Korea Technologies v Lerma

Facts: Petitioner Korea (KOGIES) is engaged in the supply and installation of LPG cylinder manufacturing plants Respondent, PGSMC is a domestic corp Both executed a contract where KOGIES would set up a manufacturing plant while PGSMC would pay about $1,224,000 for machineries and $306,000 for installation PGSMC also entered into a lease contract with Worth The machineries were delivered by KOGIES However initial operations could not be conducted as PGSMC encountered financial problems but was able to pay for the machines PGSMC issued to checks to cover for the installation but both checks bounced bec payment was stopped. KOGIES sent a demand letter threatening criminal action PGSMC complained that KOGIES delivered a different brand from what was agreed; the checks were actually funded but payments were stopped because of this reason. PGSMC informed KOGIES that it was terminating the contract because KOGIES altered the quantity and lowered the quality of the equipment; It would dismantle and transfer the machineries PGSMC then filed an estafa case against KOGIES KOGIES wrote PGSMC that it could not unilaterally rescind the contract nor dismantle the facilities on imagined violations of KOGIES. Insisted on settling dispute via arbitration as agreed upon in the arbitration clause of the contract PGSMC wrote back and still threatened to dismantle This prompted KOGIES to institute an Application for arbitration on the Korean Commercial Arbitration Board (KCAB)

KOGIES filed a complaint for specific performance in RTC Muntinlupa. It alleged that PGSMC had conflicting reasons for the stopped payment and PGSMC cannot simply rescind the contract. PGSMC averred that the arbitration clause was null and void because it ousts the local courts of jurisdiction over the controversy RTC: Ruled in favor of PGSMC; There is no reason to restrain PGSMC from dismantling the machineries PGSMC filed a Motion for Inspection to determine the alterations of quantity and lowering of quality

RTC: Ruled in favor of PGSMC granted the motion for inspection and denied KOGIES MR While waiting for the resolution of the MR pn the granting of motion of inspection, KOGIES went to CA

RTC: Ruled on the issue and decided against KOGIES; directed sheriff to conduct inspection Kogies informed CA about the RTC order and claimed that the sheriff didnt have the technical skills to ascertain the facts required The sheriff submitted his reported and found that the machineries were not fully installed

CA; AFFIRMED RTC and declared the arbitration clause to be against public policy; the machineries were already fully paid ISSUE 1 Procedural 2 WON the arbitration clause was valid SC: 1 I will skip on the procedural issues 2. Article 15 of the contract on arbitration is not null and void.

Lex loci contractus the contract was perfected here in the Phils therefore, our laws govern. The clause was mutually and voluntarily agreed upon; it is not contrary to law, or against moral In Gonzales vs Climax it was held that: submission to arbitration is a contract and that a clause providing that all matters in dispute shall be referred to arbitration is a contract. ARBITRATION CLAUSE IS NOT ONTRARY TO PUBLIC POLICY the clause provides that arbitration be done in Korea and that the arbitral award is binding RA 9285 incorporated the UNCITRAL Model Law to which we are a signatory. For domestic arbitration, we have particular agencies to arbitrate disputes arising from contractual relations. In case of a foreign arbitral body is chosen, we are committed to the Model Law Among the pertinent features of RA 9285 applying and incorporating the UNCITRAL Law are: 1. RTC must refer to arbitration in proper cases 2. Foreign arbitral awards must be confirmed by RTC they are binding but not immediately enforceable. Sec 35 of UNCITRAL Law stipulates that the arbitral award to be recognized by a competent court for enforcement; It is clear that foreign arbitral awards when confirmed by the RTC are deemed not as a judgment of a foreign court but as a foreign arbitral award, and when confirmed, are enforced as final and executor decisions of our courts of law. 3. RTC has jurisdiction to review foreign arbitral awards to set aside, reject or vacate a foreign award; Foreign awards while binding do not oust the courts of jurisdiction as they

are not absolute and without exceptions as they are still judicially reviewable 4. Grounds for judicial review different in domestic and foreign awards 5. RTC decision of assailed foreign award appealable to the CA and thereafter SC PGSMC has remedies to protect its interest Unilateral rescission improper a party may not unilaterally rescind the contract for whatever cause without first resorting to arbitration In this case, there was A COMMITMENT TO ARBITRATE There was grave abuse of discretion in allowing the inspection of things as the matter should be subject to arbitration; besides, sheriff is not technically competent RTC still has interim jurisdiction to protect the rights of the parties it is not incompatible with an arbitration agreement to prevent from irreparable loss Interim measure (UNCITRAL) is any temporary measure to maintain status quo, preserve asset, preserve evidence Pendency of arbitral proceedings does not foreclose resort to courts for provisional measures

