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
dispute. They argued that the dispute did not arise from a construction contract and as such did not fall under the jurisdiction of the CIAC. The CIAC arbitral tribunal dismissed the case for lack of jurisdiction. The CIAC arbitral tribunal explained that while MJAS undertook offshore and inshore marine route surveys and provided vessel personnel and equipment, these services did not involve any construction-related activity as defined under the law. In the absence of any underlying construction agreement or activity, the arbitral tribunal held that it could not exercise its jurisdiction over the case. FMCS challenged this ruling before the Philippine Supreme Court. Given the prevailing interpretation of the CIAC’s juris - diction under the Construction Industry Arbitration Law, it was necessary for the Philippine Supreme Court to determine whether the parties’ dispute arose from a construction project in the Philippines. If it did, then the referral to the CIAC (instead of the ICC) was proper. If it did not, then then the dispute did not fall within the jurisdiction of the CIAC, and the dispute should have been referred to the ICC pursuant to the parties’ arbitration agreement. The Philippine Supreme Court affirmed the CIAC arbi - tral tribunal’s determination that it had no jurisdiction over the dispute and ruled that the dismissal of the complaint was proper. According to the Supreme Court, the dispute did not fall within the jurisdiction of the CIAC because FMCS failed to prove that there was an overarching construction contract in place, or even a dispute or controversy related to it, when the parties entered into the FMCS-MJAS Services Agree - ment. The Philippine Supreme Court explained that con - struction refers to “all on-site works on buildings or altering structures, from land clearance through com - pletion including excavation, erection and assembly and installation of components and equipment” ( Fort Bonifacio Development Corporation v Domingo, G.R. No 218341 , 7 December 2022). Upon closer scru - tiny, the Supreme Court’s definition of construction appears to originate from its opinion in Gammon Philippines, Inc v Metro Rail Transit Development Cor-
poration (G.R. No 144792, 31 January 2006), which in turn cited a definition from Cyril M Harris’s “The Dictionary of Architecture and Construction”. Thus, construction-related contracts must refer to matters that fall under this definition of construction. The Philippine Supreme Court characterised the activities to be performed under both Service Agree - ments (ie, site survey, landing site determination and routing design, archival research for desk top study, submarine cable route design, project planning and final desk top study report) as purely marine survey - ing activities that did not fall under the definition of construction. According to the Supreme Court, the intention of the parties under the FMCS-Eastern Ser - vices Agreement to “build and construct a new high[- ] capacity domestic fiber-optic submarine network that will connect various islands in Luzon, Visayas and Mindanao” was “merely descriptive of a future plan which may or may not happen”. Such intention was, according to the Supreme Court, insufficient to establish the existence of an overarching construction contract, or even a controversy or dispute related to it, for the purposes of vesting the CIAC with jurisdic - tion over the dispute between FMCS and MJAS under their Services Agreement. The Philippine Supreme Court explained that arbitra - tion agreements should not be interpreted so as to enlarge the jurisdiction of the CIAC beyond its con - templated scope to include disputes that are within the jurisdiction of other tribunals. Thus, since the cause of action of FMCS did not arise from any con - struction contract or any controversy or dispute con - nected with it, the CIAC did not have any jurisdiction over the dispute between FMCS and MJAS. Moving forward The Philippine Supreme Court’s rulings in Chua and Fleet Marine are significant because they further clari - fy how the jurisdiction of the CIAC may be invoked. On one hand, Chua reiterated the fundamental require - ment that there be an agreement between the parties to refer their dispute to arbitration. On the other hand, Fleet Marine adopted a narrow interpretation of con - struction disputes that would fall within the jurisdiction of the CIAC.
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