#10 THIRD DIVISION

G.R. Nos. 132848-49, June 26, 2001

PHILROCK, INC., Petitioner,
vs.
CONSTRUCTION INDUSTRY ARBITRATION COMMISSION
AND SPOUSES VICENTE AND NELIA CID, Respondents.
PONENTE: PANGANIBAN, J.

Facts:
On 14 September 1992, the Cid spouses filed a complaint for
damages against Philrock and its seven officers and engineers
with RTC Quezon. On 7 December 1993, the RTC dismissed
and referred the case to CIAC because the parties had filed an
agreement to arbitrate with CIAC. During the conference,
disagreements arose as to whether moral and exemplary
damages and tort should be included as an issue along with
breach of contract, and whether Philrocks seven officers and
engineers, who are not parties to the agreement to arbitrate,
should be included in the arbitration proceedings.

Unable to agree, they requested that the case be remanded to

RTC. On 13 April 1994, the CIAC dismissed and referred the
case to RTC Quezon. Thereafter, Cid spouses moved to set the
case for hearing, which was opposed by Philrock. On 13 June
1995, the RTC declared that it no longer had jurisdiction and
remanded the case to CIAC. The CIAC resumed the
preliminary conferences. On 21 August 1995, Philrock
requested to suspend the proceedings arguing that the 13
June 1995 RTC Order was premised on the reason that CIAC
withdrew the case due to Philrocks opposition to the inclusion
of its seven officers and engineers who did not consent to the
arbitration.

The CIAC denied the request due to the Cid spouses

willingness to exclude the seven officers as parties to the case.
Philrock's agreed to the continuation of the arbitration, and
the parties proceeded to sign the Terms of Reference. On 12
September 1995, Philrock moved to dismiss alleging that CIAC
had lost jurisdiction due to the parties' withdrawal of their
consent to arbitrate. On 22 September 1995, the CIAC denied
the motion. On 24 September 1996, the CIAC decided in favor
of Cid spouses.

Philrock went to CA via Petition for Review mainly contesting

CIACs jurisdiction. On 7 July 1997, the CA upheld the
jurisdiction of the CIAC holding that under EO 1008, the CIAC
acquires jurisdiction when the parties agree to submit their
dispute to voluntary arbitration. Thus, its jurisdiction
continues despite its referral of the case back to RTC. This is
on the principle that once acquired, jurisdiction remains until
full termination of the case, unless a law provides the contrary.
Hence, the present petition for review under Rule 45.

Issue:
Whether or not CIAC still has jurisdiction after it had dismissed
the case and referred it to RTC.

Ruling:

YES. Petition is Denied.

I. Jurisdiction
Parties Arguments
Petitioner avers that the CIAC lost jurisdiction over the
arbitration case after both parties had withdrawn their consent
to arbitrate. The June 13, 1995 RTC Order remanding the case
to the CIAC for arbitration was allegedly an invalid mode of
referring a case for arbitration.

We disagree. Section 4 of Executive Order 1008 expressly

vests in the CIAC original and exclusive jurisdiction over
disputes arising from or connected with construction contracts
entered into by parties that have agreed to submit their
dispute to voluntary arbitration.[8]
It is undisputed that the parties submitted themselves to the
jurisdiction of the Commission by virtue of their Agreement to
Arbitrate dated November 24, 1993. Signatories to the
Agreement were Atty. Ismael J. Andres and Perry Y. Uy
(president of Philippine Rock Products, Inc.) for petitioner, and
Nelia G. Cid and Atty. Esteban A. Bautista for respondent
spouses.[9]

Petitioner claims, on the other hand, that this Agreement was

withdrawn by respondents on April 8, 1994, because of the
exclusion of the seven engineers of petitioners in the
arbitration case. This withdrawal became the basis for the
April 13, 1994 CIAC Order dismissing the arbitration case and
referring the dispute back to the RTC. Consequently, the CIAC
was divested of its jurisdiction to hear and decide the case.

