Chung Fu Industries Inc.

Vs Court of Appeals
GR 96283

Facts:
Petitioner Chung Fu entered into a construction agreement with Roblecor Phil. Inc. for the
corporations 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 courts power of judicial review.
Decision:
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 that there are
grounds for vacating, modifying or rescinding an arbitrators 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.