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[G.R. No. 144467. November 20, 2000]

FIRST CATANDUANES ELECTRIC COOP., INC., vs. CA, et al.

FIRST DIVISION

Gentlemen:

Quoted hereunder, for your information, is a resolution of this Court dated NOV 20 2000.

G.R. No. 144467 (First Catanduanes Electric Cooperative, Inc., vs. CA, et al.)

This is a petition for review of the Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 37037, entitled "First Catanduanes Electric Cooperative, Inc. vs. Construction Industry Arbitration Commission, et al.," which dismissed petitioner's appeal and denied its motion for reconsideration, respectively.

The antecedents of this case are as follows:

On 27 January 1982, First Catanduanes Electric Cooperative, Inc. ("FICELCO") entered in a contract with Trans-Asia (Phils.), Inc. ("TAP") for the preparation of the design, specifications and cost estimate of a mini hydropower plant. Thereafter, FICELCO contracted the services of Atlantic Gulf & Pacific Co. ("AG&P") to construct the said power plaint pursuant to the designs of TAP. It was agreed that the power plant should be completed on or before 13 June 1983.

On 3 June 1983, TAP inspected the power plant and found the same complete. Thus, TAP recommended its final inspection. After a successful commissioning test where a power generation of a maximum of 380 kilowatts load was achieved, AG&P, on 10 June 1983, asked FICELCO to finally accept the power plaint. On 17 June 1983, the management and operation of the power plant was turned over by AG&P to FICELCO. It should be noted that at this point, there were still some minor defects in the power plant that were still to be addressed by AG&P. However, such defects concerned aesthetic considerations rather than operational matters.

Sometime in November of 1983 "Warling" entered the Philippines and caused substantial damage to the power plant. Because of this, FICELCO demanded that TAP share in the repair costs since it claimed that the extensive damage on the power plant was allegedly due to the faulty design and lack of adequate geological tests conducted by latter. Furthermore, FICELCO insisted that AG&P should also share in the repair since the former claimed that AG&P's poor workmanship on the power plant contributed to the damage. TAP and AG&P refused FICELCO's demands but TAP signified its willingness to waive its P264,000 for repair service fee from FICELCO while AG&P was willing to give P300,000 upon its receipt of the 10% retention amount from FICELCO. Since the parties could not settle their disagreements, the matter was referred to the Construction Industry Arbitration Commission ("CIAC"). In its Award, dated 20 December 1991, the CIAC declared that AG&P and TAP were not liable for the damages on the power plant. The CIAC found that since the power plant had already been turned over to FICELCO and the damage was caused by force majeure, TAP and AG&P have no liability for the damage brought about by the typhoon. However, in view of TAP and AG&P's previous compromise offers, the CIAC ordered TAP to waive its P264,000 repair service fee and for AG&P to pay FICELCO the amount of P300,000 from the return of its 10% retention fee. FICELCO filed a motion for reconsideration but the same was denied.

Undaunted, FICELCO elevated the case to the Court of Appeals. In its Decision, dated 21 June 1999, the Court of Appeals dismissed FICELCO's appeal on the basis that the issues raised by petitioner were questions of fact and since Executive Order No. 1008 only allows an appeal on questions of law, the said appeal must be dismissed. Its motion for reconsideration was likewise denied.

Hence, the instant petition where petitioner insists that the Court of Appeals erred in dismissing its appeal since Rule 43 allows the petitioner to raise questions of law and of fact.

We find the petition devoid of merit.

Executive Order No. 1008, otherwise known as the "Construction Industry Arbitration Law," is clear that findings of fact or the arbitral tribunal are binding on the parties and if any appeal is taken from the arbitral award, only questions of law can be raised therein. Section 19, of E.O. No. 1008 provides:

Sec. 19. Finality of Awards. - The arbitral award shall be binding upon the parties. It shall be final and unappealable except on questions of law which shall be appealable to the Supreme Court.

However, pursuant to the amendments brought about by Bar Matter No. 803 ¹ Effective 1 July 1997.on the Rules of Court, Rule 43 now provides that appeals from the quasi-judicial bodies like the CIAC are appealable to the CA. In this regard, petitioner insists that, in view of the amendments brought about by Rule 43 on Sec. 19 of E.O. No. 1008, the appeal to the CA now allows both questions of fact and law. In this regard, petitioner cites Sec. 3 of the said rule, to wit:

Sec. 3. Where to appeal. - An appeal under this Rule may be taken to the Court of Appeals within the period and in the manner herein provided, whether the appeal involves questions of fact, of law, or mixed questions of fact and law.

