Adamson vs Court of Appeals

G.R. No. 106879 May 27, 1994

Topic: Vacation of an Award and partiality of an Arbitrator

Doctrine:
Disadvantage decision by the Arbitration Committee does not prove partiality. For
partiality to invoke, proof other than inferences are needed to establish evident partiality.

Facts:

Adamson Management Corporation and Lucas Adamson petitioners and private

respondent APAC Holdings Limited entered into a contract whereby the former sold
outstanding common shares of stock to APAC plus the Net Asset Value (NAV). Unable to
agree with the reasonable NAV, parties submitted the case for arbitration under RA No. 876
(Arbitration Law). Arbitration committee rendered decision finding the NAV and disregarded
petitioners’ argument that there was a fixed NAV to which should be added to the
intangible assets of Adamson. However, the Arbitration committee stated that the NAV
cited by petitioner was merely an estimate of the company’s NAV, which was still subject to
financial development until the cut-off date. Aside from deciding the amount of NAV, the
committee also held that any ambiguity in the contract should be necessarily be interpreted
against herein private respondent. APAC filed a petition for conformation of arbitration
awards before the RTC of Makati. Petitioners opposed and prayed for the nullification,
modification and correction of the arbitration awards, alleging that the arbitrators
committed evident partiality and grave abuse of discretion. RTC rendered decision vacating
the award. On appeal, the Court of Appeals ruled reversing the decision of the RTC. Hence,
petition for revie was filed before the Supreme Court.

Issue:
1. Whether or not the court can vacate the arbitration awards rendered by
Arbitration Committee. YES
2. Whether or not there was an evident partiality on the part of arbitration
committee.

Ruling:

1. Section 24 of the Arbitration Law set forth the grounds wherein the court can vacate
the arbitration awards rendered by the arbitration committee upon the petition of any party
to the controversy when such party proves affirmatively that in the arbitration proceedings:
(a) The award was procured by corruption, fraud or other undue means; or
(b) (b) That there was evident partiality or corruption in the arbitrators or any of them;
or
(c) (c) That the arbitrators were guilty of misconduct in refusing to postpone the hearing
upon sufficient cause shown, or in refusing to hear evidence pertinent and material
to the controversy; that one or more of the arbitrators was disqualified to act as
such under section nine hereof, and willfully refrained from disclosing such
disqualifications or any other misbehavior by which the rights of any party have been
materially prejudiced; or(d) That the arbitrators exceeded their powers, or so
 imperfectly executed them, that a mutual, final and definite award upon the subject
matter submitted to them was not made.
2. Disadvantage decision by the Arbitration Committee does not prove partiality. For
partiality to invoke, proof other than inferences are needed to establish evident partiality.
Petitioners herein failed to prove their allegation of partiality on the part of the
arbitrators.