petitioner failed to procure materials and complete its tasks.
After completing its portion, petitioner presented a bill for P6,711,813.90 which respondent refused to pay, contesting the amounts of advances and billable accomplishments and invoking the contract's termination/take-over and set-off provisions. Petitioner then filed a Complaint for collection with the Regional Trial Court (RTC) of Makati (originally Branch 141; later transferred to Branch 64). Instead of filing an answer, respondent moved to dismiss on the ground that the complaint was premature because the parties had agreed to prior arbitration.
In an Order dated September 15, 1987, the RTC denied respondent's Motion to Dismiss, finding that the dispute did not involve interpretation or implementation of the contract and thus was not covered by the arbitral clause. After trial on the merits the RTC ruled for petitioner, holding that respondent’s take-over was a modification, not a termination, and ordered payment.
On appeal, the Court of Appeals (Seventh Division) in CA‑GR CV No. 54232 reversed the RTC and ordered referral of the dispute to arbitration under the Subcontract, also discharging the surety bond posted by respondent. The CA found arbitrable questions concerning whether the take‑over amounted to termination under Letter K of the Subcontract, whether petitioner was liable under the warranty clause, and whether respondent could be reimbursed for costs of the take‑over.
Petitioner sought review by the Supreme Court via a Petition for Review on Certiorari under Rule 45, assailing the CA’s January 28, 2000 Decision. In its memorandum petitioner raised two principal issues: (A) whether a controversy exists over interpretation/implementation of the Subcontract that requires prior arbitration; and (B) if so, whether the procedural requirements of Article III, Section 1 of the CIAC Rules regarding a request for arbitration were complied with. The case was deemed submitted for decision on October 25, 2001.
Issues:
- Whether there exists a justiciable controversy between the parties over the interpretation and implementation of the Subcontract that requires prior recourse to arbitration.
- If the dispute is arbitrable, whether the requirements of Article III, Section 1 of the CIAC Rules (regarding submission/request for arbitration) were complied with so as to vest jurisdiction in CIAC.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)