Metropolitan Cebu Water District Vs. Mactan Rock Industries, Inc.

Gr No. 172438

Facts:

Petition (Metropolitan) is a GOCC created under PD no. 198 located in Cebu City. On May 1997, it
entered into a contract with Mactan for an annual supply of potable water.

On March 2004, Mactan filed a case against Metropolitan with the Construction Industry Arbitration
Commission (CIAC) pursuant to Clause 18 in the said contract. In the complaint, it sought the
reformation of clause 17 of the contract which is the Escalation/De-escalation Caluse, in order to include
the cost recovery in the price escalation formula and to have such formula apply from 1996, when the
bidding was conducted. It also sought payment for the unpaid adjustment (escalation) and interest up to
December 31, 2003.

Metropolitan argued that the CIAC has no jurisdiction to hear the case as the contract was not one for
construction or infrastructure.

CIAC rendered a decision in favour of the Mactan, and when the case was appealed, same decision was
upheld hence, a petition for Certiorari was filed.

Issue: Whether or not the CIAC has jurisdiction over disputes arising from a water supply contract?

Yes, the CIAC has jurisdiction over the case pursuant to Section 4 of E.O. No. 1008 which states “ Sec 4
Jurisdiction - The CIAC shall have original jurisdiction over disputes arising from, or
connected with, contracts entered into by parties involved in construction in the Philippines”

The E.O. No. 1008 was made in recognition of the need to establish arbitral machinery that would
expeditiously settle construction industry disputes. The prompt resolution of problems ARISING FROM,
OR CONNECTED TO, the CONSTRUCTION INDUSTRY was considered necessary and vital for the fulfilment
of national development goals.

...the jurisdiction of CIAC may include but is not limited to payment of employer or contractor and
changes in contract costs.