NIA vs. Court of Appeals

The Supreme Court held that (1) a petition for certiorari under Rule 65 is not available when the remedy of appeal under Rule 45 is available and has been lost through the petitioner's own neglect; and (2) the Construction Industry Arbitration Commission (CIAC) has original and exclusive jurisdiction over disputes arising from construction contracts under Executive Order No. 1008, regardless of when the contract was executed or completed, as long as the dispute arose after the effectivity of the law, since jurisdiction attaches to the dispute and not to the contract itself.

In August 1978, NIA awarded Hydro Resources Contractors Corporation (HYDRO) a contract for the construction of the main civil works of the Magat River Multi-Purpose Project. The contract provided for payment partly in Philippine pesos and partly in U.S. dollars, and contained a clause providing for arbitration of any disputes. HYDRO substantially completed the works in 1982, and final acceptance by NIA was made in 1984. Thereafter, HYDRO claimed it was entitled to dollar rate differentials representing price escalation. After unsuccessful negotiations with NIA, HYDRO filed a request for adjudication with the CIAC on December 7, 1994, seeking to recover the claimed differentials.

• In August 1978, NIA awarded Contract MPI-C-2 to HYDRO for the construction of the main civil works of the Magat River Multi-Purpose Project, with payment provisions in both Philippine pesos and U.S. dollars.
• The contract contained an arbitration clause agreeing to submit any disputes to arbitration before or after termination of the agreement.
• HYDRO substantially completed the works in 1982, and final acceptance by NIA was made in 1984.
• HYDRO determined it had receivables from NIA representing dollar rate differentials for price escalation, which NIA refused to pay.
• On December 7, 1994, HYDRO filed a Request for Adjudication with CIAC, nominating six arbitrators from whom CIAC appointed Engr. Lauro M. Cruz.
• On January 6, 1995, NIA filed its Answer questioning CIAC jurisdiction, alleging lack of cause of action, laches, and estoppel, and nominated six arbitrators from whom CIAC appointed Atty. Custodio O. Parlade.
• The two arbitrators appointed CPA Joven B. Joaquin as Chairman, and the parties participated in preliminary conferences and formulation of Terms of Reference.
• NIA actively participated in the arbitration by examining HYDRO's documents after requesting originals, but maintained its objection to jurisdiction.
• On March 13, 1995, NIA filed a Motion to Dismiss arguing that EO No. 1008 (effective 1985) could not retroactively apply to a 1978 contract completed in 1982.
• CIAC deferred resolution of the motion to dismiss and proceeded with hearings, later denying the motion and ruling it had jurisdiction under EO No. 1008.
• The Court of Appeals received NIA's motion for reconsideration of its dismissal order on March 4, 1997, giving NIA until March 19, 1997 to file an appeal under Rule 45, which NIA failed to do.

• EO No. 1008 has no retroactive effect and cannot apply to a contract executed in 1978 and completed in 1982, whereas the law creating CIAC was signed only in 1985.
• The dispute should be settled under General Conditions No. 25, Article 2046 of the Civil Code, and Republic Act No. 876, which were the governing laws at the time the contract was executed and terminated.
• EO No. 1008 is a substantive law, not merely procedural, and cannot retroactively divest parties of vested rights.
• An indorsement by the Auditor General deciding the controversy constitutes a final decision if not appealed seasonably.
• NIA timely raised the issue of jurisdiction and did not waive or estop itself from assailing CIAC's jurisdiction by its participation, as its participation was made under protest.
• The doctrine that jurisdiction is determined by the statute in force at the time of the commencement of the action does not apply to the instant case because the contract predates CIAC's existence.
• CIAC did not acquire jurisdiction because only HYDRO requested arbitration, whereas EO No. 1008 requires both parties to request arbitration.

• CIAC has original and exclusive jurisdiction over disputes arising from construction contracts under Section 4 of EO No. 1008, regardless of whether the dispute arises before or after completion of the contract.
• The arbitration clause in the construction contract constitutes an agreement to submit to voluntary arbitration, and under the amended CIAC Rules of Procedure (Resolutions No. 2-91 and 3-93), such clause is deemed an agreement to submit to CIAC jurisdiction.
• NIA voluntarily submitted to CIAC jurisdiction by actively participating in the arbitration proceedings, including filing an answer with counterclaim, nominating arbitrators, participating in preliminary conferences, and examining evidence.
• The jurisdiction of CIAC is determined by the law in force at the time of the commencement of the action (December 7, 1994), not by the date of the contract.
• Laches and prescription are evidentiary matters that cannot be resolved in a motion to dismiss and must be proven at trial.

• Procedural: Whether the petition for certiorari under Rule 65 is the proper remedy instead of a petition for review under Rule 45 from the Court of Appeals' resolutions dismissing the petition against CIAC.
• Substantive Issues: Whether CIAC has jurisdiction over disputes arising from a construction contract executed and completed before the effectivity of EO No. 1008; whether a request for arbitration by only one party is sufficient to vest CIAC with jurisdiction; and whether the claims are barred by laches or prescription.

