ANGELO

10. State Policy on ADR

13. Features of ADR
Reyes v. Balde II

FACTS: Spouses Esquig entered into a Design-Build Construction Agreement that contained an arbitration clause
with Reyes, doing business under the name and style of CBH Reyes Architects, for the architectural design and
construction of a 2-storey residence in Tahanan Village, Parañaque City. Spouses Esquig paid the amount of
P1,050,000 as down payment. Thereafter, construction commenced. Spouses Esquig left for the US and designated
Papas as their representative who meddled with the construction works by demanding changes and additional
works which entailed additional cost.

Reyes filed a complaint for Accounting, Collection of Sum of Money, Rescission of Contract with Damages against
spouses Esquig and Papas with RTC-Muntinlupa. In the complaint, Reyes prayed that an accounting be rendered to
determine the cost of the materials purchased by Papas; that Spouses Esquig be ordered to pay the cost of the
additional works done on the property; and that the Design-Build Construction Agreement be ordered rescinded
because Spouses Esquig breached the same.

Spouses Esquig filed a motion to dismiss on the ground that the court has no jurisdiction alleging that because of
the arbitration clause, any dispute should be brought before the Construction Industry Arbitration Court. They
also filed a complaint before the CIAC against Reyes. Instead of submitting an answer, Reyes filed with the CIAC a
motion to dismiss on grounds of lack of jurisdiction to hear and decide the case as well as the pendency of the
case before the trial court involving the same subject matter.

ISSUE: Whether or not CIAC has jurisdiction.

RULING: 10. YES. CIAC has 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. Needless to say, the Design-Build Construction Agreement mutually entered into by the parties contain
an arbitration clause. It bears to stress that being an inexpensive, speedy, and amicable method of settling disputes,
arbitration—along with mediation, conciliation, and negotiation—is encouraged by the Supreme Court. Aside from
unclogging judicial dockets, arbitration also hastens the resolution of disputes, especially of the commercial
kind. It is thus regarded as the “wave of the future” in international civil and commercial disputes.

13. YES. One of the features of ADR is it serves as means used to resolve a dispute or controversy. The
objective of ADR forms, methods and processes is to resolve or facilitate the resolution of a dispute or
controversy in a speedy, amicable, and inexpensive manner. The presence of the arbitration clause in the
parties’ contract vests jurisdiction on the CIAC on all controversies arising from such contract. The arbitral clause in
the agreement is a commitment by the parties to submit to arbitration the disputes covered therein. Because that
clause is binding, they are expected to abide by it in good faith. Where the jurisdiction of CIAC is properly invoked,
the failure or refusal of herein petitioner to arbitrate shall not affect the proceedings. Arbitration proceedings shall
continue notwithstanding the absence or lack of participation of Reyes, and the award shall be made after receiving
the evidence of the claimant

With respect to petitioner’s contention that the action is purely civil in nature hence, jurisdiction rests with the
Regional Trial Court, the same must fail. Since the action is rooted on alleged violations of the agreement, it is
embraced by the term “construction dispute.”

Other features of ADR:

2. ADR utilizes means and methods allowed by law;
3. ADR is contractual in nature;
4. ADR avoids court trial; and
5. ADR usually involves the participation of a neutral third party.