MINDANAO PORTLAND CEMENT CORPORATION, petitioner-appellee, vs.

McDONOUGH
CONSTRUCTION COMPANY OF FLORIDA, respondent-appellant.
G.R. No. L-23390

April 24, 1967

MPCC contracted MDCCOF for the construction of the latters dry portland cement plant in Iligan City.
Inevitably there are changes in the construction plans and so the respondent failed to deliver the said
obligation to construct the cement plant. The petitioner hereby claimed for the damages incurred in
such delay and the respondent counter demanded for the amount of P403,700 as the cost of extra work.
MPCC considered the dispute and invited the construction company to arbitrate invoking the arbitration
clause of their contract. After two invitations, MPCC filed an action in the CFI-Manila to compel the
respondent to arbitrate where it received a favourable order for submission for arbitration.
Not satisfied with the ruling of the CFI-Manila, MDCCOF appealed the decision of the CFI to the Supreme
Court raising the questions of law.
The first contention of the respondent is the absence of the conflict.
The SC affirmed the decision of the lower court who had appreciated the evidences that there is indeed
a conflict.
Secondly, the respondent contends that the conflict falls within the exemption to arbitrate provided by
the same contract.
In the event of disagreement between the Owner and the Contractor in respect of
the rights or obligations of either of the parties hereunder except the interpretation of the
plans and specifications and questions concerning the sufficiency of materials, the time,
sequence and method of performing the work, which questions are to be finally determined by
the Engineer, they shall submit the matter to arbitration, the Owner choosing one arbitrator,
the Contractor one, and the two so chosen shall select a third. The decision of such arbitrators
or a majority of them shall be made in writing to both parties and when so made shall be
binding upon the parties thereto.

SC ruled considered the exemptions are categories as (1) The interpretation of plans and specifications;
(2) sufficiency of materials; and (3) the time, sequence and method of performing the work, in which
the present conflict does not fall.
The parties are hereby ordered to proceed to arbitration to the manner stipulated.