Case Summary (G.R. No. 106879)
Factual Background
The dispute arises from a contract wherein Adamson Management Corporation and Lucas Adamson sold 99.97% of outstanding shares of Adamson and Adamson, Inc. to APAC Holdings Limited for P24,384,600, in addition to an agreed Net Asset Value (NAV). However, the parties could not agree on the NAV, leading them to submit their case to arbitration under the Arbitration Law. The arbitration committee ultimately determined the NAV to be P167,118 based on a pro-forma balance sheet, which provided detailed calculations contrasting the petitioner's claims of a higher NAV.
Arbitration Findings
The arbitration committee provided its determination by evaluating both parties' submissions and stated that the previously claimed NAV of P5,146,000 was merely an estimate that was subject to changes until the cut-off date. In its ruling, the committee considered various aspects, such as the company’s balance sheet, the included values of the tangible and intangible assets, and tax savings, while rejecting petitioners' claims for additional values. The committee opined clarity in the agreement and maintained that the adjustments proposed by the accounting firm SGV were valid.
Regional Trial Court Ruling
Following the arbitration award, APAC Holdings filed a petition for confirmation with the Regional Trial Court of Makati. The trial court vacated the arbitration award, primarily asserting that the arbitration committee acted with evident partiality and misinterpreted the existing contract provisions. Specifically, it ordered APAC Holdings to pay Adamson the final NAV of P47,121,468.00 based on its interpretations of contract clauses.
Court of Appeals Decision
On appeal, the Court of Appeals reversed the trial court’s decision. It noted that the trial court did not have sufficient grounds under the Arbitration Law to vacate the award, particularly the absence of substantiated evidence of partiality by the arbitrators. The appellate court highlighted that the trial court's conclusions were based on speculative claims rather than concrete evidence.
Legal Analysis of Alleged Partiality
The petitioners contended that the arbitration committee displayed evident partiality, alleging that their determination deviated significantly from the expected result outlined in their proposal. However, the Court of Appeals established that mere dissatisfaction with the arbitration outcome does not satisfy the criteria for evident partiality as defined in Section 24 of the Arbitration Law. The court emphasized that for claims of evident partiality, demonstrable evidence is necessary rather than reliance solely on inferences.
Interpretation of the Agreement
The appellate court defended the arbitration committee's interpretation of the contractual provisions, noting that the committee's findings did not create a new contract but rather clarified existing terms as established. It ratified the arbitration
...continue readingCase Syllabus (G.R. No. 106879)
Case Summary
- This case involves a petition for review on certiorari concerning a decision of the Court of Appeals, which set aside a Regional Trial Court ruling that vacated an arbitration award.
- The primary parties are Dr. Lucas G. Adamson and Adamson Management Corporation (Petitioners) against the Hon. Court of Appeals and APAC Holdings Limited (Respondents).
- The decision in question was rendered on May 27, 1994, by the Supreme Court of the Philippines under G.R. No. 106879.
Factual Background
- On June 15, 1990, a contract was executed between Adamson Management Corporation, represented by Dr. Lucas Adamson, and APAC Holdings Limited for the sale of 99.97% of outstanding common shares of Adamson and Adamson, Inc. for P24,384,600.00 plus the Net Asset Value (NAV) as of June 19, 1990.
- The parties could not agree on the NAV, leading to arbitration under Republic Act No. 876 (the Arbitration Law).
- On May 15, 1991, the Arbitration Committee determined the NAV to be P167,118.00, based on a pro-forma balance sheet prepared by SGV.
- The Committee rejected the Petitioners’ argument that a fixed NAV of P5,146,000.00 should be used, stating that it was merely an estimate subject to adjustments.
Arbitration Committee's Findings
- The Arbitration Committee's decision included:
- The NAV was computed based on total assets and liabilities, disregarding the Petitioners’ claimed values for int