National Steel Corporation v. RTC of Lanao Del Norte (G.R. No. 127004)


Respondent Edward Willkom Enterprises Inc. (EWEI) and Ramiro Construction executed a contract with petitioner National Steel Corporation (NSC) whereby the former jointly undertook the Contract for Site Development for the latter’s Integrated Iron and Steel Mills Complex. Sometime in 1983, the services of Ramiro Construction was terminated and EWEI took over the contractual obligation. Due to this and to other causes deemed sufficient by EWEI, extensions of time for the termination of the project were granted by NSC. Differences later arose, EWEI filed a case before the RTC praying essentially for payments with interest from the time of delay; the price adjustment as provided by PD 1594; and exemplary damages and attorney’s fees. NSC filed an answer with counterclaim to plaintiffs complaints. The court upon joint motion of both parties had issued an order dismissing the said complaint and counterclaim in view of the desire of both parties to implement Sec. 19 of the contract, providing for a resolution of any conflict by arbitration. In accordance with the aforesaid order and pursuant to Sec. 19 of the Contract, herein parties constituted an Arbitration Board after which of a series of hearings, rendered the decision directing NSC to pay EWEI. The RTC affirmed and confirmed the award of the arbitrators. NSC’s Motion for Reconsideration was denied, hence has come to this court via the present petition.


Whether or not the lower court acted with grave abuse of discretion in not vacating the arbitrator’s award.


Thus, in a Petition to Vacate Arbitrator’s Decision before the trial court, regularity in the performance of official functions is presumed and the complaining party has the burden of proving the existence of any of the grounds for vacating the award, as provided for by Sections 24 of the Arbitration Law, to wit: (a) The award was procured by corruption, fraud or other undue means; (b) That there was evident partiality or corruption in the arbitrators of any of them; or  (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 wilfully refrained from disclosing such disqualification or of 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. . . .

The grounds relied upon by the petitioner were the following (a) That there was evident partiality in the assailed decision of the Arbitrators in favor of the respondent; and (b) That there was mistaken appreciation of the facts and application of the law by the Arbitrators.

Petitioner’s allegation that there was evident partiality is untenable. It is anemic of evidentiary support. In the case of Adamson vs. Court of Appeals, in upholding the decision of the Board of Arbitrators, this Court ruled that the fact that a party was disadvantaged by the decision of the Arbitration Committee does not prove evident partiality. Proofs other than mere inference are needed to establish evident partiality. Here, petitioner merely averred evident partiality without any proof to back it up. Petitioner was never deprived of the right to present evidence nor was there any showing that the Board showed signs of any bias in favor of EWEI.

Parentethically, and in the light of the record above-mentioned, this Court hereby holds that the Board of Arbitrators did not commit any “evident partiality” imputed by petitioner NSC. Above all, this Court must sustain the said decision for it is a well-settled rule that the actual findings of an administrative body should be affirmed if there is substantial evidence to support them and the conclusions stated in the decision are not clearly against the law and jurisprudence, similar to the instant case, Henceforth, every reasonable intendment will be indulged to give effect such proceedings and in favor of the regulatory and integrity of the arbitrators act. Indeed, the allegation of evident partiality is not well-taken because the petitioner failed to substantiate the same.

WHEREFORE, the awards made by the Board of Arbitrators which the trial court adopted in its decision are modified.


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