ADR CASE DIGEST:

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

TUNA PROCESSING, INC., Petitioner, v. PHILIPPINE KINGFORD, INC., Respondent.
PEREZ, J.:
FACTS:
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.

GRANTED.

2. DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES

(DENR)
v
UNITED PLANNERS CONSULTANTS, INC. (UPCI)
G.R. No. 212081, 23 February 2015, FIRST DIVISION, (Perlas -Bernabe, J.)
The Special ADR Rules, as far as practicable, should be made to apply not only to the proceedings
on confirmation but also to the confirmed awards execution.
The Department of Environment and Natural Resources (DENR) , through the Land Management Bureau
(LMB), entered into an Agreement for Consultancy Services with United Planners Consul
tants, Inc. (UPCI) in connection with an LMB's project. Under the Consultancy Agreement, DENR
committed to pay a total contract price of P4,337,141.00. UPCI completed the work required, however,
DENR was able to pay only 47% of the total contract price. For failure to pay its obligation under the
Consultancy Agreement despite repeated demands, UPCI instituted a complaint against DENR before the
Regional Trial Court (RTC). Upon motion of UPCI, the case was subsequently referred to arbitration
pursuant to the arbitration clause of the Consultancy Agreement. The parties agreed to adopt the CIAC
Revised Rules Governing Construction Arbitration (CIAC Rules) to govern the arbitration proceedings.
They further agreed to submit their respective draft
decisions in lieu of memoranda of arguments on or before April 21, 2010, among others.
The Arbitral Award ruled in favor of UPCI. When DENR filed a Motion for Reconsideration before the
RTC, the Arbitral Award was confirmed by the RTC. The RTC also denied DENRs motion
to quash the writ of execution of the Arbitral Award. The Court of Appeals denied DENRs petition for
certiorari ,applying the Special Alternative Dispute Resolution (ADR) Rules.
ISSUE:
May the Special ADR Rules be applied even until the execution of the Arbitral Award, even if the Special
Rules are silent as to execution of a confirmed arbitral award?
RULING:
Yes.
While it appears that the Special ADR Rules remain silent on the
procedure for the execution of a confirmed arbitral award, it is the Courts considered view that the Rules
procedural mechanisms cover not only aspects of confirmation but necessarily extend to a confirmed
awards execution in light of the doctrine of necessary implication which states that every statutory grant
of power, right or privilege is deemed to include all incidental power, right or privilege.
As the Court sees it, execution is but a necessary incident to the Courts confirmation of an arbitral award.
To construe it otherwise would result in an absurd situation whereby the confirming court previously
applying the Special ADR Rules in its confirmation of the arbitral award would later shift to the regular
Rules of Procedure come execution. Irrefragably, a courts power to confirm a judgment award under the
Special ADR
Rules should be deemed to include the power to
order its execution for such is but a collateral and subsidiary consequence that may be fairly and logically
inferred from the statutory grant to regional trial courts of the
power to confirm domestic arbitral awards. All the more is such interpretation warranted under the
principle of ratio legis est anima which provides that a statute must be read according to its spirit or intent,
for what is within the spirit is within the statute although it is not within its letter, and that which is within
the letter but not within the spirit is not within the

statute. Accordingly, since the Special ADR Rules are intended to achieve speedy and efficient resolution of
disputes and curb a litigious culture, every interpretation thereof should be made consistent with these
objectives.