We do not agree. The changes brought about by Bar Matter No. 803, on the manner by which appeals from the CIAC should be taken, only affect the forum to which such an appeal can be made. Thus, instead of elevating the case to the Supreme Court pursuant to Sec. 19 of E.O. No. 1008, the appeal should now be taken to the Court of Appeals. However, the matters that can be raised by the parties in such appeal still remain to be those issues prescribed by Sec. 19 of E.O. No. 1008 - only questions of law.

Since many quasi-judicial agencies are covered by Rule 43, the proper appreciation of Sec. 3 of the said rule necessitates that the said provision should be read in relation to the law creating the quasi-judicial agency concerned. Thus, it the case of the CIAC, only questions of law can be elevated on appeal since this is what is prescribed by Sec. 19 of E.O. No. 1008. The only time when the appellate court will review factual findings of the arbitral tribunal is when there is a patent showing of abuse of discretion. In the case of Hi-Precision Steel Center, Inc. vs. Lim Kim Steel Builders, Inc., ² 228 SCRA 397 (1993).we explained the ratio on why factual findings of an tribunal are considered conclusive on appeal:

Executive Order No. 1008, as amended, provides, in its Section 19, as follows:

"Sec. 19. Finality of Awards. - The arbitral award shall be binding upon the parties. It shall be final and inappealable except on questions of law which shall be appealable to the Supreme Court."

Section 19 makes it crystal clear that questions of fact cannot be raised in proceedings before the Supreme Court - which is not a trier of facts - in respect of an arbitral award rendered under the aegis of the CIAC. Consideration of the animating purpose of voluntary arbitration in general, and arbitration under the aegis of the CIAC in particular, requires us to apply rigorously the above principle embodied in Section 19 that the Arbitral Tribunal's findings of fact shall be final and inappealable.

Voluntary arbitration involves the reference of a dispute to an impartial body, the members of which are chosen by the parties themselves, which parties freely consent in advance to abide by the arbitral award issued after proceedings where both parties had the opportunity to be heard. The basic objective is to provide a speedy and inexpensive method of settling disputes by allowing the parties to avoid the formalities, delay, expense and aggravation which commonly accompany ordinary litigation, especially litigation which goes through the entire hierarchy of courts. Executive Order No. 1008 created an arbitration facility to which the construction industry in the Philippines can have recourse. The Executive Order was enacted to encourage the early and expeditious settlement of disputes in the construction industry, a public policy the implementation of which is necessary and important for the realization of national development goals.

Aware of the objective of voluntary arbitration in the labor field, in the construction industry, and in any other area for that matter, the Court will not assist one or the other or even both parties in any effort to subvert or defeat that objective for their private purposes. The Court will not review the factual findings of an arbitral tribunal upon the artful allegation that such body had "misapprehended the facts" and will not pass upon issues which are, at bottom, issues of fact, no matter how cleverly disguised they might be as "legal questions." The parties here had recourse to arbitration and chose the arbitrators themselves; they must have had confidence in such arbitrators. The Court will not, therefore, permit the parties to relitigate before it the issues of facts previously presented and argued before the Arbitral Tribunal, save only where a very clear showing is made that, in reaching its factual conclusions, the Arbitral Tribunal committed an error so egregious and hurtful to one party as to constitute a grave abuse of discretion resulting in lack or loss of jurisdiction. Prototypical examples would be factual conclusions of the Tribunal which resulted in deprivation of one or the party of a fair opportunity to present its position before the Arbitral Tribunal, and an award obtained through fraud or the corruption of arbitrators. Any other, more relaxed, rule would result in setting at naught the basic objective of a voluntary arbitration and would reduce arbitration to a largely inutile institution. ³ Id., at 404-407.

In the present petition, our review of the records reveals that no grave abuse of discretion was committed by the CIAC in its findings of fact and in rendering an award in favor of private respondents. As such, no reversible error can be ascribed to the Court of Appeals in dismissing petitioner's appeal since the issues raised therein were purely on questions of fact.

WHEREFORE, in view of the foregoing, the petition is hereby DENIED.

Very truly yours,

(Sgd.) VIRGINIA ANCHETA-SORIANO

Clerk of Court

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