The Supreme Court addressed a motion to inhibit the Chief Justice and to refer the case to the Court En Banc. The motion, filed by Atty. Francisco I. Chavez, alleged bias on the part of the Chief Justice due to a perceived close relationship with opposing counsel, Atty. Ordoñez. The Court denied the motion, asserting that the Chief Justice acted impartially and that decisions were based on legal merit. The Supreme Court’s affirmation of CIAC’s (Construction Industry Arbitration Commission) jurisdiction clarified that arbitration, not judicial intervention, is the proper route for resolving disputes arising from construction agreements, highlighting respect for specialized tribunals.

Architects of Discord: When Court Intervention Obstructs Arbitration Agreements

This case originates from a dispute involving Charles Bernard H. Reyes (CBH Reyes Architects) and Spouses Cesar and Carmelita Esquig and Rosemarie Papas, concerning a Design-Build Construction Agreement. The crux of the issue lies in determining the appropriate forum for resolving construction-related disputes: the regional trial court or the Construction Industry Arbitration Commission (CIAC). Reyes initially filed a complaint with the Regional Trial Court (RTC) of Muntinlupa City seeking an accounting and rescission of the agreement, while the respondents filed a complaint with the CIAC, seeking completion of the project and reimbursement for overpayments.

The CIAC rendered a decision in favor of the respondents, a decision that was appealed to the Court of Appeals. Meanwhile, the RTC also ruled in favor of Reyes, ordering the respondents to pay for additional works and damages. This parallel litigation led to a clash of jurisdictions, with the RTC ordering a writ of execution against the respondents, even as the CIAC’s decision was pending appeal. The respondents sought relief from the Supreme Court, arguing that the CIAC had exclusive jurisdiction over the dispute. The dispute then became more personal with a motion to inhibit the Chief Justice from the case because the movant argued that the Chief Justice was too friendly with the opposing party’s counsel.

The Supreme Court emphasized the significance of the **Construction Industry Arbitration Law (Executive Order No. 1008)**, which vests the CIAC with original and exclusive jurisdiction over construction disputes. The court reiterated that the CIAC’s jurisdiction is triggered by the mere agreement of the parties to submit their construction disputes to arbitration. The agreement need not specifically name the CIAC; it is sufficient that the parties agree to resolve disputes through arbitration, as in the Design-Build Construction Agreement in this case. The court then analyzed if an implied bias exists. The court reviewed that any rulings were a collective effort with the First Division and it further scrutinized the ties to determine if they were close enough to impair the presiding justice objectivity.

Building on this principle, the Supreme Court addressed concerns raised by the petitioner regarding the issuance of a Temporary Restraining Order (TRO). The TRO enjoined the Presiding Judge of Muntinlupa City from continuing proceedings in the Civil Case No. 03-110, arguing that respondents established their entitlement to the injunction. The Court stated:

Acting on the prayer for issuance of a temporary restraining order/injunction, the Court further resolves to issue a TEMPORARY RESTRAINING ORDER enjoining the Presiding Judge, Regional Trial Court, Branch 203, Muntinlupa City, from continuing with any of the proceedings in Civil Case No. 03-110 entitled “Charles Bernard H. Reyes, doing business under the name and style of “CBH Reyes Architects’ vs. Spouses Mely and Cesar Esquig, et al.” [subject matter of the assailed Court of Appeals decision and resolution dated February 18, 2005 and May 20, 2005, respectively, in CA-G.R. SP No. 83816 entitled “Charles Bernard H. Reyes, doing business under the name and style CBH REYES ARCHITECTS vs. Antonio Yulo Balde II, et al”] and from enforcing the Order dated June 29, 2006 ordering the designated sheriff to implement the writ of execution dated May 17, 2006 to enforce the decision dated July 29, 2005 in Civil Case No. 03-110, upon the private respondents’ filing of a bond in the amount of Three Hundred Thousand Pesos (P300,000.00) within a period of five (5) days from notice hereof x x x.

In sum, the Court acknowledged that allowing the RTC to proceed would render any ruling from the Supreme Court moot, underscoring that the TRO was necessary to maintain the status quo and prevent irreparable injury. Thus, there was no overreach in its jurisdiction.

The Supreme Court’s decision reinforces the policy of favoring arbitration as a means of resolving construction disputes, with specific regard for an implied bias to sway objectivity.

FAQs

What was the key issue in this case?	The primary issue was whether the Regional Trial Court (RTC) or the Construction Industry Arbitration Commission (CIAC) had jurisdiction over the construction dispute between the parties.
What is the Construction Industry Arbitration Commission (CIAC)?	CIAC is a specialized arbitration body established by Executive Order No. 1008 to resolve construction disputes. It has original and exclusive jurisdiction over these disputes, provided the parties have agreed to arbitration.
What is a Temporary Restraining Order (TRO)?	A TRO is a court order that temporarily prevents a party from taking a particular action. It is issued to prevent irreparable harm while the court considers whether to grant a preliminary injunction.
What was the basis for the motion to inhibit the Chief Justice?	The motion alleged a perceived lack of impartiality due to a close relationship between the Chief Justice and one of the attorneys representing the opposing party.
What did the Supreme Court decide regarding the motion to inhibit?	The Supreme Court denied the motion, finding no evidence of bias and affirming that the Chief Justice’s actions were based on legal merit and a collective agreement.
Why did the Supreme Court issue a Temporary Restraining Order (TRO)?	The Supreme Court issued the TRO to prevent the Regional Trial Court (RTC) from proceeding with the case, as it could render the Supreme Court’s decision moot and cause irreparable injury to the respondents.
What is the effect of agreeing to arbitration in a construction contract?	By agreeing to arbitration, parties generally waive their right to litigate the dispute in court and submit to the jurisdiction of the arbitral tribunal, such as the CIAC.
What does this decision mean for construction contracts?	This decision reinforces the importance of arbitration clauses in construction contracts and upholds the CIAC’s jurisdiction over construction disputes, ensuring that parties adhere to their arbitration agreements.

This ruling underscores the Supreme Court’s commitment to respecting arbitration agreements and specialized tribunals like the CIAC in resolving construction disputes, ensuring efficient and expert resolution. Parties entering into construction contracts with arbitration clauses should be aware of the implications of such agreements and the primary role of arbitration in resolving disputes.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Charles Bernard H. Reyes v. Antonio Yulo Balde II, G.R. No. 168384, August 18, 2006