HELD: PARTLY GRANTED Parties are ordered to submit themselves to arbitration PGSMC is allowed to dismantle

UP v Walfrido Delos Angeles

F: The land in question is a grant of endowment to UP. UP an ALUMCO entere into a logging agreement extenible by 5 yrs to cut an collect timber from the land in consideration of payment to UP of royalties, forest fees

ALUMCO incurred an unpaid account of php 219,362.94, several demands were made by UP After receiving a notice to rescind the logging agreement, ALUMCO executed an Acknowledgement of Debt and Proposed manner of payments which was approved by the President of UP, it had a stipulation that should ALUMCO fail in its obligation, UP has the right to rescind the agreement without the necessity of any judicial suit ALUMCO continued with the operations but failed to pay again UP informed ALUMCO that it had considered the agreement ineffective an file a case against ALUMCO in CFI (QC) for collection or payment Before the issuance of the preliminary injunction, UP took on another concessionaire for the logging ops by advertising an invitation to bid which was eventually awarded to Sta Clara ALUMCO filed motions to discharge the writsof attachment and prelim injunction but were denied by CT ALUMCO filed another petition to enjoin UP from conducting biding and awarding rights to another company UP received the order after it concluded its contract with STa Clara On motion of ALUMCO and Jose Rico, the CT declared UP in contempt and in the same order prohibited Sta Clara from exercising its logging rights UPs MR DENIED ALUMCO gave several excuses as to why it failed on its obligation Its former general manager, Cesar Guy did not turn over management; the logs turned out to be rotten; It also contended the UPs unilateral rescission of the contract without a ct order was invalid

SC: Ruled IFO of UP It was ALUMCO that expressly stipulated in the Acknowledgement of Debt that UP has the right to rescind the contract without the necessity of judicial suit Such stipulation in connection with Art 1191 of the civil code is valid: THERE IS NOTHING IN THE LAW THAT PROHIBIT THE PARTIES FROM ENTERING INTO AGREEMENT THAT VIOLATION OF THE TERMS OF CONTRACT WOULD CAUSE CANCELLATION THEREOF EVEN WITHOUT COURT INTERVENTION (Froilan V Pan Oriental Shipping) The party who deems the contract violated may consider it rescinded and act accordingly, without previous court action, but it proceeds at its own risk. FOR IT IS ONLY THE FINAL JUDGMENT OF THE CORRESPONDNG COURT THAT WILL CONCLUSIVELY SETTLE WHETHER THE ACTION TAKEN WAS OR WAS NOT CORRECT IN LAW. The contracting party who finds itself injured must file a suit; in case of abuse and error by rescinder, the other party is not barred from questioning the act in court Besides, ALUMCOs excuses for not being able to pay is not sufficient. HELD: Writ of Certiorari granted. LOWER COURTS ORDER SET ASIDE

Mindanao Portland v McDonough

F: Mindanao Portland and McDonough executed a contract for the construction for a dry Portland In a separate contract, Turnbull inc was engaged to design and manage construction of the plant, supervise construction etc Alterations were made during the progress of the construction so an extension for termination of project was initially agreed

ISSUE: WON UP can treat its contract with ALUMCO rescinded and may disregard the same

Respondent completed the project in 1962 except the delivery of certain spare parts Differences later arose. Petitioner claimed from respondent damages for 2M bec of the delay in the projects completion. Mc (Respondent) in turn asked for more than 450,000 for losses to cost of extra work A conference was held bet Mindanao Port (Petitioner) and Turnbull Inc and Respondent on the other but no satisfactory results were reached Petitioner sent respondent letters to arbitrate invoking the provision in their contract regarding arbitration of disputes Instead of answering said invitations, Respondent with Turnbulls approval, submitted to Petitioner for payment its final statement of work and asked for the unpaid balance Petitioner filed with CFI to compel Respondent to arbitrate ; It averred that the deletions and additional to the plans and specifications were agreed upon during the progress of the construction, that disagreement arose bec of the cost of the additional work to be done and respondents deviation from some agreed specifications Respondent filed answer and denied that there were disagreement. Its claim of 403,700 was not disputed and that claims for damages should be resolved by Turnbull pursuant to the exception in the arbitration clause of the construction contract

