National Irrigation Administration vs. Court of Appeals

Posted Nov 17, 1999

By Anonymous

8 min read

Case Title and Citation

National Irrigation Administration (NIA), petitioner, vs. Honorable Court of Appeals (4th Division), Construction Industry Arbitration Commission, and Hydro Resources Contractors Corporation, respondents.
G.R. No. 129169, November 17, 1999
Supreme Court - First Division
Ponente: DAVIDE, JR., C.J.

Facts

In a competitive bidding held in August 1978, Hydro Resources Contractors Corporation (HYDRO) was awarded Contract MPI-C-2 for construction of the main civil works of the Magat River Multi-Purpose Project. The contract provided payment partly in Philippine pesos and partly in U.S. dollars.
HYDRO substantially completed the works in 1982; final acceptance by NIA occurred in 1984.
HYDRO claimed an outstanding account receivable representing the dollar rate differential of price escalation. After administrative efforts with NIA failed, HYDRO filed a Request for Adjudication with the Construction Industry Arbitration Commission (CIAC) on December 7, 1994.
HYDRO nominated six arbitrators; CIAC appointed Engr. Lauro M. Cruz. On January 6, 1995, NIA filed an Answer challenging jurisdiction and alleging laches and estoppel; on the same date NIA filed a Compliance nominating six arbitrators, from whom CIAC appointed Atty. Custodio O. Parlade, and asserted counterclaims.
The two designated arbitrators appointed CPA Joven B. Joaquin as chairman of the arbitration panel. Parties exchanged documents and were provided draft Terms of Reference. NIA requested originals of HYDRO’s documents, stating its records had been destroyed; HYDRO agreed to provide originals.
On March 13, 1995, NIA filed a Motion to Dismiss alleging CIAC lacked jurisdiction over the dispute because the contract predated Executive Order No. 1008 (promulgated February 4, 1985) and because the parties could not have contemplated CIAC arbitration.
On April 11, 1995, CIAC deferred resolution of the motion to dismiss and proceeded with hearings, finding the jurisdictional grounds not “indubitable”; CIAC denied reconsideration and ruled it had jurisdiction under E.O. No. 1008.
On May 26, 1996, NIA filed an original action for certiorari and prohibition with the Court of Appeals seeking annulment of CIAC orders; the Court of Appeals dismissed the petition by Resolution dated June 28, 1996; NIA’s motion for reconsideration was denied on February 24, 1997.
NIA filed an original action for certiorari and prohibition with the Supreme Court on June 2, 1997, reiterating the same issues and seeking annulment of the Court of Appeals’ Resolutions.
Judicial notice taken that CIAC rendered a decision in favor of HYDRO on June 10, 1997; NIA appealed that decision to the Court of Appeals, which held its resolution in abeyance pending resolution of the present petitions.
The Supreme Court noted NIA failed to appeal the Court of Appeals’ Resolutions under Rule 45 within the reglementary period and instead filed the present Rule 65 certiorari petition.

Issues

Whether the petition for certiorari under Rule 65 is proper when an appeal under Rule 45 was available and not timely taken?
Whether CIAC has jurisdiction over the dispute between NIA and HYDRO under Executive Order No. 1008 despite the contract being executed before CIAC’s creation?
Whether a request for arbitration filed by one party only is insufficient to vest CIAC with jurisdiction?
Whether defenses of laches and prescription may be resolved by a motion to dismiss for lack of jurisdiction?
Whether E.O. No. 1008 is substantive and thus cannot apply to contracts predating its promulgation (as argued by NIA)?

Ruling

Yes - The certiorari petition under Rule 65 is improper because NIA had a plain, speedy and adequate remedy by appeal under Rule 45 and failed to timely file it.
No - CIAC does have jurisdiction over the dispute under E.O. No. 1008 because the claim was filed during CIAC’s effectivity and jurisdiction is over the dispute, not the date of the contract.
No - A request by one party is sufficient; under the amended CIAC Rules, an arbitration clause or submission to arbitration is deemed an agreement to submit controversies to CIAC.
No - Laches and prescription are evidentiary/merits issues that cannot be resolved by a motion to dismiss unless the complaint on its face shows prescription.
No - It was unnecessary to decide whether E.O. No. 1008 is substantive or procedural because CIAC’s jurisdiction is over disputes arising during its existence; the Court found no grave abuse in CIAC’s exercise of jurisdiction.

