NATIONAL STEEL CORPORATION V RTC of LANAO DEL NORTE

NATIONAL STEEL CORPORATION,
petitioner, vs. THE REGIONAL TRIAL COURT

OF LANAO DEL NORTE, BRANCH 2, ILIGAN CITY and E. WILLKOM
ENTERPRISES, INC.,respondents.
Facts: 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.
Issue: Whether or not the lower court acted with grave abuse of discretion in not vacating the
arbitrator’s award.
Ruling: A stipulation to refer all future disputes or to submit an ongoing dispute to an
arbitrator is valid. Republic Act 876, otherwise known as the Arbitration Law, was enacted
by Congress since there was a growing need for a law regulating arbitration in general.
The parties in the present case, upon entering into a Contract for Site Development,
mutually agreed that any dispute arising from the said contract shall be submitted for
arbitration. Explicit is Paragraph 19 of subject contract, which reads:
"Paragraph 19. ARBITRATION. All disputes, questions or differences which may at
any time arise between the parties hereto in connection with or relating to this Agreement or
the subject matter hereof, including questions of interpretation or construction, shall be
referred to an Arbitration Board composed of three (3) arbitrators, one to be appointed by
each party, and the third, to be appointed by the two (2) arbitrators. The appointment of
arbitrators and procedure for arbitration shall be governed by the provisions of
the Arbitration Law (Republic Act No. 876). The Board shall apply Philippine Law in
adjudicating the dispute. The decision of a majority of the members of the Arbitration Board
shall be valid, binding, final and conclusive upon the parties, and from which there will be no
appeal, subject to the provisions on vacating, modifying, or correcting an award under the
said Republic Act No. 876.
Thereunder, if a dispute should arise from the contract, the Arbitration Board shall
assume jurisdiction and conduct hearings. After the Board comes up with a decision, the
parties may immediately implement the same by treating it as an amicable settlement.
However, if one of the parties refuses to comply or is dissatisfied with the decision, he may
file a Petition to Vacate the Arbitrator's decision before the trial court. On the other hand, the
winning party may ask the trial court's confirmation to have such decision enforced.
It should be stressed that voluntary arbitrators, by the nature of their functions, act in
a quasi-judicial capacity. As a rule, findings of facts by quasi-judicial bodies, which have
acquired expertise because their jurisdiction is confined to specific matters, are accorded not
only respect but even finality if they are supported by substantial evidence, even if not
overwhelming or preponderant. As the Petitioner has availed of Rule 65, the Court will not
review the facts found nor even of the law as interpreted or applied by the arbitrator unless
the supposed errors of facts or of law are so patent and gross and prejudicial as to amount to
a grave abuse of discretion or an excess de pouvoir on the part of the arbitrators.
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
Section 24 of the Arbitration Law, to wit:
"Sec. 24. GROUNDS FOR VACATING THE AWARD. — In any one
of the following cases, the court must make an order vacating the award 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;
(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. These were the very same grounds alleged by NSC before the trial court in their
Petition to Vacate the Arbitration Award and which petitioner is reiterating in this petition
under scrutiny.

NATIONAL STEEL CORPORATION V RTC of LANAO DEL NORTE

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NATIONAL STEEL CORPORATION V RTC of LANAO DEL NORTE

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NATIONAL STEEL CORPORATION,

petitioner, vs. THE REGIONAL TRIAL COURT

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