Contributed by Romulo Mabanta Buenaventura Sayoc & De Los Angeles
Under the Corporation Code, no foreign corporation transacting business in the Philippines without a licence shall be permitted to maintain any action, suit or proceeding in any Philippines court (Section 133).
In a recent case, a foreign corporation entered into a memorandum of
agreement with several Philippine tuna processors, including Philippine
Kingford Inc, whereby in consideration of royalty payments, the foreign
corporation permitted the tuna processors to use patented processes to
establish a California tuna processing corporation. Philippine Kingford
violated the memorandum of agreement and the foreign corporation
submitted the dispute for arbitration before the International Centre
for Dispute Resolution in the State of California, pursuant to an
arbitration clause. At the end of the arbitration proceedings, the
foreign corporation was awarded $1,750,846.
The foreign corporation then filed a petition before the Philippine court for recognition and enforcement of the foreign arbitral award. Philippine Kingford sought to dismiss the petition on the ground that the foreign corporation lacked legal capacity to sue in the Philippines because it had no licence to do business there.
Initially, the lower court denied the motion to dismiss, but the appeal court reconsidered and dismissed the petition for recognition and enforcement.
Ruling on the foreign corporation's appeal, the Philippine Supreme Court held that while, under the Corporation Code, no foreign corporation doing business in the Philippines may maintain any action, suit or proceeding in any court of the Philippines, such general law must yield to the more specific Alternative Dispute Resolution Act 2004. Under this law, which adopts the United Nations Commission on International Trade Law and the New York Convention, the grounds to reject a foreign arbitration award are limited and lack of capacity to sue is not one of them.
Further, considering that it is state policy in the Philippines to promote arbitration, and under the Special Alternative Dispute Resolution Rules "any party to a foreign arbitration may petition the court to recognize and enforce a foreign arbitral award", the Supreme Court held that when it comes to enforcement of a foreign arbitral award, a losing party may not avail of the rule in the Corporation Law that bars foreign corporations not licensed to do business in the Philippines from maintaining a suit in Philippine courts.
The Supreme Court said that:
The foreign corporation then filed a petition before the Philippine court for recognition and enforcement of the foreign arbitral award. Philippine Kingford sought to dismiss the petition on the ground that the foreign corporation lacked legal capacity to sue in the Philippines because it had no licence to do business there.
Initially, the lower court denied the motion to dismiss, but the appeal court reconsidered and dismissed the petition for recognition and enforcement.
Ruling on the foreign corporation's appeal, the Philippine Supreme Court held that while, under the Corporation Code, no foreign corporation doing business in the Philippines may maintain any action, suit or proceeding in any court of the Philippines, such general law must yield to the more specific Alternative Dispute Resolution Act 2004. Under this law, which adopts the United Nations Commission on International Trade Law and the New York Convention, the grounds to reject a foreign arbitration award are limited and lack of capacity to sue is not one of them.
Further, considering that it is state policy in the Philippines to promote arbitration, and under the Special Alternative Dispute Resolution Rules "any party to a foreign arbitration may petition the court to recognize and enforce a foreign arbitral award", the Supreme Court held that when it comes to enforcement of a foreign arbitral award, a losing party may not avail of the rule in the Corporation Law that bars foreign corporations not licensed to do business in the Philippines from maintaining a suit in Philippine courts.
The Supreme Court said that:
"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." (Tuna Processing, Inc v Kingford Inc, 667 SCRA 287).
For further information on this topic please contact Eduardo de los Angeles at Romulo Mabanta Buenaventura Sayoc & De Los Angeles by telephone (+63 2 848 0114), fax (+63 2 815 3172) or email (eduardo.delosangeles@romulo.com).
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Fonte:http://www.internationallawoffice.com/newsletters/Detail.aspx?g=0ed28cea-ffbf-4c46-a607-961a4b48b2a0
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription. Register at www.iloinfo.com.
Fonte:http://www.internationallawoffice.com/newsletters/Detail.aspx?g=0ed28cea-ffbf-4c46-a607-961a4b48b2a0
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