Case Digest: Tuna Processing v. Philippine Kingford

G.R. No. 185582 : February 29, 2012




Philippine Kingford, Inc. (Kingford) is a corporation duly organized and existing under the laws of the Philippines while Tuna Processing, Inc. (TPI) is a foreign corporation not licensed to do business in the Philippines. Due to circumstances not mentioned in the case, Kingford withdrew from petitioner TPI and correspondingly, reneged on their obligations. Petitioner submitted the dispute for arbitration before the International Centre for Dispute Resolution in the State of California, United States and won the case against respondent. To enforce the award, petitioner TPI filed a Petition for Confirmation, Recognition, and Enforcement of Foreign Arbitral Award before the RTC of Makati City. The RTC dismissed the petition on the ground that the petitioner lacked legal capacity to sue in the Philippines.

ISSUE: Can a foreign corporation not licensed to do business in the Philippines, but which collects royalties from entities in the Philippines, sue here to enforce a foreign arbitral award?

HELD: RTCs decision is reversed.

POLITICAL LAW: special vs. general law

The Alternative Dispute Resolution Act of 2004 shall apply in this case as the Act, as its title - An Act to Institutionalize the Use of an Alternative Dispute Resolution System in the Philippines and to Establish the Office for Alternative Dispute Resolution, and for Other Purposes - would suggest, is a law especially enacted to actively promote party autonomy in the resolution of disputes or the freedom of the party to make their own arrangements to resolve their disputes. It specifically provides exclusive grounds available to the party opposing an application for recognition and enforcement of the arbitral award. The Corporation Code is the general law providing for the formation, organization and regulation of private corporations. As between a general and special law, the latter shall prevail generalia specialibus non derogant.

The Special Rules of Court on Alternative Dispute Resolution provides that any party to a foreign arbitration may petition the court to recognize and enforce a foreign arbitral award.Indeed, it is in the best interest of justice that in the enforcement of a foreign arbitral award, the losing party can not avail of the rule that bars foreign corporations not licensed to do business in the Philippines from maintaining a suit in our courts. When a party enters into a contract containing a foreign arbitration clause and, as in this case, in fact submits itself to arbitration, it becomes bound by the contract, by the arbitration and by the result of arbitration, conceding thereby the capacity of the other party to enter into the contract, participate in the arbitration and cause the implementation of the result.