G.R. No. 129169 - National Irrigation Administration vs. Court of Appeals

Case Summary (G.R. No. 129169)

Factual Background

In a competitive bidding held by NIA in August 1978, HYDRO was awarded Contract MPI-C-2 for the main civil works of the Magat River Multi-Purpose Project, with payment partly in pesos and partly in U.S. dollars. HYDRO substantially completed the works in 1982 and received final acceptance in 1984. HYDRO later asserted an outstanding account receivable representing the dollar rate differential of the contract price escalation. After administrative attempts failed, HYDRO filed a Request for Adjudication with CIAC on December 7, 1994.

Proceedings Before CIAC

CIAC appointed arbitrators from lists submitted by the parties and constituted an arbitration panel chaired by Certified Public Accountant Joven B. Joaquin. The parties exchanged proposed evidence and were given draft Terms of Reference. At the preliminary conference NIA, through counsel from the Office of the Government Corporate Counsel, manifested inability to admit the genuineness of HYDRO’s documentary evidence because NIA’s records had been destroyed and requested inspection of the originals, which HYDRO agreed to provide. NIA filed an Answer on January 6, 1995 contesting jurisdiction and alleging laches and estoppel, and filed a Compliance the same date nominating arbitrators and asserting counterclaims.

CIAC’s Interim Orders and Motion to Dismiss

On March 13, 1995, NIA filed a Motion to Dismiss for lack of jurisdiction, arguing that the contract predated the creation of CIAC and that the parties could not have contemplated submission of their disputes specifically to CIAC. CIAC deferred resolution of the motion on April 11, 1995 and proceeded with hearings on the merits, finding that the grounds raised did not appear indubitable. CIAC denied NIA’s motion for reconsideration and reaffirmed its jurisdiction pursuant to E.O. No. 1008, ordering the hearing to proceed.

Court of Appeals Action

On May 26, 1996, NIA filed with the Court of Appeals an original action for certiorari and prohibition seeking annulment of CIAC’s orders for being issued without or in excess of jurisdiction. NIA argued, inter alia, that E.O. No. 1008 had no retroactive effect, that the dispute should be governed by laws existing when the contract was executed and terminated, that E.O. No. 1008 was substantive and not procedural, and that NIA had timely raised jurisdictional objections. The Court of Appeals found no grave abuse of discretion by CIAC and dismissed NIA’s petition in a Resolution dated June 28, 1996, and denied NIA’s motion for reconsideration on February 24, 1997.

Petition to the Supreme Court and Procedural Defect

NIA filed an original action for certiorari and prohibition with the Supreme Court on June 2, 1997, reiterating its prior arguments. The Supreme Court held at the outset that NIA’s petition suffered from a procedural defect warranting dismissal because NIA failed to pursue the proper remedial route: a petition for review under Rule 45 from the Court of Appeals’ final resolutions rather than a special civil action under Rule 65. The Court emphasized that the Court of Appeals had jurisdiction under B.P. Blg. 129 to entertain a certiorari under Rule 65, and that alleged errors in its exercise of jurisdiction were errors of judgment reviewable by appeal.

Applicable Rules on Appeal and Certiorari

The Court explained that under Rule 45 the reglementary period to appeal a decision, final order, or resolution of the Court of Appeals is fifteen days from notice of judgment or denial of a motion for reconsideration, and that a writ of certiorari under Rule 65 issues only when there is no plain, speedy and adequate remedy in the ordinary course of law. Because NIA received the Court of Appeals’ resolution on March 4, 1997, it had until March 19, 1997 to perfect an appeal but failed to do so. The availability of appeal rendered certiorari inappropriate and the special civil action could not substitute for the lost appeal remedy.

Consideration of Merits in the Alternative

The Court proceeded to address the merits in the alternative and concluded that CIAC committed no grave abuse of discretion in deferring resolution of jurisdictional and prescription defenses and in proceeding with the hearings. The Court found that E.O. No. 1008 vests CIAC with original and exclusive jurisdiction over disputes arising from, or connected with, construction contracts entered into by parties involved in construction in the Philippines, whether such disputes arise before or after contract completion. The Court observed that HYDRO’s complaint was filed on December 7, 1994, while E.O. No. 1008 was in effect, and that jurisdiction is determined by the law in force at the time of commencement of the action; thus CIAC had jurisdiction over the dispute.

