C. DR. LUCAS G.

Adamson and Adamson Management Corporation(Adamson) vs Court of

Appeals and APAC HOLDINGS LIMITED(APAC, 232 SCRA 602
G.R. No. 106879 May 27, 1994
a. Facts
ADAMSON and APAC entered into a contract whereby the former sold 99.97% of its
outstanding common shares of stocks to the latter for P24,384,600.00 plus the Net Asset Value
(NAV) of Adamson as of June 19, 1990. But the parties failed to agree on a reasonable Net Asset
Value. This prompted them to submit the case for arbitration in accordance with Republic Act
No. 876.
The Arbitration Committee rendered a decision finding the Net Asset Value of the Company to
be P167,118.00 despite petitioner’s argument that there was a fixed NAV amounting to
P5,146,000.00 as of February 28, 1990. The arbitrators resorted to contract interpretation and
based the awardmon the statements prepared by the SGV which was chosen by both parties to be
the "auditors”.
APAC. filed a petition for confirmation of the arbitration award before the RTC.
b. Issue/s
WON the CA erred in affirming the arbitration award and in reversing the RTC’s decision.
c. Ruling of the RTC,
The RTC rendered a decision vacating the arbitration award and ordered APAC to pay
ADAMSON.
d. Ruling of the CA
The CA reversed the RTC’s decision and affirmed the arbitration award. It held that RTC’s
nullification of the decision of the Arbitration Committee was not based on the grounds provided
by the Arbitration Law. The CA found that the trial court had no legal basis for vacating the
award.
e. Final Ruling of the SC
NO. Section 24 of the Arbitration Law provides the Grounds for vacating award which was not
proved in this case. That they were disadvantaged by the decision of the Arbitration Committee
does not prove evident partiality as a valid ground. Neither was the award arbitrary for it was
based on the statements prepared by the SGV which was chosen by both parties to be the
"auditors."
When it was submitted to arbitration to settle the issue regarding the computation of the NAV,
petitioners agreed to be bound by the judgment of the arbitration committee, except in cases
where the grounds for vacating the award existed. Petitioners cannot now refuse to perform its
obligation after realizing that it had erred in its understanding of the Agreement.
SC dismissed Adamson’s petition and affirmed CA’s decision.