Scribd Logo
Upload

Welcome to Scribd!

  • 136 views

    4.case Digest Cargill Philippines Inc. vs. Fernando Regala Trading Inc., GRN 175404, Jan. 31 2011

    Uploaded by

    Fex tro
    The Supreme Court of the Philippines ruled that an arbitration agreement in a disputed contract constitutes a separate agreement, even if the main contract is repudiated. In this case, San Fernando Regala Trading filed a complaint seeking rescission of a sales contract with Cargill Philippines due to alleged breach, but the contract contained an arbitration clause. The Court held that the arbitration agreement survives repudiation of the main contract and must be treated separately. As such, the dispute was referred to arbitration according to the agreement, rather than being resolved in court as San Fernando Regala Trading had sought.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    4.case Digest Cargill Philippines Inc. vs. Fernando Regala Trading Inc., GRN 175404, Jan. 31 2011

    Uploaded by

    Fex tro
    136 views2 pages
    The Supreme Court of the Philippines ruled that an arbitration agreement in a disputed contract constitutes a separate agreement, even if the main contract is repudiated. In this case, San Fernando Regala Trading filed a complaint seeking rescission of a sales contract with Cargill Philippines due to alleged breach, but the contract contained an arbitration clause. The Court held that the arbitration agreement survives repudiation of the main contract and must be treated separately. As such, the dispute was referred to arbitration according to the agreement, rather than being resolved in court as San Fernando Regala Trading had sought.

    Original Description:

    Original Title

    4.Case Digest Cargill Philippines Inc. vs. Fernando Regala Trading Inc., GRN 175404, Jan. 31 2011

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The Supreme Court of the Philippines ruled that an arbitration agreement in a disputed contract constitutes a separate agreement, even if the main contract is repudiated. In this case, San Fernando Regala Trading filed a complaint seeking rescission of a sales contract with Cargill Philippines due to alleged breach, but the contract contained an arbitration clause. The Court held that the arbitration agreement survives repudiation of the main contract and must be treated separately. As such, the dispute was referred to arbitration according to the agreement, rather than being resolved in court as San Fernando Regala Trading had sought.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    136 views2 pages

    4.case Digest Cargill Philippines Inc. vs. Fernando Regala Trading Inc., GRN 175404, Jan. 31 2011

    Uploaded by

    Fex tro
    The Supreme Court of the Philippines ruled that an arbitration agreement in a disputed contract constitutes a separate agreement, even if the main contract is repudiated. In this case, San Fernando Regala Trading filed a complaint seeking rescission of a sales contract with Cargill Philippines due to alleged breach, but the contract contained an arbitration clause. The Court held that the arbitration agreement survives repudiation of the main contract and must be treated separately. As such, the dispute was referred to arbitration according to the agreement, rather than being resolved in court as San Fernando Regala Trading had sought.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    Arbitration agreement in disputed

    contract constitutes separate


    agreement
    06 December 2011

    Litigation, Philippines

     Facts
     Decision

    In Cargill Phils Inc v San Fernando Regala Trading, Inc the Supreme Court ruled that while actions for rescission and
    damages are ordinarily judicial matters, the dispute at hand was to be referred to arbitration because the contract which
    the plaintiff sought to have rescinded included an arbitration agreement.(1)

    Facts

    San Fernando Regala Trading filed before the trial court a complaint for rescission of contract with damages against
    Cargill Philippines, Inc. In its complaint, San Fernando Regala Trading alleged that it was engaged in buying and selling
    molasses and that Cargill was one of its suppliers. San Fernando Regala Trading alleged that it purchased from Cargill,
    and the latter had agreed to sell, 12,000 tons of cane blackstrap molasses originating from Thailand at the price of $192
    per metric ton, and that delivery would be made in April or May 1997. After San Fernando Regala Trading delivered the
    letter of credit, it claimed that Cargill failed to comply with its obligations under the contract, which included an
    arbitration clause as follows:

    "Any dispute which the Buyer and Seller may not be able to settle by mutual agreement shall be settled by
    arbitration in the City of New York before the American Arbitration Association. The Arbitration Award shall be
    final and binding on both parties."

    Cargill moved to dismiss and/or suspend the court proceedings citing the arbitration clause. San Fernando Regala Trading
    argued that since it was seeking rescission of the contract, it was in effect repudiating the contract which included the
    arbitration clause. Further, it argued that rescission constitutes a judicial issue, which requires the exercise of judicial
    function and cannot be the subject of arbitration.

    Decision

    The Supreme Court held that the provision to submit to arbitration any dispute arising between the parties is part of the
    contract and is itself a contract. The arbitration agreement is to be treated as a separate agreement and does not
    automatically terminate when the contract of which it is a part comes to an end. To reiterate a contrary ruling would
    suggest that a party's mere repudiation of the main contract is sufficient to avoid arbitration; that is exactly the situation
    that the separability doctrine seeks to avoid.
    San Fernando Regala Trading filed a complaint for rescission of contract and damages with the trial court. In so doing, it
    alleged that a contract existed. It was that contract which provided for an arbitration clause which expressed the parties'
    intention that any dispute to arise between them, as buyer and seller, should be referred to arbitration. It is for the
    arbitrator and not the court to decide whether a contract between the parties exists or is valid. Under the circumstances,
    the argument that rescission is judicial in nature is misplaced.

    For further information on this topic please contact Eduardo de los Angeles at Romulo Mabanta Buenaventura Sayoc &
    De Los Angeles by telephone (+63 2 848 0114), fax (+63 2 815 3172) or email ([email protected]).

    Endnotes

    (1) 641 SCRA 31.

    The materials contained on this website are for general information purposes only and are subject to the
    disclaimer.

    ILO is a premium online legal update service for major companies and law rms worldwide. In-house corporate
    counsel and other users of legal services, as well as law rm partners, qualify for a free subscription.

    You might also like