G.R. No. 168384 - Reyes vs. Balde II

On October 20, 2002, respondent-spouses Cesar and Carmelita Esquig entered into a Design-Build Construction Agreement with petitioner Charles Bernard H. Reyes, doing business as CBH Reyes Architects, for the architectural design and construction of a 2-storey residence in Tahanan Village, Parañaque City.
In accordance with the contract, the respondents paid a down payment of P1,050,000, and construction commenced without initial dispute.

The relationship between petitioner and respondents was amicable until January 2003 when the Esquigs left for the United States, designating their co-respondent, Rosemarie Papas, as their representative.
According to petitioner, Papas interfered with the construction works by demanding changes, additional works (entailing extra costs), refusing to pay progress billing, and withholding laborers' salaries.

Petitioner, having prepared an accounting report for all additional works and corresponding costs, was met with denial from Papas regarding the additional charges.
On May 26, 2003, petitioner filed a complaint in the Regional Trial Court (RTC) of Muntinlupa City (Civil Case No. 03-110) praying for:

On July 15, 2003, respondents moved to dismiss Civil Case No. 03-110 on the ground that the agreement contained an arbitration clause, hence, any dispute should be resolved by the Construction Industry Arbitration Commission (CIAC).
Concurrently, respondents filed a complaint before CIAC (CIAC Case No. 13-2003) alleging:

Instead of answering respondents’ complaint before CIAC, petitioner filed a motion to dismiss the CIAC action on the grounds of lack of jurisdiction due to:

CIAC’s Order (October 17, 2003) denied petitioner’s motion to dismiss, holding that the arbitration clause in the contract vested CIAC’s jurisdiction over the dispute.
Petitioner’s motion for reconsideration was further denied by CIAC on November 27, 2003, prompting petitioner to file an Answer Ad Cautelam.
Meanwhile, the RTC of Muntinlupa City, Branch 203, denied respondents’ motion to dismiss (February 27, 2004), asserting its jurisdiction over the complaint for accounting, rescission, and damages.
On April 23, 2004, petitioner’s motion to terminate the CIAC proceedings was denied.
Subsequently, petitioner filed a petition for certiorari and prohibition before the Court of Appeals, which dismissed the petition on February 18, 2005, thus affirming CIAC’s jurisdiction under the arbitration clause.
Ultimately, the RTC issued a judgment on July 29, 2005, in favor of petitioner in Civil Case No. 03-110, ordering reliefs including:

Rescission of the Design-Build Construction Agreement;
Accounting for construction materials;
Payment of amounts representing additional costs, balance of contract price, moral and exemplary damages, and attorney’s fees.

On June 29, 2006, the presiding judge ordered the implementation of the writ of execution, leading Sheriff Melvin T. Bagabaldo to levy respondents’ personal property.
In response, respondents sought the issuance of a temporary restraining order (TRO).
On July 12, 2006, the Supreme Court issued a TRO enjoining further RTC proceedings in Civil Case No. 03-110, halting the sale of levied properties.
The Supreme Court concluded that the CIAC, and not the RTC, had proper jurisdiction over the dispute, leading to the dismissal of Civil Case No. 03-110 for lack of jurisdiction.

Whether the petitioner, by entering into the Design-Build Construction Agreement containing an arbitration clause, irrevocably consented to submit any dispute arising from the contract to voluntary arbitration before the CIAC.
Whether, even assuming petitioner’s consent to arbitration, the CIAC possesses proper jurisdiction over the dispute, considering it involves issues beyond its stipulated technical construction disputes.
Whether the prior pending Philippine Regional Trial Court proceedings, initiated before the CIAC arbitration, confer jurisdiction upon the RTC or whether such proceedings are rendered null and void in light of the compulsory arbitration clause and the exclusive jurisdiction of the CIAC.