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ARCHIBALD QUISTADIO

Tuna Processing, Inc. vs. Philippine Kingford, Inc.

FACTS
Kanemitsu Yamaoka (herein referred to as the licensor), co-patentee of U.S. Patent No. 5,484,619,
Philippine Letters Patent No. 31138, and Indonesian Patent No. ID0003911 (collectively referred to as
the Yamaoka Patent), and five (5) Philippine tuna processors, namely, Angel Seafood Corporation,
East Asia Fish Co., Inc., Mommy Gina Tuna Resources, Santa Cruz Seafoods, Inc., and respondent
Kingford (collectively referred to as the sponsors/licensees) entered into a Memorandum of
Agreement (MOA). The objective of the MOA was to enforce the three (3) aforementioned patents,
granting licenses under those patents, and collecting royalties. The sponsors wish to be licensed
under the aforementioned patents in order to practice the processes claimed in those patents in the
United States, the Philippines, and Indonesia, enforce those patents and collect royalties in
conjunction with licensor. The parties likewise agreed to the establishment of Tuna Processors, Inc.
(TPI), a corporation established in the State of California, in order to implement the objectives of
the MOA. Due to a series of events, the licensees, including respondent Kingford, withdrew from
petitioner TPI and correspondingly reneged on their obligations contained in the MOA. 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. However, it was dismissed on the ground that petitioner, being a foreign
corporation, lacked legal capacity to sue in the Philippines.

ISSUE
Whether or not a foreign corporation not licensed to do business in the Philippines, but which collects
royalties from entities in the Philippines, can sue to enforce a foreign arbitral award

HELD
A foreign corporation not licensed to do business in the Philippines, but which collects royalties from
entities in the Philippines, CAN SUE to enforce a foreign arbitral award. It is entitled to seek for the
recognition and enforcement of the subject foreign arbitral award in accordance with Republic Act No.
9285 (Alternative Dispute Resolution Act of 2004), the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards drafted during the United Nations Conference on International
Commercial Arbitration in 1958 (New York Convention), and the UNCITRAL Model Law on International
Commercial Arbitration (Model Law), as none of these specifically requires that the party seeking for
the enforcement should have legal capacity to sue. Pertinent provisions of the Special Rules of Court
on Alternative Dispute Resolution, which was promulgated by the Supreme Court, likewise support
this position. Rule 13.1 of the Special Rules provides that any party to a foreign arbitration may
petition the court to recognize and enforce a foreign arbitral award. The contents of such petition
are enumerated in Rule 13.5. Capacity to sue is not included. Clearly, 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 has certainly erased any conflict of law question.
ARCHIBALD QUISTADIO
Puromines, Inc. vs. Court of Appeals and Philipp Brothers Oceanic, Inc.

FACTS
Petitioner, Puromines, Inc. (Puromines) and Makati Agro Trading, Inc. entered into a contract with
private respondents Philipp Brothers Oceanic, Inc. for the sale of prilled Urea in bulk. The Sales
Contract No. S151.8.01018 provided, among others an arbitration clause which states, thus: 9.
Arbitration - Any dispute arising under this contract shall be settled by arbitration in London in
accordance with the Arbitration Act 1950 and any statutory amendment or modification thereof.
Each party is to appoint an Arbitrator, and should they be unable to agree, the decision of an Umpire
appointed by them to be final. The Arbitrators and Umpire are all to be commercial men and resident
in London. This submission may be made a rule of the High Court of Justice in England by either
party.

On or about May 22, 1988, the vessel M/V Liliana Dimitrova loaded on board at Yuzhny, USSR
a shipment of 15,500 metric tons prilled Urea in bulk complete and in good order and condition for
transport to Iloilo and Manila, to be delivered to petitioner. Three bills of lading were issued by the
ship-agent in the Philippines, Maritime Factors Inc., namely: Bill of Lading No. 1 covering 10,000
metric tons for discharge Manila; Bill of Lading No. 2 covering 4,000 metric tons for unloading in Iloilo
City; and Bill of Lading No. 3 covering 1,500 metric tons likewise for discharged in Manila.

The shipment covered by Bill of Lading No. 2 was discharged in Iloilo City complete and in good
order and condition. However, the shipments covered by Bill of Lading Nos. 1 and 3 were discharged
in Manila in bad order and condition, caked, hardened and lumpy, discolored and contaminated with
rust and dirt. Damages were valued at P683, 056. 29, including additional discharging expenses.

Consequently, petitioner filed a complaint with the trial court for breach of contract of carriage
against Maritime Factors Inc. as ship-agent in the Philippines for the owners of the said vessel, while
private respondent, Philipp Brothers Oceanic Inc., was impleaded as charterer of the said vessel and
proper party to accord petitioner complete relief. Private respondent filed a motion to dismiss on the
grounds that the complaint states no cause of action; that it was prematurely filed; and that
petitioner should comply with the arbitration clause in the sales contract.

The motion to dismiss was opposed by petitioner contending the inapplicability of the
arbitration clause inasmuch as the cause of action did not arise from a violation of the terms of the
sales contract but rather for claims of cargo damages where there is no arbitration agreement.

ISSUE
Whether or not the phrase any dispute arising under this contract in the arbitration clause of the
sales contract covers a cargo claim against the vessel (owner and/or charterers) for breach of
contract of carriage

HELD
In this case, the phrase any dispute arising under this contract in the arbitration clause of the sales
contract covers a cargo claim against the vessel (owner and/or charterers) for breach of contract of
carriage. The Supreme Court had looked into the intention of the parties that all disputes between
them should first be arbitrated before court action can be taken by the aggrieved party. In any case,
whether the liability of private respondent should be based on the same contract or that of the bill of
lading, the parties are nevertheless obligated to respect the arbitration provisions on the sales
contract and/or the bill of lading. Petitioner being a signatory and party to the sales contract cannot
escape from his obligation under the arbitration clause as stated therein. Arbitration has been held
valid and constitutional. Even before the enactment of Republic Act No. 876, this Court has
countenanced the settlement of disputes through arbitration. The rule now is that unless the
agreement is such as absolutely to close the doors of the courts against the parties, which
agreement would be void, the courts will look with favor upon such amicable arrangements and will
only interfere with great reluctance to anticipate or nullify the action of the arbitrator.