Case Digest (G.R. No. 237422) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Korea Technologies Co., Ltd. v. Lerma (G.R. No. 143581, January 7, 2008), petitioner Korea Technologies Co., Ltd. (KOGIES), a Korean corporation engaged in supplying and installing LPG cylinder manufacturing plants, entered into a March 5, 1997 contract with Philippine respondent Pacific General Steel Manufacturing Corporation (PGSMC) to set up such a plant in Carmona, Cavite for USD 1,530,000, including USD 1,224,000 for machinery and facilities and USD 306,000 for installation and initial operation. An April 7, 1997 amendment revised payment terms. PGSMC leased the plant site from Worth Properties, Inc. on October 14, 1997. Although KOGIES shipped, delivered, and installed all equipment, PGSMC, citing financial difficulty in procuring raw materials, agreed by certificate dated January 22, 1998 that KOGIES had fully complied. PGSMC then issued two post-dated checks totaling PhP 9,000,000, which were dishonored for “payment stopped.” On May 8, 1998, KOGIES sent a demand lette Case Digest (G.R. No. 237422) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Contractual Arrangements
- Petitioner Korea Technologies Co., Ltd. (KOGIES) is a Korean corporation engaged in supplying and installing LPG cylinder manufacturing plants; private respondent Pacific General Steel Manufacturing Corp. (PGSMC) is a Philippine corporation.
- On March 5, 1997, KOGIES and PGSMC executed a contract in the Philippines for the supply, installation, and commissioning of an LPG cylinder plant in Carmona, Cavite.
- Contract Amendment and Financial Terms
- On April 7, 1997 in Korea, an amendment modified payment terms. The total contract price was USD 1,530,000 (USD 1,224,000 for machinery/facilities; USD 306,000 upon plant commissioning).
- PGSMC leased the plant site from Worth Properties, Inc. on October 14, 1997 at PhP 322,560/month (with 10% annual increments) beginning January 1, 1998.
- Delivery, Installation, and Payment Difficulties
- KOGIES shipped, delivered, and installed the equipment; PGSMC paid USD 1,224,000. A January 22, 1998 certificate deemed KOGIES’ obligations under the March contract fulfilled.
- PGSMC issued two postdated BPI checks (PhP 4,500,000 each) for the USD 306,000 balance; both were dishonored for “payment stopped.” KOGIES sent a demand letter threatening estafa charges.
- Contractual Breakdown and Parallel Proceedings
- PGSMC alleged defective delivery (wrong brand hydraulic press, missing parts), canceled the contract on June 1, 1998, and filed an estafa complaint against KOGIES’ president.
- KOGIES insisted on arbitration per Article 15 and, on July 1, 1998, applied to the Korean Commercial Arbitration Board (KCAB). On July 3, 1998, it filed for specific performance and TRO in RTC, Muntinlupa (extended to July 22, 1998).
- RTC Proceedings and CA Petition
- RTC denied KOGIES’ injunction (July 23, 1998), held Article 15 arbitration clause “invalid,” and granted PGSMC’s inspection motion (September 21, 1998).
- KOGIES filed a certiorari petition in the Court of Appeals (CA-G.R. SP No. 49249) on October 12, 1998, challenging interlocutory orders and seeking enforcement of arbitration agreement.
Issues:
- Must PGSMC pay docket fees and submit a certificate against forum shopping for compulsory counterclaims in its Answer?
- Can interlocutory RTC orders (denying injunction, granting inspection) be challenged by certiorari, and was KOGIES’ CA petition premature?
- Did the RTC and CA gravely abuse their discretion in refusing to enforce the Article 15 arbitration clause and adjudicating facts reserved for arbitration?
- Is the foreign arbitration clause (Seoul, KCAB rules, “final and binding”) contrary to public policy or ousting Philippine courts of jurisdiction?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)