Reasoning / Ratio Decidendi

Procedural defect and availability of appeal:
- The Court applied the rule that when the Court of Appeals has jurisdiction over a special civil action for certiorari under Rule 65 (Section 9(1) of B.P. 129), alleged errors in exercise of that jurisdiction are errors of judgment reviewable by appeal (Rule 45), not by certiorari (citing B.F. Corporation v. Court of Appeals, 288 SCRA 267 [1998]; Giron v. Caluag, 8 SCRA 285 [1963]; Heirs of Marcelino Pagobo v. Court of Appeals, 280 SCRA 870 [1997]).
- Rule 45 allows appeal to the Supreme Court within fifteen (15) days from notice of judgment or denial of motion for reconsideration (Sec. 1, Rule 45). NIA received the Court of Appeals’ denial on March 4, 1997 and failed to file a petition for review by March 19, 1997.
- A special civil action of certiorari under Rule 65 requires lack of plain, speedy and adequate remedy; appeal was such a remedy (citing Sunshine Transportation v. NLRC, 254 SCRA 51 [1996]; De Espina v. Abaya, 16 SCRA 312 [1991]).
CIAC jurisdiction under E.O. No. 1008:
- E.O. No. 1008 vests CIAC with original and exclusive jurisdiction over disputes arising from or connected with construction contracts, whether the dispute arises before or after contract completion and whether involving government or private contracts.
- Jurisdiction is determined by the law in force at the commencement of the action (People v. Magallanes, et al., 249 SCRA 212 [1995]). HYDRO filed its claim on December 7, 1994, during E.O. 1008’s effectivity; therefore CIAC had jurisdiction.
- The Court emphasized that CIAC’s jurisdiction is over the dispute, not the contract’s date; because the dispute arose when CIAC existed, jurisdiction was current, not retroactive.
Submission to CIAC and amended CIAC rules:
- The Court relied on amendments to the CIAC Rules (CIAC Resolutions No. 2-91 and 3-93) which provide that an arbitration clause or submission to arbitration in a construction contract shall be deemed an agreement to submit controversies to CIAC jurisdiction notwithstanding reference to a different arbitral body.
- Under these rules, it is not necessary for parties to enter a separate submission agreement for CIAC jurisdiction; agreement to voluntary arbitration suffices (citing Tesco Services, Inc. v. Vera, 209 SCRA 440 [1992] and subsequent modifications).
One-party request and active participation:
- NIA’s conduct — filing an answer with counterclaim, nominating arbitrators, participating in formulation of Terms of Reference, requesting originals and examining documents — constituted submission and active participation in CIAC proceedings, reinforcing the finding of CIAC jurisdiction.
Laches and prescription:
- Laches and prescription are defenses of evidentiary nature and cannot be disposed of on a motion to dismiss unless apparent on the complaint’s face (citing Espano, Sr. v. Court of Appeals, 268 SCRA 211 [1997]; Francisco v. Robles, 94 Phil. 1035 [1954]).
- CIAC properly deferred resolution of these defenses and proceeded with hearings; under the 1997 Rules of Civil Procedure the court may now grant, deny, or order amendment rather than defer (Sec. 3, Rule 16, 1997 Rules).
No grave abuse of discretion by CIAC or Court of Appeals:
- The Court found no grave abuse in CIAC’s orders nor in the Court of Appeals’ denial; any alleged errors were reviewable by appeal, not certiorari.

Doctrine / Legal Principle

A special civil action for certiorari under Rule 65 is not a substitute for an appeal under Rule 45 when appeal is available; failure to appeal precludes relief by certiorari.
Jurisdiction is determined by the law in force at the time of commencement of the action; CIAC acquires jurisdiction over disputes filed during its effectivity even if the underlying contract predates CIAC.
CIAC’s jurisdiction is over the dispute, not the contract’s formation date.
An arbitration clause or submission to arbitration in a construction contract is deemed an agreement to submit controversies to CIAC under amended CIAC Rules, regardless of reference to another arbitral body.
Laches and prescription are defenses to be resolved on the merits and cannot ordinarily be decided by a pretrial motion to dismiss unless shown on the face of the complaint.

Disposition

The petition for certiorari is DISMISSED for lack of merit and on procedural grounds (failure to appeal under Rule 45).
The Supreme Court DIRECTED the Court of Appeals to proceed with reasonable dispatch in the disposition of C.A. G.R. No. 44527 and to include in its resolution the issues of laches and prescription.

Concurring / Dissenting Opinions

Puno, Kapunan, Pardo and Ynares-Santiago, JJ., concurred.
No dissenting opinion was noted.

Significance / Notes

Reinforces the procedural rule that certiorari under Rule 65 cannot replace an available, adequate appellate remedy under Rule 45; parties must timely appeal Court of Appeals’ resolutions.
Clarifies CIAC jurisdictional scope under E.O. No. 1008: disputes arising during CIAC’s existence over construction contracts (even if contracts predate CIAC) fall within CIAC jurisdiction.
Emphasizes that amended CIAC Rules deem arbitration clauses as submissions to CIAC, reducing the formal requirement of a joint submission to CIAC by both parties.
Confirms that active participation in arbitration proceedings can constitute submission to the forum and estop a party from later contesting jurisdiction.
Notes procedural practice: defenses of laches and prescription are to be proven at trial; they are not ordinarily grounds for dismissal on jurisdictional motions unless evident on the complaint’s face.

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