G.R. No. 96283 . February 25, 1992. CHUNG FU INDUSTRIES (PHILIPPINES) INC., et al., petitioners, vs. COURT OF APPEALS, HON. FRANCISCO X. VELEZ, and ROBLECOR PHILIPPINES, INC., respondents.
FACTS

Petitioner Chung Fu Industries and respondent Roblecor Philippines entered into a construction agreement with an arbitration clause for dispute resolution. Roblecor failed to complete the project, leading Chung Fu to take over. Roblecor filed a petition for compulsory arbitration. The parties subsequently executed a detailed Arbitration Agreement, which was approved by the Regional Trial Court (RTC). The agreement explicitly stipulated that the arbitrator’s decision would be “final and unappealable” and that “there shall be no further judicial recourse.”
The sole arbitrator rendered an award in favor of Roblecor, declaring it final pursuant to the agreement. Roblecor moved for its confirmation. Chung Fu opposed, moving to remand the case, arguing the arbitrator committed grave errors by disregarding the contract. The RTC denied Chung Fu’s motions, confirmed the award, and issued a writ of execution. The Court of Appeals affirmed, holding the parties were bound by their agreement precluding appeal.

ISSUE

Whether the stipulation in the Arbitration Agreement that the arbitrator’s award is “final and unappealable” absolutely bars judicial review of the award.

RULING

No. While the Court upheld the validity and enforceability of arbitration agreements, it ruled that a contractual stipulation declaring an arbitration award final and unappealable cannot absolutely preclude judicial review. The policy favoring arbitration does not grant arbitrators unbounded authority. Judicial review remains necessary to ensure that the arbitrator did not exceed his powers or imperfectly execute them, as provided under Section 24 of the Arbitration Law ( Republic Act No. 876 ).
The Court clarified that such a stipulation merely signifies the award’s finality on the facts and the merits of the case. It does not foreclose judicial recourse for the limited purpose of reviewing whether the award was rendered without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack of jurisdiction. To hold otherwise would contravene public policy by placing arbitral awards beyond the court’s constitutional duty to ensure that a tribunal or board has not acted without or in excess of its jurisdiction. Consequently, the case was remanded to the trial court to determine if any grounds under Section 24 of the Arbitration Law existed to vacate the award.