Case Brief: Chung Fu vs. CA

G.R. No. 96283   February 25, 1992
CHUNG FU INDUSTRIES (PHILIPPINES) INC., its Directors and Officers namely: HUANG KUO-CHANG, HUANG AN-CHUNG, JAMES J.R. CHEN, TRISTAN A. CATINDIG, VICENTE B. AMADOR, ROCK A.C. HUANG, JEM S.C. HUANG, MARIA TERESA SOLIVEN and VIRGILIO M. DEL ROSARIO, petitioners,
vs.
COURT OF APPEALS, HON. FRANCISCO X. VELEZ (Presiding Judge, Regional Trail Court of Makati [Branch 57]) and ROBLECOR PHILIPPINES, INC., respondents.

 

Facts:
Petitioner Chung Fu entered into a construction agreement with Roblecor Phil. Inc. for the corporation’s industrial factory with a total consideration of P42,000,000.00. Also, said companies entered into 2 other ancillary construction contracts amounting to P3,875,285.00 and P12,100,000.00. The said construction agreement contained a stipulation that in the event of disputes arising from the performance of the contract, such issue shall be submitted for resolution before a single arbitrator chosen by the parties. However, Roblecor failed to complete the work despite the extension of time provided by Chung Fu, which later on had to take over the said construction. Roblecor then claimed for the unsatisfied account of P10,500,000 and unpaid progress billings of P2,370,179.23 and filed a petition for the compulsory arbitration with a prayer for a TRO, while Chung Fu prayed for the dismissal of such petition. The RTC approved the arbitration agreement and Engr. Asuncion was latter appointed as the sole arbitrator. He then ordered the petitioners to pay the respondent contractor P16,108,801.00 and declared such award as final and unappealable. Chung Fu moved to remand the case for further hearing but the lower court denied the motion and granted the Confirmation of the award in favour of Roblecor. Chung Fu elevated the case to the CA via a petition for certiorari but the CA only assailed the resolution of the lower court assailing that the signatories of the Arbitration Agreement are bound to observe the stipulations thereof for the finality of the award.

Issue:
Whether or not the decision of the arbitrator shall be deemed final and unappealable and beyond the ambit of the court’s power of judicial review.

Held:
No. As per Art 2044 of the Civil Code, the finality of the arbitrators award is not absolute and without exceptions. It is also stated in Sections 24, 25 of the Arbitration Law (R.A. 876, year 1953) that there are grounds for vacating, modifying or rescinding an arbitrator’s award. Thus, if there are factual circumstances which are referred to in the said provisions be present, judicial review of the award is properly warranted. Also, even decisions of an administrative agency which are declared as “final” are not exempt from judicial review when so warranted. That is why a voluntary arbitrator, by the very nature of their function, acts in a quasi-judicial capacity in deciding such cases, is not to be construed as beyond the scope of the power of judicial review. The Court then provided that the lower court committed grave abuse of discretion by not looking into the merits of the case despite a prima facie showing of the existence of grounds warranting judicial review. Finally, the case was remanded back to the court of origin for further hearing.