Fruehauf vs. TEAM

G.R. No. 204197 November 23, 2016 CONFIRMED, the arbitral award.
TEAM filed a Notice of

Appeal.
FRUEHAUF ELECTRONICS PHILIPPINES
CORPORATION, Petitioner, The CA reversed and set aside the arbitral award
vs. and dismissed the arbitral complaint for lack of merit.
TECHNOLOGY ELECTRONICS ASSEMBLY AND
MANAGEMENT PACIFIC CORPORATION, Respondent. ISSUE:
FACTS: Whether or not an arbitral award is appealable or be

subject for a petition for certiorari.
In 1978, Fruehauf Electronics Philippines
Corp. (Fruehauf) leased several parcels of land in Pasig RULING:
City to Signetics Filipinas Corporation (Signetics) for a
period of 25 years (until May 28, 2003). Signetics NO. The right to an appeal is neither a natural right nor an
constructed a semiconductor assembly factory on the indispensable component of due process. It is a mere
land on its own account. statutory privilege that cannot be invoked in the absence
of an enabling statute.
In 1983, Signetics ceased its operations and in 1986, Team
Holdings Limited (THL) bought Signetics. THL later Neither the Arbitration Law nor the ADR Law allows a
changed its name to Technology Electronics Assembly losing party to appeal from the arbitral award. The
and Management Pacific Corp. (TEAM) statutory absence of an appeal mechanism reflects the
State's policy of upholding the autonomy of arbitration
In March 1987, Fruehauf filed an unlawful detainer case proceedings and their corresponding arbitral awards.
against TEAM. In an effort to amicably settle the dispute,
both parties executed a Memorandum of (Rule 19.7. No appeal or certiorari on the merits of an
Agreement (MOA) where TEAM undertook to pay arbitral award - An agreement to refer a dispute to
Fruehauf 14.7 million pesos as unpaid rent (for the period arbitration shall mean that the arbitral award shall be
of December 1986 to June 1988). final and binding. Consequently, a party to an arbitration
is precluded from filing an appeal or a petition
They also entered a 15-year lease contract4 (expiring on for certiorari questioning the merits of an arbitral award. )
June 9, 2003) that was renewable for another 25 years
upon mutual agreement. The contract included an More than a decade earlier in Asset Privatization Trust v.
arbitration agreement. Court of Appeals, the Court likewise defended the
autonomy of arbitral awards through our policy of non-
TEAM subleased the property to Capitol Publishing intervention on their substantive merits:
House (Capitol) on December 2, 1996 after notifying
Fruehauf. As a rule, the award of an arbitrator cannot be set aside
for mere errors of judgment either as to the law or as to
On May 2003, TEAM informed Fruehauf that it would not the facts. Courts are without power to amend or overrule
be renewing the lease. On May 31, 2003, the sublease merely because of disagreement with matters of law or
between TEAM and Capitol expired. However, Capitol facts determined by the arbitrators. They will not review
only vacated the premises on March 5, 2005. In the the findings of law and fact contained in an award,
meantime, the master lease between TEAM and Fruehauf and will not undertake to substitute their judgment for
expired on June 9, 2003. that of the arbitrators, since any other rule would make
an award the commencement, not the end, of litigation.
Fruehauf instituted SPProc. No. 11449 before the Regional Errors of law and fact, or an erroneous decision of matters
Trial Court (RTC) for "Submission of an Existing Controversy submitted to the judgment of the arbitrators,
for Arbitration”. The RTC granted the petition and are insufficient to invalidate an award fairly and honestly
directed the parties to comply with the arbitration clause made. Judicial review of an arbitration is, thus, more
of the contract. limited than judicial review of a trial.
On December 3, 2008, the arbitral tribunal awarded Nonetheless, an arbitral award is not absolute. Rule 19.10
Fruehauf: (1) 8.2 million pesos as (the balance of) unpaid of the Special ADR Rules - by referring to Section 24 of the
rent from June 9, 2003 until March 5, 2005; and (2) 46.8 Arbitration Law and Article 34 of the 1985 United Nations
million pesos as damages. Commission on International Trade
TEAM moved for reconsideration which the tribunal Law (UNCITRAL) Model Law - recognizes the very limited
denied. Thus, TEAM petitioned the RTC to partially vacate exceptions to the autonomy of arbitral awards.
or modify the arbitral award. It argued that the tribunal
failed to properly appreciate the facts and the terms of (Rule 19.10. Rule on judicial review on arbitration in the
the lease contract. Philippines. - As a general rule, the court can only vacate
or set aside the decision of an arbitral tribunal upon a
On April 29, 2009, the RTC found insufficient legal clear showing' that the award suffers from any of the
grounds under Sections 24 and 25 of the Arbitration Law infirmities or grounds for vacating an arbitral
to modify or vacate the award. It denied the petition and award under Section 24 of Republic Act No. 876 or
under Rule 34 of the Model Law in a domestic
arbitration, or for setting aside an award in an
international arbitration under Article 34 of the Model
Law, or for such other grounds provided under these
Special Rules.)
If the Regional Trial Court is asked to set aside an arbitral

award in a domestic or international arbitration on any
ground other than those provided in the Special ADR
Rules, the court shall entertain such ground for the setting
aside or non-recognition of the arbitral award only if the
same amounts to a violation of public policy.
The court shall not set aside or vacate the award of the
arbitral tribunal merely on the ground that the arbitral
tribunal committed errors of fact, or of law, or of fact and
law, as the court cannot substitute its judgment for that of
the arbitral tribunal.

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G.R. No. 204197 November 23, 2016 CONFIRMED, the arbitral award.

TEAM filed a Notice of

FACTS: Whether or not an arbitral award is appealable or be

If the Regional Trial Court is asked to set aside an arbitral

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