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  • (G.R. No. 141833) L.M. Power Engineering vs. Capitol Industrial Construction (Digest)

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    Ryan Leocario
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    (1) LM Power Engineering Corporation filed a complaint against Capitol Industrial Construction Groups for payment of an alleged balance due for electrical work performed under a subcontract agreement. (2) Capitol Industrial filed a motion to dismiss, arguing the dispute must first be submitted to arbitration per the agreement. (3) The RTC denied the motion, finding the dispute did not involve interpretation of the agreement. (4) The Court of Appeals reversed and ordered arbitration, and LM Power appealed. (5) The Supreme Court ruled the dispute did involve interpretation of payment terms in the agreement, so arbitration was required before litigation.

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    [G.R. No. 141833] L.M. Power Engineering vs. Capitol Industrial Construction (digest)

    Original Title

    [G.R. No. 141833] L.M. Power Engineering vs. Capitol Industrial Construction (digest)

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    (1) LM Power Engineering Corporation filed a complaint against Capitol Industrial Construction Groups for payment of an alleged balance due for electrical work performed under a subcontract agreement. (2) Capitol Industrial filed a motion to dismiss, arguing the dispute must first be submitted to arbitration per the agreement. (3) The RTC denied the motion, finding the dispute did not involve interpretation of the agreement. (4) The Court of Appeals reversed and ordered arbitration, and LM Power appealed. (5) The Supreme Court ruled the dispute did involve interpretation of payment terms in the agreement, so arbitration was required before litigation.

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    834 views1 page

    (G.R. No. 141833) L.M. Power Engineering vs. Capitol Industrial Construction (Digest)

    Uploaded by

    Ryan Leocario
    (1) LM Power Engineering Corporation filed a complaint against Capitol Industrial Construction Groups for payment of an alleged balance due for electrical work performed under a subcontract agreement. (2) Capitol Industrial filed a motion to dismiss, arguing the dispute must first be submitted to arbitration per the agreement. (3) The RTC denied the motion, finding the dispute did not involve interpretation of the agreement. (4) The Court of Appeals reversed and ordered arbitration, and LM Power appealed. (5) The Supreme Court ruled the dispute did involve interpretation of payment terms in the agreement, so arbitration was required before litigation.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    of 1

    [G.R. No.

    141833] March 26, 2003


    LM POWER ENGINEERING CORPORATION, petitioner,
    vs.
    CAPITOL INDUSTRIAL CONSTRUCTION GROUPS, INC., respondent.

    Facts:

    On February 22, 1983, Petitioner LM Power Engineering Corporation and Respondent Capitol Industrial
    Construction Groups Inc. entered into a "Subcontract Agreement" involving electrical work at the Third
    Port of Zamboanga.

    On April 25, 1985, respondent took over some of the work contracted to petitioner. Allegedly, the
    latter had failed to finish it because of its inability to procure materials.

    Upon completing its task, petitioner billed respondent. However, the latter contested the accuracy of
    the amount. Because of the dispute, petitioner filed with the Regional Trial Court (RTC) of Makati
    (Branch 141) a Complaint for the collection of the amount representing the alleged balance due it
    under the Subcontract. Instead of submitting an Answer, respondent filed a Motion to Dismiss, alleging
    that the Complaint was premature, because there was no prior recourse to arbitration.

    In its Order dated September 15, 1987, the RTC denied the Motion on the ground that the dispute did
    not involve the interpretation or the implementation of the Agreement and was, therefore, not covered
    by the arbitral clause.

    The Court of Appeals (CA) reversed the RTC and ordered the referral of the case to arbitration.

    Hence, this Petition.

    Issue

    Whether or not there exists a controversy/dispute between petitioner and respondent regarding the
    interpretation and implementation of the Sub-Contract Agreement which requires prior recourse to
    voluntary arbitration.

    Ruling

    The controversy/dispute between the parties involve the interpretation and implementation of the
    Sub-Contract Agreement. Hence, prior recourse to arbitration is required.

    The issue as to the correct amount of petitioner’s advances and billable accomplishments involves an
    evaluation of the manner in which the parties completed the work, the extent to which they did it,
    and the expenses each of them incurred in connection therewith. Arbitrators also need to look into
    the computation of foreign and local costs of materials, foreign and local advances, retention fees and
    letters of credit, and taxes and duties as set forth in the Agreement. These data can be gathered from
    a review of the Agreement.

    The courts should liberally construe arbitration clauses. Provided such clause is susceptible of an
    interpretation that covers the asserted dispute, an order to arbitrate should be granted. Any doubt
    should be resolved in favor of arbitration.

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