PHILIPPINES Trends and Developments Contributed by: Ricardo Ma P G Ongkiko, John Christian Joy A Regalado and Ma Patricia B Paz-Jacoba, SyCip Salazar Hernandez & Gatmaitan
tractors, it was discovered that De Castro deviated from the structural plan and compromised on the work done and materials used. As a condition prior to the filing of a formal complaint, the dispute was referred to the Lupong Tagapamayapa, the local peacekeeping team of the village. During the first conference before the Lupong Tagapamayapa, De Castro acknowledged that a construction contract existed for the construction of the residential building and that he received the indicated amounts. Since no amicable resolution was reached between the parties, Chua filed a complaint against De Castro before the Regional Trial Court of Bayombong, Nueva Vizcaya (RTC). As De Castro did not participate in the RTC’s proceedings, Chua sought to declare him in default, and for the Court to render judgment based on her complaint. The RTC motu prioprio dismissed Chua’s complaint and referred the dispute to CIAC. The RTC cited the Philippine Office of the Court Administrator (OCA) Circular No 103-2015, promulgated on 1 June 2015, which directed all RTC judges to review pending civil cases for the collection of a sum of money and to determine whether these arise from a construction dispute. Under the OCA Circular, construction-related cases must be dismissed and referred to the CIAC for arbitration, unless both parties submit a written agree - ment that the case shall be exclusively resolved by the trial court. Citing the OCA Circular, the RTC ruled that the CIAC had exclusive jurisdiction over construction disputes, and that the complaint’s allegations placed the dispute within the CIAC’s jurisdiction. Chua moved for reconsideration, which was denied by the RTC. On review, the Philippine Supreme Court reversed the RTC’s dismissal of the complaint and ruled that the CIAC did not have jurisdiction over the dispute. According to the Supreme Court, there must be a clear agreement between the parties to refer their con - struction dispute to the CIAC for arbitration before the CIAC can acquire jurisdiction over the dispute. The Philippine Supreme Court ruled that there was no agreement between the parties to refer their construc - tion dispute to arbitration. The Supreme Court also noted that Chua herself repeatedly rejected the notion
of arbitration and that there was nothing in the record showing De Castro’s consent to arbitrate. Since there was no agreement between the parties to arbitrate, the CIAC did not have jurisdiction over the parties’ dispute, and Chua’s complaint was properly filed before the RTC. The Supreme Court thus remanded the case to the RTC and directed its speedy resolu - tion. It also admonished trial courts for “overzealously applying OCA Circular No 103-2015 and other Circu - lars of a similar nature, as it is not an excuse to ignore the letter of the law or established jurisprudence with regard to the proper jurisdiction of the RTC vis-à-vis the CIAC”. The narrow interpretation of construction disputes Fleet Marine involved a project to build an undersea cable network. As part of the project, Fleet Marine Cable Solutions, Inc (FMCS) was contracted by Eastern Telecommunications Philippines, Inc, Globe Telecom, Inc, and InfiniVAN, Inc through a Services Agreement (the “FMCS-Eastern Services Agreement”) to undertake several preparatory services, including a site survey, archival research and submarine cable route design, project planning, a final study report, and vessel arrangement and mobilisations. FMCS subcontracted these services to MJAS Zenith Geo - mapping & Surveying Services (MJAS) through a Ser - vices Agreement (the “FMCS-MJAS Services Agree - ment”), wherein the parties agreed on, among other things, a one-year timeline for the completion of the services. FMCS delivered to MJAS a downpayment equivalent to 20% of the total contract price, and MJAS secured a surety bond from Travellers Insur - ance and Surety Corporation (TRISCO) to guarantee the downpayment, and a performance bond to assure the performance of its obligations. The parties also expressly agreed to refer any dispute arising from their Services Agreement to arbitration under the rules of the International Chamber of Commerce (ICC). FMCS alleged that MJAS failed to meet its obliga - tions, resulting in project delays and substandard per - formance. FMCS terminated its contract with MJAS, sought reimbursement, and invoked the surety and performance bonds issued by TRISCO. While the parties expressly agreed to ICC arbitration, FMCS referred the dispute to CIAC arbitration. MJAS and TRISCO contested the CIAC’s jurisdiction over the
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