GR No. 219708, October 3, 2018 (TIEZA Vs Global-V Builders CO.)

Tourism Infrastructure and Enterprise Zone Authority Vs. Global-V Builders Co.
G.R. No. 219708. October 3, 2018

Peralta, J.
FACTS:
In 2007 and 2008, the Philippine Tourism Authority (PTA) entered into five Memoranda
of Agreement (MOA) with respondent Global-V Builders Co. (Global-V). The Memoranda of
Agreement are as follows:
1. Memorandum of Agreement (MOA) dated February 2, 2007 for the Construction of

Stamped Concrete Sidewalk and Installation of Streetlights (Main Road) located at
Boracay, Aklan;
2. MOA dated September 6, 2007 for the Boracay Environmental Infrastructure Project
(BEIP)-Extension of Drainage Component System (Main Road and Access Road)
located at Barangay Balabag, Boracay, Aklan;
3. MOA dated December 7, 2007 for the Additional Sidewalk, Streetlighting and Drainage
System (Main Road), located at Bora cay, Aklan;
4. MOA dated September 19, 2008 for the Widening ofBoracay Road along Willy's Place at
Barangay Balabag, Boracay, Aklan; and
5. MOA dated February 29, 2008 for the Perimeter Fence at Banaue Hotel in Banaue,
Ifugao.
The BEIP-Extension of Drainage Component System (Main Road and Access Road)
Project and the Perimeter Fence at Banaue Hotel Project were procured through competitive
bidding, while the rest of the projects aforementioned were obtained through negotiated
procurement pursuant to Section 53, paragraphs (b) and (d) of Republic Act (R.A.) No. 9184 or
the Government Procurement Reform Act.
On July 31, 2012, Global-V filed a Request for Arbitration and a Complaint before the
CIAC, seeking payment from the Tourism Infrastructure and Enterprise Zone Authority (TIEZA),
the office that took over the functions of PTA, of unpaid bills in connection with the five projects.
On August 30, 2012, TIEZA filed a Refusal of Arbitration (Motion to Dismiss for Lack of
Jurisdiction), instead of filing an Answer. TIEZA argued that CIAC has no jurisdiction over the
case filed by Global-V because the Complaint does not allege an agreement to arbitrate and the
contracts do not contain an arbitration agreement in accordance with Sections 2.3 and 2.3.1 13
of the CIAC Revised Rules of Procedure Governing Construction Arbitration.
ISSUE(s):
1. Whether CIAC had jurisdiction over the dispute. If yes, what kind of jurisdiction and to
what extent?
2. Are the contracts between TIEZA, formerly PTA, and Global-V valid? If so, is negotiated
procurement under RA 9184 the appropriate mode?
RULING:
1. Whether CIAC had jurisdiction over the dispute. If yes, what kind of jurisdiction and to what
extent?
The jurisdiction of courts and quasi-judicial bodies is determined by the Constitution and the
law.47 Section 4 of E.O. No. 1008 provides that the CIAC shall have original and exclusive
jurisdiction over disputes arising from, or connected with, construction contracts, which may
involve government or private contracts, provided that the parties to a dispute agree to
submit the dispute to voluntary arbitration.
Further, the MOAs dated February 2, 2007 (Construction of Stamped Concrete Sidewalk and
Installation of Streetlights [Main Road] Project) and December 7, 2007 (Additional Sidewalk,
Streetlighting and Drainage System [Main Road] Project) specifically stated that the projects
covered thereby were additional works to the original contracts covered by bidding (with
General Conditions of Contract containing an arbitration clause) and, together with the MOA
dated September 19, 2008 (Widening of Boracay Road along Willy's Place Project), were
negotiated procurements made pursuant to Sections 53 (d) and 53 (b), respectively, of the !RR-
A of R.A. No. 9184. The jurisdiction of CIAC over the construction controversy involving the said
MOAs is questioned because the MOAs do not contain an arbitration clause.
However, the said MOAs expressly state that they are covered by R.A. No. 9184. By virtue of
R.A. No. 9184, which is the law that authorized the negotiated procurement of the construction
contracts entered into by the parties, CIAC is vested with jurisdiction over the dispute.
Applicable laws form part of, and are read into contracts; hence, the provision on settlement of
disputes by arbitration under Section 591 of R.A. No. 9184 formed part of the MOAs in this case.
2. W/N the negotiated procurement of the contracts between TIEZA and Global-V is valid under
RA 9184
The Court holds that the aforementioned MOAs are valid as they complied with the
requirements of negotiated procurement under Section 53, paragraphs (b) and (d) of R.A. No.
9184.
The Widening of Boracay Road along Willy's Place Project was justified under Section
53 (b)2 of R.A. No. 9184 and its IRR-A, to wit: "other causes where immediate action is
necessary to prevent damage to or loss of life or property." As Boracay is famous for its white-
sand beaches and is a tourist attraction and destination in the Philippines, the PT A found it "of
utmost urgency with the onset of the tourist peak season" to undertake the project to ensure the
