G.R. No. 219708 - Tourism Infrastructure and Enterprise Zone Authority vs. Global-V Builders Co.

Between 2007 and 2008, the Philippine Tourism Authority (PTA) entered into five Memoranda of Agreement (MOA) with Global-V Builders Co. (Global-V) for various infrastructure projects in Boracay, Aklan, and Banaue, Ifugao:

MOA dated February 2, 2007 for Construction of Stamped Concrete Sidewalk and Installation of Streetlights (Main Road), Boracay;
MOA dated September 6, 2007 for Boracay Environmental Infrastructure Project (BEIP) - Extension of Drainage Component System (Main Road and Access Road), Boracay;
MOA dated December 7, 2007 for Additional Sidewalk, Streetlighting and Drainage System (Main Road), Boracay;
MOA dated September 19, 2008 for Widening of Boracay Road along Willy’s Place, Boracay;
MOA dated February 29, 2008 for Perimeter Fence at Banaue Hotel, Banaue.

The BEIP-Extension and Perimeter Fence projects were procured through competitive bidding; the rest were secured through negotiated procurement under Sections 53(b) and 53(d) of R.A. No. 9184 (Government Procurement Reform Act).

On July 31, 2012, Global-V filed a Request for Arbitration and Complaint before the Construction Industry Arbitration Commission (CIAC), against the successor agency, Tourism Infrastructure and Enterprise Zone Authority (TIEZA), seeking payment for unpaid bills related to the five projects, plus interest, moral and exemplary damages, and attorney’s fees.
The total claim amounted to approximately ₱16.66 million.

Jurisdictional Challenge by TIEZA and Proceedings Before the Arbitral Tribunal

On August 30, 2012, TIEZA filed a Refusal of Arbitration (Motion to Dismiss for Lack of Jurisdiction), arguing:

No arbitration agreement existed between the parties; thus, CIAC lacked jurisdiction per CIAC Revised Rules, Sections 2.3 and 2.3.1.
The claims were money claims under the primary jurisdiction of the Commission on Audit (COA), and administrative remedies were not exhausted.

Global-V argued CIAC had jurisdiction based on Section 59 of R.A. No. 9184, which mandates arbitration for disputes arising from implementation of contracts covered by the Act and considers arbitration provisions as part of the contracts by operation of law.
After submission of memoranda and oral arguments, the Arbitral Tribunal:

Denied TIEZA's Motion to Dismiss for lack of jurisdiction (Order dated December 18, 2012), ruling that the absence of an explicit arbitration clause in the MOAs was cured by law;
Found Global-V satisfied exhaustion of administrative remedies due to unreasonable delay;
Denied TIEZA’s motion for reconsideration (January 29, 2013 Order), reaffirming jurisdiction.

TIEZA filed its Answer Ex Abundanti Ad Cautelam and participated in preliminary conferences, although emphasizing non-waiver of jurisdictional challenges.
A supervening COA special audit disallowed payment for one project (Stamped Concrete Sidewalk and Streetlights), but the Arbitral Tribunal maintained its jurisdiction and continued the proceedings.

Global-V was entitled to payments for the BEIP drainage extension project and the Perimeter Fence project;
The negotiated contracts for the widening of Boracay Road, additional sidewalk, streetlighting, and drainage system were valid and Global-V entitled to claims under them;
Claim related to Stamped Concrete Sidewalk and Streetlights denied for lack of authority from joint venture partner;
Moral and exemplary damages claims denied;
Awarded attorney’s fees and imposed cost of arbitration on TIEZA;
Total monetary award was ₱10,178,440.17 plus 6% interest per annum until full payment.

TIEZA petitioned for review before the Court of Appeals, raising issues on CIAC jurisdiction, validity of contracts, and entitlement to damages and interest.
Initially, in June 2014, the CA nullified the Arbitral Award for lack of CIAC jurisdiction due to absence of arbitration agreement.
After reconsideration, in an Amended Decision dated April 6, 2015, CA reversed itself, affirmed CIAC jurisdiction, upheld validity of the contracts under negotiated procurement, and confirmed the award of interest, attorney’s fees, and arbitration costs.
CA emphasized that the arbitration clause in the General Conditions of Contract sufficed to vest jurisdiction in CIAC and that applicable laws (e.g., R.A. No. 9184) form part of the contracts by operation of law.
CA rejected TIEZA’s claim of COA’s primary jurisdiction over money claims and held that failure to allege exhaustion of administrative remedies did not deprive CIAC of jurisdiction.
Motion for reconsideration by TIEZA was denied by the CA on July 22, 2015.

Lack of CIAC jurisdiction given absence of arbitration clause and non-compliance with conditions precedent;
COA’s primary jurisdiction over money claims;
Invalidity of contracts obtained through negotiated procurement;
Lack of basis for interest, attorney’s fees, and arbitration cost awards against TIEZA.

Whether CIAC has jurisdiction over the dispute despite absence of an arbitration clause expressly incorporated in the MOAs.
Whether the money claims of Global-V fall under COA’s primary jurisdiction rather than CIAC’s jurisdiction.
Whether the negotiated procurement contracts between TIEZA and Global-V comply with the requirements of R.A. No. 9184 and are valid.
Whether the award of 6% interest, attorney’s fees, and cost of arbitration against TIEZA was proper and merited.