Jurisdictional Analysis and the Nature of CIAC’s Authority

The Court articulated that CIAC’s jurisdiction is jurisdiction over the dispute and not over the date of the contract; disputes arising after CIAC’s constitution fall within its competence even if the underlying contract predates the CIAC. The Court declined to resolve whether E.O. No. 1008 is substantive or procedural because that question was unnecessary to the result. The Court also rejected NIA’s contention that CIAC required a mutual request for arbitration to acquire jurisdiction, explaining that the contracts between the parties contained an arbitration clause and that under the amended CIAC Rules of Procedure (CIAC Resolutions No. 2-91 and 3-93) an agreement to submit to voluntary arbitration suffices to bring the dispute within CIAC’s jurisdiction, even where the contract referred to another arbitral forum.

Distinction from Precedent and Parties’ Participation

The Court distingu

Case Syllabus (G.R. No. 129169)

Parties and Procedural Posture

NATIONAL IRRIGATION ADMINISTRATION (NIA) filed a special civil action for certiorari under Rule 65 of the Rules of Court with the Supreme Court seeking to annul Court of Appeals resolutions dated 28 June 1996 and 24 February 1997.
HONORABLE COURT OF APPEALS (4TH DIVISION) dismissed NIA's original petition for certiorari and prohibition against the CONSTRUCTION INDUSTRY ARBITRATION COMMISSION (CIAC) and denied NIA's motion for reconsideration.
HYDRO RESOURCES CONTRACTORS CORPORATION (HYDRO) was the claimant before the CIAC and the respondent in the appellate and special civil actions.
NIA originally filed an original action for certiorari and prohibition in the Court of Appeals on 26 May 1996 which the Court of Appeals resolved on 28 June 1996 and denied reconsideration on 24 February 1997.
NIA filed the present petition with the Supreme Court on 2 June 1997 while the CIAC had rendered a decision in favor of HYDRO on 10 June 1997.
The Court of Appeals held in abeyance resolution of NIA's appeal from the CIAC decision by resolution dated 26 March 1998 pending final disposition of the instant petition.

Key Factual Allegations

HYDRO was awarded Contract MPI-C-2 in a competitive bidding held by NIA in August 1978 for construction of the main civil works of the Magat River Multi-Purpose Project.
The contract provided partial payment in Philippine pesos and partial payment in U.S. dollars, and HYDRO substantially completed the works in 1982 with final acceptance by NIA in 1984.
HYDRO claimed an outstanding account receivable representing the dollar rate differential of price escalation under the contract and filed a Request for Adjudication with CIAC on 7 December 1994.
NIA filed its Answer and Compliance on 6 January 1995, nominated arbitrators, and asserted defenses including lack of cause, laches, and estoppel while making a counterclaim for damages and attorney's fees.
CIAC appointed arbitrators nominated by the parties and designated Certified Public Accountant Joven B. Joaquin as Chairman of the Arbitration Panel.
At the preliminary conference NIA through counsel declared inability to admit the genuineness of HYDRO's documentary evidence due to destruction of NIA's records and requested inspection of originals which HYDRO agreed to provide.
NIA filed a Motion to Dismiss on 13 March 1995 asserting lack of jurisdiction by CIAC because the contract predated E.O. No. 1008 and because the parties did not agree specifically to submit disputes to CIAC.
CIAC deferred resolution of the Motion to Dismiss on the ground that the grounds cited did not appear indubitable and proceeded with hearings, and CIAC subsequently denied NIA's motion for reconsideration.

Issues Presented

Whether CIAC had jurisdiction to hear and resolve HYDRO's dispute under E.O. No. 1008 when the contract was executed and completed prior to the promulgation of that Executive Order.
Whether a unilateral request for arbitration by one party suffices to vest jurisdiction in CIAC under the applicable rules.
Whether issues of laches and prescription could be resolved by CIAC in a motion to dismiss.
Whether the Court of Appeals committed grave abuse of discretion in upholding the CIAC orders.
Whether NIA's remedy by appeal under Rule 45 was available and adequate such that certiorari under Rule 65 was improper.

Contentions of Parties

NIA contended that E.O. No. 1008 had no retroactive effect and that the dispute should be governed by the laws in force when the contract was executed and terminated, specifically citing GC No. 25, Art. 2046 of the Civil Code, and R.A. No. 876.
NIA further contended that E.O. No. 1008 was substantive and that endorsement by the Auditor General constituted a final decision if not seasonably appealed.
CIAC and HYDRO contended that E.O. No. 1008 vested CIAC with original and exclusive jurisdiction over construction disputes arising during its effectivity and that HYDRO's claim was filed on 7 December 1994, well within CIAC's jurisdiction.
CIAC and H