The prevailing rule and jurisprudence was that an appeal from an arbitral award of the Construction Industry Arbitration Commission (CIAC) was taken by way of a petition for review to the Court of Appeals (CA) pursuant to Section 1, Rule 43 of the Rules of Court which expressly mentions the CIAC among the agencies whose awards may be the subject of review. However, in Global Medical Center of Laguna, Inc. v. Ross Systems International, Inc., 11 May 2021, the Supreme Court en banc revisited Section 1 of Rule 43 and stated that the CIAC’s inclusion therein was an error. The Court held that an appeal from an arbitral award of the CIAC may be taken only by way of a petition for review on certiorari on pure questions of law to the Supreme Court pursuant to the Construction Industry Arbitration Law.
A brief history of the laws regarding appeal from the CIAC’s arbitral award
Section 9 of B.P. Blg. 129 (the Judiciary Reorganization Act of 1980) provides that the CA shall exercise “[e]xclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of … quasi-judicial agencies, instrumentalities, boards or commissions.” This provision served as the basis for Rule 43 of the 1997 Rules of Civil Procedure.
In February 1985, President Marcos issued E.O. No. 1008 or the Construction Industry Arbitration Law which created the CIAC. The law provides that the CIAC shall have “original and exclusive jurisdiction” over disputes arising from or connected with contracts entered into by parties involved in construction in the Philippines. For the Board to acquire jurisdiction, the parties to a dispute must agree to submit the same to voluntary arbitration. E.O. No. 1008 provides that the arbitral award shall be final and unappealable except on questions of law, which shall be appealable to the Supreme Court. (Sec. 19, E.O. No. 1008).
Section 1, Rule 43 of the 1997 Rules of Civil Procedure (effective 1 July 1997) provides that Rule 43, which governs appeals from quasi-judicial agencies to the Court of Appeals, “shall apply to appeals from … awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of quasi-judicial functions.” Section 1 of Rule 43 states that “[a]mong these agencies” is the CIAC. An appeal under Rule 43 may involve “questions of fact, of law, or mixed questions of fact and law.” (Section 3, Rule 43).
From the text of Section 1 of Rule 43, an arbitration award of the CIAC is appealable on questions of fact or law to the CA by way of a petition for review under Rule 43. Case law hewed to the text of Section 1.
In February 2004, R.A. No. 9285 (the Alternative Dispute Resolution Act of 2004) was enacted into law. Section 34 thereof provides that the arbitration of construction disputes shall be governed by E.O. No. 1008. Notwithstanding the passage of R.A. No. 9285, jurisprudence continued to cling to the text of Section 1, Rule 43 of the Rules of Court. In fact, the latest iteration (June 2019) of the CIAC Revised Rules of Procedure Governing Construction Arbitration provides that “[a] petition for review from a final award may be taken by any of the parties within fifteen (15) days from receipt thereof in accordance with the provisions of Rule 43 of the Rules of Court.”
However, in CE Construction v. Araneta Center, 836 SCRA 181 (2017), the Supreme Court held that Rule 43 must be read together with E.O. No. 1008 which provides that appeals from arbitral awards must raise only questions of law, and that even if Rule 43 provides that appeals may be brought before the CA, these appeals must be confined to questions of law. While CE Construction clarified that the appeal may raise only legal questions, it still recognized the viability of Rule 43 as the mode of appeal from the CIAC. The CE Construction ruling was reiterated in Metro Bottled Water Corp. v. Andrada Construction & Dev’t Corp., 6 March 2019.
Global Medical Center of Laguna, Inc. v. Ross Systems International, Inc. (2021)
In Global Medical Center of Laguna, Inc. v. Ross Systems International, Inc., 11 May 2021, Caguioa, J., the Supreme Court en banc revisited Section 1 of Rule 43.
The Court held that an appeal from the CIAC’s arbitral award may be taken only by way of a petition for review on certiorari under Rule 45 of the Rules of Court to the Supreme Court and that such petition can raise only questions of law in accordance with E.O. No. 1008. The Court stated that the CIAC’s inclusion in Section 1 of Rule 43 was an error.
Applying the canons of statutory construction, the Court held that E.O. No. 1008, being the more recent and special law, prevails over the earlier and general provisions of Sec. 9 of B.P. Blg. 129. The Court stated that Rule 43’s departure from E.O. No. 1008 would be unequivocally corrected and realigned with the enactment of R.A. No. 9285.
Resort to a special civil action for certiorari under Rule 65 to challenge factual findings
The Court also stated that exceptionally, the factual findings of the CIAC may be challenged by way of a special civil action for certiorari under Rule 65 of the Rules of Court. The petition for certiorari may be filed with the CA on the limited grounds that pertain to either a challenge on the integrity of the CIAC arbitral tribunal (i.e., allegations of corruption, fraud, misconduct, evident partiality, incapacity or excess of powers within the tribunal) or an allegation that the arbitral tribunal violated the Constitution or positive law in the conduct of the arbitral process. The CA may conduct a factual review only upon a sufficient and demonstrable showing that the integrity of the CIAC arbitral tribunal had indeed been compromised or that it committed unconstitutional or illegal acts in the conduct of the arbitration.
With due respect, allowing a resort to a special civil action for certiorari to challenge the CIAC’s factual findings is arguable. This runs counter to Section 19.7 of the Special ADR Rules which provides that “a party to an arbitration is precluded from filing … a petition for certiorari questioning the merits of an arbitral award.” While a procedural rule issued by the Supreme Court may be amended by a decision of the Court en banc, ideally, this should be done where the question of amending the rule is directly in issue. In the Global Medical Center case, resort to a petition for certiorari was not an issue, even tangentially.
Moreover, the rule is that a special civil action for certiorari is available only against a tribunal, board, or person exercising judicial or quasi-judicial functions. It is submitted that in arbitrating construction disputes, the CIAC is not exercising quasi-judicial functions.[1] Commercial arbitration (of which construction arbitration is included)[2] is not a quasi-judicial proceeding. The subject-matter jurisdiction of a judicial or quasi-judicial body is set by law and such body exercises jurisdiction over the dispute through legislative fiat and by compulsory process, such as service of summons, writ, or other process. On the other hand, for the CIAC to acquire jurisdiction, the parties to a dispute must agree to submit the same to voluntary arbitration. In other words, arbitration is essentially a contractual rather than an administrative or judicial means of settling a dispute. It should not be subject to judicial review unless expressly provided for by law.
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[1] The prevailing jurisprudence is that the CIAC is a quasi-judicial agency. See Metro Bottled Water Corp. v. Andrada Construction & Dev’t Corp., 6 March 2019, Leonen, J. It is submitted that this pronouncement should be re-examined.
[2] See Sections 21 and 35 of the Alternative Dispute Resolution Act of 2004.