This contention is untenable. First, private respondents

removed the obstacle to the continuation of the arbitration,
precisely by withdrawing their objection to the exclusion of the
seven engineers. Second, petitioner continued participating in
the arbitration even after the CIAC Order had been issued. It
even concluded and signed the Terms of Reference[10] on
August 21, 1995, in which the parties stipulated the
circumstances leading to the dispute; summarized their
respective positions, issues, and claims; and identified the
composition of the tribunal of arbitrators. The document
clearly confirms both parties intention and agreement to
submit the dispute to voluntary arbitration. In view of this fact,
we fail to see how the CIAC could have been divested of its
jurisdiction.

Finally, as pointed out by the solicitor general, petitioner

maneuvered to avoid the RTCs final resolution of the dispute
by arguing that the regular court also lost jurisdiction after the
arbitral tribunals April 13, 1994 Order referring the case back
to the RTC. In so doing, petitioner conceded and estopped
itself from further questioning the jurisdiction of the CIAC. The
Court will not countenance the effort of any party to subvert or
defeat the objective of voluntary arbitration for its own private
motives. After submitting itself to arbitration proceedings and
actively participating therein, petitioner is estopped from
assailing the jurisdiction of the CIAC, merely because the
latter rendered an adverse decision.[11]

II. Cause of Action

Petitioner contends that respondent spouses were negligent in
not engaging the services of an engineer or architect who
should oversee their construction, in violation of Section 308
of the National Building Code. It adds that even if the concrete
it delivered was defective, respondent spouses should bear
the loss arising from their illegal operation. In short, it alleges
that they had no cause of action against it.

We disagree. Cause of action is defined as an act or omission

by which a party violates the right of another.[12] A complaint
is deemed to have stated a cause of action provided it has
indicated the following: (1) the legal right of the plaintiff, (2)
the correlative obligation of the defendant, and (3) the act or
the omission of the defendant in violation of the said legal
right.[13] The cause of action against petitioner was clearly
established. Respondents were purchasers of ready-mix
concrete from petitioner. The concrete delivered by the latter
turned out to be of substandard quality. As a result,
respondents sustained damages when the structures they
built using such cement developed cracks and honeycombs.
Consequently, the construction of their residence had to be
stopped.

Further, the CIAC Decision clearly spelled out respondents

cause of action against petitioner, as follows:

Accordingly, this Tribunal finds that the mix was of the right proportions
at the time it left the plant. This, however, does not necessarily mean
that all of the concrete mix delivered had remained workable when it
reached the jobsite. It should be noted that there is no evidence to show
that all the transit mixers arrived at the site within the allowable time
that would ensure the workability of the concrete mix delivered.

On the other hand, there is sufficiently strong evidence to show that

difficulties were encountered in the pouring of concrete mix from certain
transit mixers necessitating the [addition] of water and physically
pushing the mix, obviously because the same [was] no longer workable.
This Tribunal holds that the unworkability of said concrete mix has been
firmly established.

There is no dispute, however, to the fact that there are defects in some
areas of the poured structures. In this regard, this Tribunal holds that the
only logical reason is that the unworkable concrete was the one that was
poured in the defective sections.[14]

III. Monetary Awards

Petitioner assails the monetary awards given by the arbitral
tribunal for alleged lack of basis in fact and in law. The solicitor
general counters that the basis for petitioners assigned errors
with regard to the monetary awards is purely factual and
beyond the review of this Court. Besides, Section 19, EO 1008,
expressly provides that monetary awards by the CIAC are final
and unappealable.

We disagree with the solicitor general. As pointed out earlier,

factual findings of quasi-judicial bodies that have acquired
expertise are generally accorded great respect and even
finality, if they are supported by substantial evidence.[15] The
Court, however, has consistently held that despite statutory
provisions making the decisions of certain administrative
agencies final, it still takes cognizance of petitions showing
want of jurisdiction, grave abuse of discretion, violation of due
process, denial of substantial justice or erroneous
interpretation of the law.[16] Voluntary arbitrators, by the
nature of their functions, act in a quasi-judicial capacity, such
that their decisions are within the scope of judicial review.[17]
Petitioner protests the award to respondent spouses of
P23,276.25 as excess payment with six percent interest
beginning September 26, 1995. It alleges that this item was
neither raised as an issue by the parties during the arbitration
case, nor was its justification discussed in the CIAC Decision.
It further contends that it could not be held liable for interest,
because it had earlier tendered a check in the same amount to
respondent spouses, who refused to receive it.

