J.A.B. Bulao & Associates

DISPOSITIVE:

WHEREFORE, the Petition is hereby PARTIALLY GRANTED. Accordingly, the Decision dated October 28, 2016 of the Court of Appeals, Sixth Division, in CA-G.R. SP No. 145753 is PARTIALLY REVERSED with respect to Ross Systems International, Inc.’ s entitlement to the amount of Pl,088,214.83. The Construction Industry Arbitration Commission’s Final Award dated May 10, 2016 is hereby REINSTATED with MODIFICATION, in that Global Medical Center of Laguna, Inc. is further ORDERED to furnish Ross Systems International, Inc. with the pertinent BIR Form 2307, in compliance with Section 2.57.3, Revenue Regulation No. 2-98.

Furthermore, the new ruling of the Court with respect to the modes of judicial review of the Construction Industry Arbitration Commission arbitral awards is accorded PROSPECTIVE application and does not apply to appeals therefrom that are currently pending before the Court of Appeals.

SO ORDERED.

SUBJECTS/DOCTRINES/DIGEST:

WHAT HAPPENED IN THIS CASE?

THE SUPREME COURT OBSERVES THAT CA MISAPPLIED ITS APPELLATE FUNCTION WHEN IT DELVED INTO SETTLING THE FACTUAL MATTERS AND MODIFIED THE MATHEMATICAL COMPUTATION OF THE CIAC.

Further, even without applying to the instant case the foregoing considerations on the history of judicial review vis-a-vis CIAC awards, the Court nevertheless chiefly observes that the CA misapplied its appellate function when it delved into settling the factual matters and modified the mathematical computation of the CIAC with respect to the presence or absence of an outstanding balance payable to RSII. This mathematical re[1]computation is an error not because the new ruling on judicial review of CIAC awards is applicable to this case (as it applies prospectively) but because the amounts reimbursable to RSII were not specifically raised by the RSII as an issue in its Rule 43 petition before the CA, since the issues raised before it were confined to the release of the amount deducted by GMCLI from its Progress Billing No. 15 to cover the CWT of 2% on payments for the first 14 Progress Billings. 177

WHAT IS THE RATIONALE BEHIND ARBITRATION MODES?

ARBITRATION ALLOW PARTIES SPACE TO EXERCISE VOLUNTARY AUTONOMY UNDER THE PRINCIPLE OF EXPEDITED CONFLICT RESOLUTION WHICH MEANS QUICKEST AND MOST CONCLUSIVE CONFLICT RESOLUTION. COURTS MUST STAY THEIR OWN HANDS.

WHY IS THIS PRINCIPLE MOST RELEVANT TO CONSTRUCTION INDUSTRY?

BECAUSE OF THE INDUSTRY’S  INHERENTLY COMPLEX DYNAMICS AND WITH STAKES THAT INVOLVE NATIONAL INTERESTS LIKE PUBLIC INFRASTRUCTURE AND SAFETY.

It has been said that earlier forms of arbitration predated laws and organized courts, 185 and that contrary to the notion that arbitration modes are novel and untested, they are actually the courts’ “next-of-kin”, 186 perhaps even their progenitors. Along the same vein, the ability of a society to empower alternative modes of dispute resolution is a hallmark of a democracy, 187 with courts exercising their ability to stay their own hands, thereby allowing space for the parties to a dispute to exercise their voluntary autonomy in the name and under the principle of expedited conflict resolutions. This need to enable the quickest and most conclusive conflict resolution possible finds exacting relevance in the case of the construction industry, with its inherently complex dynamics, and with the stakes that involve national interests, not in the least of which are public infrastructure and safety.

HOW DOES SUPREME COURT LOOK NOW AT CIAC?

CIAC IS A QUASI-JUDICIAL AGENCY AT PAR WITH OTHER COMMERCIAL TRIBUNALS WITH THEIR CHARACTERISTIC SPEED, SUBJECT MATTER AUTHORITATIVENESS AND OVERALL AUTONOMY. COURTS THEREFORE MUST ASCERTAIN THEIR PARAMETERS SET BY LAW. COURTS MUST HARMONIZE VARYING MATERIAL RULES. CIAC THEREFORE MUST BE EMPOWERED AND ENABLED TO EXERCISE ITS FUNCTIONS AND COURTS MUST OBSERVE NON-PARTICIPATION EXCEPT ON NARROWEST OF GROUNDS.

The attributes and functions of the CIAC also operatively place it in a hybrid classification, in that it is categorized as a quasi-judicial agency, but its very nature as an arbitral tribunal effectively places it at par with other commercial arbitral tribunals, with their characteristic speed, subject matter authoritativeness and overall autonomy. This amalgamation of its design and utilities created a whole new legal animal, which, like all things novel, poses for the Court a challenge of ascertaining its parameters and remedial routes set by law. Perhaps, unless the legislature deems it fit to create a new and independent set of rules that apply to the CIAC more responsively, the Court must continue to contend with harmonizing varying material rules, all in a manner that is as just as it is tenable under existing laws.

It is central, therefore, that the CIAC be empowered and enabled to fulfill its function as the professionally authoritative venue for settlement of construction disputes, and not straitjacketed to fit into the mold of the court system which it was meant to be an alternative of. To this end, and perhaps somewhat ironically, the courts can contribute best through non[1]participation, save on the narrowest of grounds. The courts are, after all, ultimately dealers of justice, more so in industries that are of greater consequence, and must remain true to this highest mandate, even if it means relinquishing review powers that, in the sum of things, it was demonstrably not meant to bear.

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