In the provision of the contract on Arbitration of disagreements there are questions to be determined by the engineer, respondents content that there is no showing of disagreement

SC: the fact of disagreement has been determined by the court below upon the stipulation of facts and documentary evidence The duty of the court in this case is not to resolve the merits of the claims but to determine if they should proceed to arbitration. HELD: SUBMIT TO ARBITRATION La Naval v CA, Yao Facts: Yao alleged interference and dilatory tactics vs La Naval in the implementation of the Arbitration agreement in the contract of lease Yao owns a commercial bldg. leased by La Naval La Naval exercised its option to lease the same bldg. for another 5 yrs but they disagreed on the rate Yao, through notice expressed his intent to submit to arbitration as provided for in their contract of lease Yao appointed Alamarez and La Naval, Sabile but the confirmation of the 3rd arbitrator was held in abeyance bec the same should be decided by the BOD of La naval Yao prayed for the summary hearing and for Sabile and Alamarez to proceed with arbitration LaNaval: the petition is premature bec Yao hasnt formally required arbitrators to agree on the 3rd within 10 days of notice (KASALANAN ni YAO) Yao filed an amended petition for enforcement of arbitration agreement with damages praying that La Naval pay interest on unpaid rents

Lower Ct: found that the Dispute between the parties should be submitted to arbitration pursuant to par 39 of said contract Respondent appealed to SC ISSUE: WON the parties are duty bound to submit to arbitration

Respondent CT admitted the amended petition CT announced that the 2 arbotrators chose Narciso as 3rd arbit and ordered parties to submit their position paper CA agreed with petitioner that ct may determine the issue of whether the litigants should proceed or not to arbitration, but petitioner is in estoppel from questioning the competence of the ct to hear and decide the summary proceedings having itself filed its own counterclaim Lack of jurisdiction over the person of the defendant may be waived expressly or impliedly. When the defendant voluntarily appears, he is deemed to have submitted himself to the juris of the ct. Where the defendant invoked an affirmative relief, he is deemd to have submitted himself to the juris of the ct. VOLUNTARY APPEARNCE CURES DEFECTS OF SUMMONS Doctrine of estoppel: to avoid clear injustice CA must refrain from taking up claims of the contending parties MAGELLAN V ZOSA N: F: Magellan Holdings appointed Magellan Capital as manager of its operations MH and MC entered into am elpoyment contract with Zosa (Pres and CEO) The employment agreement states the the term of Zosa is co terminous with the management agreement or sooner terminated; grounds of termination are provided MCs BoD decided not to re elect respondent Zosa as Pres on account of loss of trust and confidence violation of resolution issued by MC and of the noncompetition clause However, Zosa was elected as MCs Vice Chair for New Ventures Zosa communicated his resignation as Vice Chair on the ground that the position has less responsibility. He demanded for termination benefits

MC did not accept the resignation of Zosa for good reason but instead the agreement is terminated for a cause Zosa invoked the arbitration clause of the agreement Zosa designate his bro as rep in panel while MH designated Atty Fojas and MH Atty Quiason. Instead of submitting to arbitration, Zosa filed an action for damages vs MC and MH before RTC Cebu RTC: Denied the Motion to Dismiss of MC and MH 1. The validity of the arbitration provisioncan only be determined after trial on the merits 2. The amount of damages falls within the jurisdiction f RTC MR Denied It directed petitioners to file responsive leading MC and MH filed a petition with CA CA: Gave due course to petition and directed RTC to resolve issue on the validity of arbitration clause Denied Motion for Reconsideration RTC: in compliance with the CA decision rendered a decision declaring the arbitration clause partially void and of no effect in so far as the composition of the panel of arbitrators ISSUE: 1.WON SEC has jurisdiction? NO SC: 1. SEC doesnt have jurisdiction. It doesnt involve lection/appointment of officers When the CA affirmed he trial courts assumption of jurisdiction over the case has become law of the case Oil and Natural Gas vs CA Oil is a foreign corp (India) duly organized in the Phils Conflict between Oil and Pacific has roots in a contract entered into by

both. Pacific to supply oil well cement and Oil to pay But there was delay in the delivery. Oil had already paid. There was also a dispute as to the lcass of the material Oil informed Pacific that it was referring its claim to an arbitrator (sole arbitrator appointed to member of the commission, venue of arbitration shall be in India) The chosen arbitrator Malhotra resolved for Pacific to pay and reimburse expenditure TO enable Oil to execute the award, it filed a petition for the