Petitioners contentions are completely untenable.

Respondent Nelia G. Cid had already raised the issue of
overpayment even prior to the formal arbitration. In
paragraph 9 of the Terms of Reference, she stated:

9. Claimants were assured that the problem and her demands had been
the subject of several staff meetings and that Arteche was very much
aware of it, a memorandum having been submitted citing all the
demands of [c]laimants. This assurance was made on July 31, 1992
when Respondents Secillano, Martillano and Lomibao came to see
Claimant Nelia Cid and offered to refund P23,276.25, [t]he difference
between the billing by Philrocks Marketing Department in the amount of
P125,586.25 and the amount charged by Philrock's Batching Plant
Department in the amount of only P102,586.25, which [c]laimant
refused to accept by saying, Saka na lang.[18]

The same issue was discussed during the hearing before the
arbitration tribunal on December 19, 1995.[19] It was also
mentioned in that tribunals Decision dated September 24,
1996.[20]

The payment of interest is based on Article 2209 of the Civil

Code, which provides that if the obligation consists of the
payment of a sum of money, and the debtor incurs delay, the
indemnity for damages shall be the payment of legal interest
which is six per cent per annum, in the absence of a stipulation
of the rate.
Awards for Retrofitting Costs, Wasted Unworkable But
Delivered Concrete, and Arbitration Fees

Petitioner maintains that the defects in the concrete structure

were due to respondent spouses failure to secure the services
of an engineer or architect to supervise their project. Hence, it
claims that the award for retrofitting cost was without legal
basis. It also denies liability for the wasted unworkable but
delivered concrete, for which the arbitral court awarded
P13,404.54. Finally, it complains against the award of
litigation expenses, inasmuch as the case should not have
been instituted at all had respondents complied with the
requirements of the National Building Code.

We are unconvinced. Not only did respondents disprove the

contention of petitioner; they also showed that they sustained
damages due to the defective concrete it had delivered. These
were items of actual damages they sustained due to its breach
of contract.

Moral and Nominal Damages, Attorneys Fees and Costs

Petitioner assails the award of moral damages, claiming no

malice or bad faith on its part.

We disagree. Respondents were deprived of the comfort and

the safety of a house and were exposed to the agony of
witnessing the wastage and the decay of the structure for
more than seven years. In her Memorandum, Respondent
Nelia G. Cid describes her familys sufferings arising from the
unreasonable delay in the construction of their residence, as
follows: The family lives separately for lack of space to stay in.
Mrs. Cid is staying in a small dingy bodega, while her son
occupies another makeshift room. Their only daughter stayed
with her aunt from 1992 until she got married in 1996. x x
x.[21] The Court also notes that during the pendency of the
case, Respondent Vicente Cid died without seeing the
completion of their home.[22] Under the circumstances, the
award of moral damages is proper.

Petitioner also contends that nominal damages should not

have been granted, because it did not breach its obligation to
respondent spouses.

Nominal damages are recoverable only if no actual or

substantial damages resulted from the breach, or no damage
was or can be shown.[23] Since actual damages have been
proven by private respondents for which they were amply
compensated, they are no longer entitled to nominal damages.

Petitioner protests the grant of attorneys fees, arguing that

respondent spouses did not engage the services of legal
counsel. Also, it contends that attorneys fees and litigation
expenses are awarded only if the opposing party acted in
gross and evident bad faith in refusing to satisfy plaintiffs
valid, just and demandable claim.

We disagree. The award is not only for attorneys fees, but

also for expenses of litigation. Hence, it does not matter if
respondents represented themselves in court, because it is
obvious that they incurred expenses in pursuing their action
before the CIAC, as well as the regular and the appellate
courts. We find no reason to disturb this award.