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  • LM Power vs Capitol Industrial

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    Kenji Rangel
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    This case involves a dispute between LM Power Engineering Corporation and Capitol Industrial Construction Groups Inc. over an unpaid balance of P6,711,813.90 for electrical work LM Power completed under a subcontract agreement. The subcontract contained an arbitration clause requiring the parties to resolve disputes through arbitration. While the trial court ruled in favor of LM Power, the appellate court reversed and ordered the case to arbitration. The Supreme Court affirmed the appellate court's ruling, finding that the dispute involved technical issues best resolved by arbitrators according to the terms of the subcontract, including its arbitration clause.

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    This case involves a dispute between LM Power Engineering Corporation and Capitol Industrial Construction Groups Inc. over an unpaid balance of P6,711,813.90 for electrical work LM Power completed under a subcontract agreement. The subcontract contained an arbitration clause requiring the parties to resolve disputes through arbitration. While the trial court ruled in favor of LM Power, the appellate court reversed and ordered the case to arbitration. The Supreme Court affirmed the appellate court's ruling, finding that the dispute involved technical issues best resolved by arbitrators according to the terms of the subcontract, including its arbitration clause.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    47 views2 pages

    LM Power vs Capitol Industrial

    Uploaded by

    Kenji Rangel
    This case involves a dispute between LM Power Engineering Corporation and Capitol Industrial Construction Groups Inc. over an unpaid balance of P6,711,813.90 for electrical work LM Power completed under a subcontract agreement. The subcontract contained an arbitration clause requiring the parties to resolve disputes through arbitration. While the trial court ruled in favor of LM Power, the appellate court reversed and ordered the case to arbitration. The Supreme Court affirmed the appellate court's ruling, finding that the dispute involved technical issues best resolved by arbitrators according to the terms of the subcontract, including its arbitration clause.

    Copyright:

    © All Rights Reserved
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    of 2

    LMPowerEngineeringCorp.vs.

    CapitolIndustrial
    Facts:LMPowerEngineeringCorporation(petitioner)andCapitolIndustrial
    ConstructionGroupsInc.(respondent)enteredintoaSubcontractAgreementinvolving
    electricalworkattheThirdPortofZamboanga.
    UponcompletingitstaskundertheContract,petitionerbilledrespondentintheamount
    ofP6,711,813.90.respondentrefusedtopay.Respondentalsotookrefugeinthe
    terminationclauseoftheAgreement.Thatclauseallowedittosetoffthecostofthework
    thatpetitionerhadfailedtoundertake
    Becauseofthedispute,petitionerfiledwiththeRegionalTrialCourt(RTC)ofMakati
    (Branch141)aComplaintforthecollectionoftheamountrepresentingthealleged
    balancedueitundertheSubcontract.Respondentfiledamotiontodismissbutthesame
    wasdeniedbytheRTC.
    RTCruledthatthetakeoverofsomeworkitemsbyrespondentwasnotequivalenttoa
    termination,butameremodification,oftheSubcontract.Thelatterwasorderedtogive
    fullpaymentfortheworkcompletedbypetitioner.
    Onappeal,theCAreversedtheRTCandorderedthereferralofthecasetoarbitration.
    Thepetitionerclaimsthatthereisnoconflictforitisonlyanordinaryactionforthe
    collectionofasumofmoneyfromrespondent.
    Issue/s
    WONthereexist[s]acontroversy/disputebetweenpetitionerandrespondentregarding
    theinterpretationandimplementationoftheSubContractAgreementdatedFebruary22,
    1983thatrequirespriorrecoursetovoluntaryarbitration;
    WONtherequirementsprovidedinArticleIII[1]ofCIACArbitrationRulesregarding
    requestforarbitrationhavebeencompliedwith
    Ruling:
    YES,theSubcontracthasthefollowingarbitralclause:
    6.ThePartiesheretoagreethatanydisputeorconflictasregardstointerpretationandimplementationof
    thisAgreementwhichcannotbesettledbetween[respondent]and[petitioner]amicablyshallbesettledby
    meansofarbitrationxxx.

    ThecourtdisagreeswiththepetitionerTheinstantcaseinvolvestechnicaldiscrepancies
    thatarebetterlefttoanarbitralbodythathasexpertiseinthoseareas.
    Arbitratorsalsoneedtolookintothecomputationofforeignandlocalcostsofmaterials,
    foreignandlocaladvances,retentionfeesandlettersofcredit,andtaxesanddutiesasset
    forthintheAgreement.ThesedatacanbegatheredfromareviewoftheAgreement,
    pertinentportionsofwhicharereproducedhereunder:

    a.CONTRACTPRICEANDTERMSOFPAYMENT
    b.IMPORTEDMATERIALSANDEQUIPMENT
    c.OTHERCONDITIONS
    NO.TheCourtheldinNationalIrrigationAdministrationv.CourtofAppeals,from
    whichwequotethus:
    UnderthepresentRulesofProcedure,foraparticularconstructioncontracttofallwithin
    thejurisdictionofCIAC,itismerelyrequiredthatthepartiesagreetosubmitthesameto
    voluntaryarbitration,itisplainandclearthataslongasthepartiesagreetosubmitto
    voluntaryarbitration,regardlessofwhatforumtheymaychoose,theiragreementwillfall
    withinthejurisdictionoftheCIAC
    Clearly,thereisnomoreneedtofilearequestwiththeCIACinordertovestitwith
    jurisdictiontodecideaconstructiondispute.

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