Chung Fu v.
CA
G.R. No. 96283., February 25, 1992
Facts: Petitioner Chung Fu Industries (Philippines) and private respondent Roblecor Philippines, Inc.
forged a construction agreement 1 whereby respondent contractor committed to construct and finish
on December 31, 1989, petitioner corporation's industrial/factory complex in Tanawan, Tanza, Cavite for
and in consideration of P42,000,000.00. In the event of disputes arising from the performance of subject
contract, it was stipulated that the issue(s) shall be submitted for resolution before a single arbitrator
chosen by both parties.
They also entered into two (2) other ancillary contracts, to wit: one dated June 23, 1989, for the
construction of a dormitory and support facilities with a contract price of P3,875,285.00, to be
completed on or before October 31, 1989; and the other dated August 12, 1989, for the installation of
electrical, water and hydrant systems at the plant site, commanding a price of P12.1 million and
requiring completion thereof one month after civil works have been finished
Roblecor failed to complete the work despite the extension of time allowed it by Chung Fu. Claiming an
unsatisfied account of P10,500,000.00 and unpaid progress billings of P2,370,179.23, Roblecor on filed a
petition for Compulsory Arbitration with prayer for Temporary Restraining Order before respondent
Regional Trial Court, pursuant to the arbitration clause in the construction agreement. An arbitration
agreement was formulated. Engr. Willardo Asuncion was appointed as the sole arbitrator.
Arbitrator Asuncion ordered petitioners to immediately pay respondent contractor, the sum of
P16,108,801.00. He further declared the award as final and unappealable, pursuant to the Arbitration
Agreement precluding judicial review of the award. Consequently, Roblecor moved for the confirmation
of said award. On the other hand, Chung Fu moved to remand the case for further hearing and asked for
a reconsideration of the judgment award claiming that Arbitrator Asuncion committed twelve (12)
instances of grave error by disregarding the provisions of the parties' contract. The lower court denied
the motion to remand so Chung Fu elevated the case to
(a) by refusing to exercise their judicial authority and legal duty to review the arbitration award, and (b)
by declaring that petitioners are estopped from questioning the arbitration award allegedly in view of
the stipulations in the parties' arbitration agreement that "the decision of the arbitrator shall be final
and unappealable" and that "there shall be no further judicial recourse if either party disagrees with the
whole or any part of the arbitrator's award
They also argued that Respondent Court of Appeals and trial Judge gravely abused their discretion
and/or exceeded their jurisdiction, as well as denied due process and substantial justice to petitioner, by
not vacating and annulling the award dated 30 June 1990 of the Arbitrator, on the ground that the
Arbitrator grossly departed from the terms of the parties' contracts and misapplied the law, and thereby
exceeded the authority and power delegated to him
Issue: Whether or not the remedy of certiorari under rule 65 may be availed of
Held: Yes.
After closely studying the list of errors, as well as petitioners' discussion of the same in their Motion to
Remand Case For Further Hearing and Reconsideration and Opposition to Motion for Confirmation of
Award, we find that petitioners have amply made out a case where the voluntary arbitrator failed to
apply the terms and provisions of the Construction Agreement which forms part of the law applicable as
between the parties, thus committing a grave abuse of discretion. Furthermore, in granting unjustified
extra compensation to respondent for several items, he exceeded his powers - all of which would have
constituted ground for vacating the award under Section 24 (d) of the Arbitration Law
But the respondent trial court's refusal to look into the merits of the case, despite prima facie showing
of the existence of grounds warranting judicial review, effectively deprived petitioners of their
opportunity to prove or substantiate their allegations. In so doing, the trial court itself committed grave
abuse of discretion. Likewise, the appellate court, in not giving due course to the petition, committed
grave abuse of discretion. Respondent courts should not shirk from exercising their power to review,
where under the applicable laws and jurisprudence, such power may be rightfully exercised; more so
where the objections raised against an arbitration award may properly constitute grounds for annulling,
vacating or modifying said award under the laws on arbitration