3. Asset Privatization Trust vs Court of Appeals

300 SCRA 579 Business Organization Corporation Law Corporation Generally Not Entitled To Moral
Damages Power To Enter Into Contracts

In 1968, the government undertook to support the financing of Marinduque Mining and Industrial Corporation
(MMIC). The government then issued debenture bonds in favor of MMIC which enable the latter to take out
loans from the Development Bank of the Philippines (DBP) and the Philippine National Bank (PNB). The loans
were mortgaged by MMICs assets. In 1984 however, MMICs indebtedness reached P13.7 billion and P8.7
billion to DPB and PNB respectively. MMIC had trouble paying and this exposed the government, because of
the debenture bonds, to a P22 billion obligation.
In order to mitigate MMICs loan liability, a financial restructuring plan (FRP) was drafted in the presence of
MMICs representatives as well as representatives from DBP and PNB. The two banks however never formally
approved the said FRP. Eventually, the staggering loans became overdue and PNB and DBP chose to foreclose
MMICs assets, FRP no longer feasible at that point. So the assets were foreclosed and were eventually assigned
to the Asset Privatization Trust (APT).
Later, Jesus Cabarrus, Sr., a stockholder of MMIC initiated a derivative suit against PNB and DBP with APT
being impleaded as the successor in interest of the two banks. The suit basically questioned the foreclosure as
Cabarrus asserted that the foreclosure was invalid because he insisted that the FRP was adopted by PNB and
DBP as a consequence of the presence of the banks representatives when the said FRP was drafted. Cabarrus
asserts that APT should restore the assets to MMIC and that PNB and DBP should honor the FRP. The suit was
filed in the RTC of Makati but while the case was pending, the parties agreed to submit the case for arbitration.
Hence, Makati RTC dismissed the case upon motion of the parties.
The Arbitration Committee (AC) which heard the case ruled in favor of Cabarrus. The AC granted Cabarrus
prayer and at the same time awarded him P10 million in moral damages. Not only that, the AC also awarded
P2.5 billion in moral damages in favor of MMIC to be paid by the government. APTs MFR was denied.
Cabarrus then filed before the Makati RTC a motion to confirm the arbitration award. APT opposed the same as
it alleged that the motion is improper. Makati RTC denied APTs opposition and confirmed the arbitration
award. The Court of Appeals affirmed the ruling of the RTC.
ISSUE: Whether or not the ruling of the Arbitration Committee as affirmed by the Regional Trial Court of
Makati (Branch 62) and the Court of Appeals is correct.

HELD: No.
1. The award of damages in favor of MMIC is improper. First, it was not made a party to the case. The
derivative suit filed by Cabarrus failed to implead MMIC. So how can an award for damages be awarded
to a non-party? Second, even if MMIC, which is actually a real party in interest, was impleaded, it is not
entitled to moral damages. It is not yet a well settled jurisprudence that corporations are entitled to moral

damages. While the Supreme Court in some cases did award certain corporations moral damages for
besmirched reputations, such is not applicable in this case because when the alleged wrongful
foreclosure was done, MMIC was already in bad standing hence it has no good wholesome reputation to
protect. So it could not be said that there was a reputation besmirched by the act of foreclosure.
Likewise, the award of moral damages in favor of Cabarrus is invalid. He cannot have possibly suffered
any moral damages because the alleged wrongful act was committed against MMIC. It is a basic
postulate that a corporation has a personality separate and distinct from its stockholders. The properties
foreclosed belonged to MMIC, not to its stockholders. Hence, if wrong was committed in the
foreclosure, it was done against the corporation.
2. The FRP is not valid hence the foreclosure is valid. The mere presence of DBPs and PNBs
representatives during the drafting of FRP is not constitutive of the banks formal approval of the FRP.
The representatives are personalities distinct from PNB and DBP. PNB and DBP have their own boards
and officers who may have different decisions. The representatives were not shown to have been
authorized by the respective boards of the two banks to enter into any agreement with MMIC.
3. Further, the proceeding is procedurally infirm. RTC Makati had already dismissed the civil case when
the parties opted for arbitration. Hence, it should have never took cognizance of the Cabarrus motion to
confirm the AC award. The same should have been brought through a separate action not through a
motion because RTC Makati already lost jurisdiction over the case when it dismissed it to give way for
the arbitration. The arbitration was a not a continuation of the civil case filed in Makati RTC.