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Cargill Philippines, Inc., vs. San Fernando Regala Trading, Inc
Cargill Philippines, Inc., vs. San Fernando Regala Trading, Inc
FACTS: Respondent San Fernando Regala Trading filed with the RTC of
Makati City a Complaint for Rescission of Contract with Damages against
petitioner Cargill. It alleged that it agreed that it would purchase from Cargill
12,000 metric tons of Thailand origin cane blackstrap molasses and that the
payment would be by an Irrevocable Letter of Credit payable at sight. The parties
agreed that the delivery would be made in April/May. Cargill failed to comply with
its obligations despite demands from respondent. The respondent then filed for
rescission. The petitioner filed a Motion to Dismiss/Suspend proceeding, arguing
that they must first resort to arbitration as stated in their agreement before going
to court. However, the RTC ruled in favor of the respondent. The CA affirmed the
RTC decision, adding that the case cannot be brought under the Arbitration Law
for the purpose of suspending the proceedings before the RTC, since in its
Motion to Dismiss/Suspend proceedings, petitioner alleged, as one of the
grounds thereof, that the subject contract between the parties did not exist or it
was invalid; that the said contract bearing the arbitration clause was never
consummated by the parties, thus, it was proper that such issue be first resolved
by the court through an appropriate trial; that the issue involved a question of fact
that the RTC should first resolve.
ISSUE: Whether this case cannot be brought under the arbitration law for the
purpose of suspending the proceedings in the RTC.