G.R. No. 132848-49 - Philrock, Inc. vs. Construction Industry Arbitration Commission

The dispute arises from a construction contract involving Petitioner Philrock, Inc. and Respondents, the Cid spouses.
The Cid spouses initiated a complaint for damages against Philrock and some of its officers and engineers before the Regional Trial Court (RTC) of Quezon City.
An Agreement to Arbitrate had been previously executed by the parties, agreeing that their disputes would be resolved by the Construction Industry Arbitration Commission (CIAC).

September 14, 1992 – The Cid spouses file a Complaint for damages in the RTC, Branch 82.
December 7, 1993 – The RTC initially dismisses the case and refers it to the CIAC because of the existing arbitration agreement.
April 2, 1994 – Disagreements about the scope of arbitration arise regarding whether moral and exemplary damages and tort issues should be included, and whether non-signatory officers and engineers of Philrock should be joined.
April 13, 1994 – The CIAC issues an Order dismissing the case and referring it to the RTC due to the unresolved issues between the parties.
Subsequent proceedings include:

The filing of a Motion to Set Case for Hearing by the Cid spouses at the RTC, opposed by Philrock.
June 13, 1995 – The RTC declares it no longer has jurisdiction and orders the case records remanded back to the CIAC.
August 21, 1995 – Philrock petitions to suspend the arbitration pending clarification of the RTC’s June 13 Order; however, the CIAC denies the request based on respondent indication to exclude non-consenting parties.
Continuation of proceedings leading to the finalization and signing of the Terms of Reference, which encapsulate the identified issues and the dispute parameters.

September 12, 1995 – Philrock files a Motion to Dismiss alleging the CIAC lost jurisdiction due to withdrawal of consent by the respondents.
September 22, 1995 – The CIAC denies the Motion to Dismiss.
November and February Hearings (1995-1996) – The CIAC instructs the parties to appear and set hearing dates, with specific emphasis on the presentation of evidence and payment of fees.
September 24, 1996 – The CIAC delivers its Decision awarding various sums to the Cid spouses for:

Excess cash payment for materials ordered (P23,276.25 plus interest at 6% per annum).
Retrofitting costs (P65,000.00).
Refund for delivered but unworkable concrete (P13,404.54).
Moral damages, nominal damages, and attorney’s fees and litigation expenses.
Arbitration fees (netted against fees already paid if any).

A Petition for Review is subsequently elevated under Rule 45 of the Rules of Court, contesting the CIAC’s jurisdiction and the monetary awards.
The Court of Appeals consolidated two cases (CA-GR SP Nos. 39781 and 42443) and upheld:

The jurisdiction of the CIAC under Executive Order No. 1008 on disputes arising from construction contracts.
The awards rendered by the CIAC based on the substantial evidence on record.

The issues raised by Petitioner include arguments on the withdrawal of consent to arbitrate and alleged errors in awarding damages.

Whether the CIAC retained jurisdiction over the dispute after the RTC initially dismissed the case and referred it back for arbitration.
Whether the withdrawal of consent to arbitrate by one party (as alleged by Petitioner) affected the CIAC’s jurisdiction.

Whether the respondent spouses have a proper cause of action against Philrock, despite allegations that any defects were due to respondents’ negligence (failure to secure an engineer or architect).

The propriety of awarding P23,276.25 for excess payment on materials plus the accrual of 6% interest from September 26, 1995.
Whether the award of P65,000.00 for retrofitting costs is justified under the circumstances.
The legitimacy of awarding P13,404.54 for the refund on delivered but unworkable concrete mix.

Whether awarding moral damages is appropriate given the alleged suffering and lasting impact on the respondents.
Whether the grant of nominal damages is proper when actual damages have been proven.
Whether Philrock should be held liable for attorney’s fees and litigation expenses incurred by the respondents.

Whether Petitioner should be responsible for the payment of arbitration fees as determined by the CIAC.