safety of the people and tourists of Boracay.
Moreover, the Court finds that the Additional Sidewalk, Streetlighting and Drainage
System (Main Road) Project complied with the requirements of Section 53(d)3 of R.A. No. 9184.
The MOA covering this additional project stated that the project was found very necessary in the
1 SECTION 59. Arbitration. - Any and all disputes arising from the implementation of a contract covered by
this Act shall be submitted to arbitration in the Philippines according to the provisions of Republic Act No. 876,
otherwise known as the "Arbitration Law": Provided, however, That, disputes that are within the competence of
the Construction Industry Arbitration Commission to resolve shall be referred thereto. The process of
arbitration shall be incorporated as a provision in the contract that will be executed pursuant to the provisions of this
Act: Provided, That by mutual agreement the parties may agree in writing to resort to altemativo modes of dispute
resolution. (emphasis supplied)
2 SECTION 53. Negotiated Procurement. - Negotiated Procurement shall be allowed only in the following instances:
xxxx
b) In case of imminent danger to life or property during a state of calamity, or when time is of the essence arising
from natural or man-made calamities or other causes where immediate action is necessary to prevent damage to or
loss of life or property, or to restore vital public services, infrastructure facilities and other public utilities.
completion of the original project (the BEIP-Extension of Drainage Component System [Main
Road and Access Road] Project). This additional project should be considered as similar or
related to the scope of work as in the original project, since it also involves the construction of a
drainage system and included the construction of additional sidewalk, as well as street lighting,
to complete the original project.
The Court notes that Section 48 of R.A. No. 91844 provides that the Procuring Entity, in
this case, PTA/TIEZA, may, in order to promote economy and efficiency, resort to alternative
methods of procurement, including negotiated procurement. Hence, the PTA must have
considered the construction of the additional sidewalk and street lighting economical and related
to the original contract to fund them together with the construction of the drainage system of the
main road. As Global-V aptly commented, "why will petitioner hire another company to lay the
sidewalks while [it] was constructing the concrete drainage canals on top of which the sidewalks
would be built?"
As found by the Arbitral Tribunal, Section 53 (d) of R.A. No. 9184 was invoked by
TIEZA's Technical Evaluation Committee and Bids and Awards Committee in justifying the
award of the Additional Sidewalk, Streetlighting and Drainage System (Main Road) Project, and
there appears to be no substantial reason to disturb the original findings of TIEZA' s officials that
the projects could be negotiated, notwithstanding the reversal in the stand of TIEZA.
3 SECTION 53. Negotiated Procurement. - Negotiated Procurement shall be allowed only in the following instances:
xxxx
d) Where the subject contract is adjacent or contiguous to an on-going infrastructure project, as defined in the IRR:
Provided, however, That the original contract is the result of a Competitive Bidding; the subject contract to be
negotiated has similar or related scopes of work; it is within the contracting capacity of the contractor; the contractor
uses the same prices or lower unit prices as in the original contract less mobilization cost; the amount involved does
not exceed the amount of the ongoing project; and, the contractor has no negative slippage: Provided, further, That
negotiations for the procurement are commenced before the expiry of the original contract. Whenever applicable, this
principle shall also govern consultancy contracts, where the consultants have unique experience and expertise to
deliver the required service[.]
4 SECTION 48. Alternative Methods. -·· Subject to the prior approval of the Head of the Procuring Entity or his duly
authorized representative, and whenever justified by the conditions provided in this Act, the Procuring Entity
may, in order to promote economy and efficiency, resort to any of the following alternative methods of
Procurement:
xxxx
(e) Negotiated Procurement - a method of Procurement that may be resorted under the extraordinary circumstances
provided for in Section 53 of this Act and other instances that shall be specified in the IRR, whereby the Procuring
Entity directly negotiates a contract with a technically, legally and financially capable supplier, contractor or consultant

GR No. 219708, October 3, 2018 (TIEZA Vs Global-V Builders CO.)

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Tourism Infrastructure and Enterprise Zone Authority Vs. Global-V Builders Co.

G.R. No. 219708. October 3, 2018

1. Memorandum of Agreement (MOA) dated February 2, 2007 for the Construction of

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