CHUNG FU INDUSTRIES

(PHILIPPINES), INC. V.
COURT OF APPEALS
G.R. NO. 96283, February 25,1992
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.
PUROMINES, INC. V.
COURT OF APPEALS
G.R. NO. 91228, March 22,1993
FACTS:
Puromines, Inc. and Makati Agro Trading, Inc. entered into a
contract with Philipp Brothers Oceanic, Inc. for the sale of prilled
Urea in bulk. In their sales of contract, an arbitration clause is
provided which says that any dispute arising from said contract
shall be settled by arbitration.
Thereafter, M/V Liliana Dimitrova loaded on board at Yuhzny
USSR a shipment of 15.500 metric tons prilled Urea in bulk
complete and in good order and condition for transport to Iloilo
and Manila, to be delivered to Puromines. Three bills of lading
were issued by the ship-agent in the Philippines, Maritime
Factors, Inc.
The shipment covered by Bill of Lading No.2 was discharged in
Iloilo City complete and in good order and condition. However,
the shipments covered by Bill of Lading Nos.1 and 3 were
discharged in Manila in bad order and condition, caked,
hardened and lumpy, discolored and contaminated with rust and
dirt. Damages were value at P683,056.29 including additional
discharging expenses.
 As a result, Puromines filed a complaint for breach of
contract of carriage before the trial court against Maritime and
Philipp was impleaded as charterer of the vessel. Maritime filed
its answer but Philipp filed a motion to dismiss on the ground of
failure to comply with the arbitration clause. Philipp opposed
the motion to dismiss asserting that the cause of action did not
arise from the violation of the sales of contract but on claims of
cargo damages (contract of carriage).
The trial court ruled in favor of Puromines. Upon appeal, the
CA reversed the trial court’s ruling contending that the sales
contract is broad enough to include the claims for damages
arising from the carriage and delivery of the goods. Thus, the
case reached the SC.
ISSUE: Whether or not the arbitration clause in the sales
contract is applicable in the claims for damages subject
matter of the case.
HELD:
The arbitration clause in the sales of contract is applicable in
the claims for damages subject matter of the case. The CA is
correct in saying that the sales of contract is comprehensive
enough to include claims for damages arising from carriage and
delivery of the goods. As a general rule, the seller has the
obligation to transmit the goods to the buyer, and concomitant
thereto, the contracting of a carrier to deliver the same.
Puromines derives his right to the cargo from the bill of lading
which is the contract of affreightment together with the sales
contract. Hence, Puromines is bound by the provisions and
terms of said bill of lading and of the arbitration clause
incorporated in the sales of contract.