• Procedural: The Court dismissed the petition for certiorari because NIA failed to file a timely petition for review under Rule 45 within the 15-day reglementary period from receipt of the denial of its motion for reconsideration on March 4, 1997. Certiorari under Rule 65 is not a substitute for the lost remedy of appeal, especially when the loss was occasioned by the petitioner's own neglect or error in the choice of remedies. The remedies of appeal and certiorari are mutually exclusive, and the existence of an adequate, speedy, and plain remedy in the ordinary course of law (appeal under Rule 45) bars recourse to certiorari.
• Substantive: The Court held that CIAC has jurisdiction over the controversy. Jurisdiction is determined by the law in force at the time of the commencement of the action (December 7, 1994), not by the date of contract execution. EO No. 1008 vests CIAC with jurisdiction over all disputes arising from or connected with construction contracts, whether the dispute arises before or after completion of the contract. The jurisdiction of CIAC is over the dispute, not the contract; since the dispute arose in 1994 when CIAC already existed, the arbitral body exercises current, not retroactive, jurisdiction. Under the amended CIAC Rules, an arbitration clause in a construction contract is deemed an agreement to submit to CIAC jurisdiction, and it is not necessary for both parties to request arbitration. NIA's active participation in the proceedings constituted voluntary submission to jurisdiction. Finally, laches and prescription are evidentiary matters that cannot be established by mere allegations in pleadings and must be resolved at trial, not in a motion to dismiss.

• Jurisdiction determined by law at commencement of action — The jurisdiction of a court or quasi-judicial body is determined by the statute in force at the time of the commencement of the action, not by the date of the contract or when the cause of action accrued.
• CIAC jurisdiction over disputes, not contracts — CIAC's jurisdiction extends over the dispute itself, not the contract. Thus, even if the contract predates EO No. 1008, as long as the dispute arose after CIAC's creation, the arbitral body exercises current, not retroactive, jurisdiction.
• Certiorari not a substitute for appeal — The special civil action of certiorari under Rule 65 cannot be availed of as a substitute for the lost remedy of an ordinary appeal under Rule 45, particularly when the loss was caused by the petitioner's own neglect or error.
• Deemed submission to CIAC jurisdiction — Under the amended CIAC Rules of Procedure, an arbitration clause in a construction contract is deemed an agreement to submit an existing or future controversy to CIAC jurisdiction, regardless of reference to a different arbitration institution.

• "The jurisdiction of a court is determined by the law in force at the time of the commencement of the action."
• "The jurisdiction of CIAC is over the dispute, not the contract; and the instant dispute having arisen when CIAC was already constituted, the arbitral board was actually exercising current, not retroactive, jurisdiction."
• "It is elementary that the special civil action of certiorari is not and cannot be a substitute for an appeal, where the latter remedy is available, as it was in this case."
• "A special civil action under Rule 65 of the Rules of Court will not be a cure for failure to timely file a petition for review on certiorari under Rule 45 of the Rules of Court."
• "As to the defenses of laches and prescription, they are evidentiary in nature which could not be established by mere allegations in the pleadings and must not be resolved in a motion to dismiss."

• TESCO Services, Inc. v. Hon. Abraham Vera — Distinguished because it applied the old 1988 CIAC Rules requiring specific agreement to submit to CIAC, whereas the amended rules (CIAC Resolutions No. 2-91 and 3-93) deem any arbitration clause as submission to CIAC jurisdiction.
• People v. Magallanes — Cited for the principle that jurisdiction is determined by the law in force at the time of the commencement of the action.
• B.F. Corporation v. Court of Appeals — Cited for the rule that errors of judgment are reviewable by timely appeal, not certiorari.
• Heirs of Marcelino Pagobo v. Court of Appeals — Cited for the rule that Rule 65 is an independent action that cannot substitute for lost ordinary appeal.
• Sunshine Transportation v. NLRC — Cited for the requirement that certiorari requires showing no plain, speedy, and adequate remedy in the ordinary course of law.

• Executive Order No. 1008 (Construction Industry Arbitration Law) — Vests CIAC with original and exclusive jurisdiction over disputes arising from construction contracts entered into by parties involved in construction in the Philippines.
• Section 4 of EO No. 1008 — Specifies that CIAC has jurisdiction over disputes arising from construction contracts whether the dispute arises before or after the completion of the contract, or after the abandonment or breach thereof.
• Rule 45 of the Rules of Court — Governs appeals from the Court of Appeals to the Supreme Court, with a 15-day reglementary period.
• Rule 65 of the Rules of Court — Governs certiorari, prohibition, and mandamus; provides that it is not a substitute for appeal.
• B.P. Blg. 129 (Judiciary Reorganization Act of 1980), Section 9(1) — Vests original jurisdiction over special civil actions for certiorari in the Court of Appeals.
• Article 2046 of the Civil Code — Governs arbitration clauses in contracts.
• Republic Act No. 876 (Arbitration Law) — Governs arbitration proceedings existing at the time of contract execution.
• General Conditions (GC) No. 25 — Government contract provision cited by NIA as governing law at the time of contract execution.
• CIAC Resolutions No. 2-91 and 3-93, Article III, Section 1 — Amended rules providing that an arbitration clause is deemed a submission to CIAC jurisdiction.