FEDERAL BUILDERS vs. POWER FACTORS

FEDERAL BUILDERS, INC., Petitioner, vs. POWER FACTORS, INC., Respondent.

G.R. NO. 211504

MARCH 8, 2017

FACTS:  

Federal Builders, Inc. (Federal) was the general contractor of the Buillion Mall (Mall) under a construction agreement with Bullion Investment and Development Corporaton (BIDC).  Federal engaged Power Factors, Inc. (Power) as its subcontractor for the electric works at the Mall and the Precinct Building (Precinct).  Upon completion of the electrical works, Power demanded payment for the unpaid amount for the electrical works performed at Precinct, from Federal, which answered that its outstanding balance under the original contract should be addressed directly to BDIC.  Said demand only fall unto the deaf ear of Federal.  Anent to this, Power seek intervention from Construction Industry Arbitration Commission (CIAC) Construction Industry Arbitration Commission (CIAC).  After weighing the evidences presented, the CIAC rendered the Final Award ordering Federal to pay Power the unpaid balance on the original contract plus damages.

ISSUES:  

Whether or not the CIAC has jurisdiction over the case; and Whether or not Federal was liable to pay Power the amount of the unpaid balance on the original contract plus damages.

HELD: 

Both Federal and Power agreed to submit to voluntary arbitration, hence the CIAC had jurisdiction over the case.  All that is required for the CIAC to acquire jurisdiction is for the parties of any construction contract to agree to submit their dispute to arbitration.  It may be reflected in the arbitration clause of their contract, or by subsequently agreeing to submit their dispute to voluntary arbitration, which need not be signed or be formally agreed upon in the contract, because it can also be in the form of other modes of communication in writing.  Consistent with the policy of encouraging alternative dispute resolution methods, any doubt should be resolved in favor of the arbitration.  The Contract of Service between Federal and Power, reads:  “15. Arbitration Committee – all disputes, controversies, or differences, which may arise between the parties herein, out of or in relation to or in connection with this Agreement, or for breach thereof shall be settled by the CIAC which shall have original and exclusive jurisdiction over the aforementioned disputes.”