TUNA PROCESSING, INC. vs. PHILIPPINE KINGFORD, INC.

G.R. No. 185582 February 29, 2012

Legal Capacity to Sue

Facts: Kanemitsu Yamaoka ("licensor"), co-patentee of Yamaoka Patent and five (5) Philippine tuna processors and respondent Kingford ("sponsors"/"licensees") entered into a Memorandum of Agreement. The parties agree to the establishment of Tuna Processors, Inc. ("TPI"), a corporation established in the State of California, in order to implement the objectives of this Agreement.

Due to a series of events not mentioned in the petition, the licensees, including respondent 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. Petition was dismissed on the ground that the petitioner lacked legal capacity to sue in the Philippines.

Issue: Whether the court was correct in dismissing the petition on the ground of petitioner’s lack of legal capacity to sue.

Held: On the matter of capacity to sue, a foreign arbitral award should be respected not because it is favored over domestic laws and procedures, but because Republic Act No. 9285 (Alternative Dispute Resolution Act of 2004) has certainly erased any conflict of law question. RA No. 9285 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.

Inasmuch as the Alternative Dispute Resolution Act of 2004, a municipal law, applies in the instant petition, we do not see the need to discuss compliance with international obligations under the New York Convention and the Model Law. After all, both already form part of the law.

Petitioner TPI, although not licensed to do business in the Philippines, may seek recognition and enforcement of the foreign arbitral award in accordance with the provisions of the Alternative Dispute Resolution Act of 2004.

WHEREFORE, the Resolution dated 21 November 2008 of the Regional Trial Court, Branch 61, Makati City in Special Proceedings No. M-6533 is hereby REVERSED and SET ASIDE. The case is REMANDED to Branch 61 for further proceedings.