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PHILIPPINE SUPREME COURT DECISIONS

FIRST DIVISION

[G.R. No. 111159. June 10, 2003.]

NORDIC ASIA LIMITED (now known as DnC Limited) and BANKERS TRUST COMPANY, Petitioners, v. THE HONORABLE COURT OF APPEALS, NAM UNG MARINE CO., LTD., KIM JEONG SEONG, P. U. ULSTRUP, BAK JEONG RANG, SIN SUK NO, HWANG IN CHAN, O JEONG SUK, LEE MYUNG UNG, CHAE DOO EUP, SEOK HAEONG JO, KIM YONG JIN, KIM BU YUL, JEONG DONG SONG, LEE ON CHUN, GYEONG GI GIM, MUN KU HAN, SEUNG HO AN, BYANG YEOL YANG, SEOG MAN HAN, KIM JUNG GON, LEE DONG HWA, LEE MOON HYEONG, SEONG MUG JANG, HAN IL IM, SANG MYEONG GIM, WOO JEONG SUL, GIL HUN GIM, CHAE DONG CHONG, Respondents.

D E C I S I O N


AZCUNA, J.:


Before this Court is a petition for review on certiorari, under Rule 45 of the Rules of Court, assailing the decision 1 of the Court of Appeals in CA G.R. CV No. 21343, dated October 27, 1994.chanrob1es virtua1 1aw 1ibrary

The facts are not disputed.

On May 26, 1981, a loan agreement was entered into between petitioners Nordic Asia Limited and Bankers Trust Company, as lenders, and Sextant Maritime, S.A., as borrower, involving the sum of US$5,300,000. The amount was used by Sextant Maritime, S.A. to purchase the vessel M/V "Fylyppa." As a security for the loan, Sextant Maritime, S.A., executed in favor of petitioners a First Preferred Mortgage over the vessel M/V "Fylyppa." 2

When Sextant Maritime, S.A. defaulted on the loan, petitioners instituted on January 29, 1986 extrajudicial foreclosure proceedings under section 14 of Presidential Decree 1521, otherwise known as the "Ship Mortgage Decree of 1978." As part of the said proceedings, petitioners filed with the Regional Trial Court of Pasay City a petition for the issuance of an arrest order against the vessel M/V "Fylyppa." 3

On the same day, January 29, 1986, respondents Nam Ung Marine Co., Ltd. and the twenty-seven (27) crew members of the vessel M/V "Fylyppa" also filed a complaint for a sum of money before the Regional Trial Court of Manila against the vessel M/V "Fylyppa." 4 Respondents filed the suit to claim their preferred maritime liens under the Code of Commerce and P.D. 1521, consisting of unpaid wages, overtime pay, allowances and other benefits due to them for services rendered on board the vessel and for the manning and provisioning thereof. Other impleaded defendants were Sextant Maritime, S.A. (the registered owner of the vessel), P.V. Christensen Lines (the time-charterer of the vessel), Theil Bolvinkel Shipping, A.S. (the ship manager of the vessel) and Jibfair Shipping Agency Corporation (the alleged local ship agent of the vessel). 5

On January 30, 1986, the RTC of Pasay City issued an order for the arrest of the vessel. The arrest order was implemented the following day, on January 31, 1986. 6 Likewise, the RTC of Manila issued on January 30, 1986 an order for the arrest and/or attachment of the vessel. Per sheriff’s partial return dated February 3, 1986, 7 the vessel M/V "Fylyppa" was also arrested on January 31, 1986.

On February 10, 1986, petitioners filed with the RTC of Manila an urgent motion for leave to intervene in the collection case as plaintiffs-intervenors against respondents. Petitioners alleged that they hold and possess a Panamanian First Preferred Ship Mortgage over the vessel M/V "Fylyppa" and that their "intervention is only for the purpose of opposing the herein plaintiffs" unfounded and/or grossly exaggerated claim." 8 The motion for leave was granted and the complaint-in-intervention admitted. 9

On February 14, 1986, Petitioners, as plaintiffs-intervenors, filed a manifestation/motion with the RTC of Manila praying for the discharge of the attachment of the vessel M/V "Fylyppa" and offering a counterbond in the amount of US$327,269.73. The RTC of Manila initially granted the manifestation/motion based on the counterbond offered. However, upon motion for reconsideration filed by respondents, the amount of the bond was increased to US$567,297.84. Petitioners posted the required bond and the attachment over the vessel was lifted. 10

A motion to dismiss was seasonably filed by defendant Jibfair Shipping Agency Corporation in the collection case. All other impleaded defendants failed to file responsive pleadings to the complaint within the time allowed under the Rules of Court. As a result, Respondents, on February 19, 1986, moved to declare these defendants in default and to be allowed to present evidence immediately. The RTC of Manila, in an order dated February 21, 1986, declared in default M/V "Fylyppa," Sextant Maritime, S.A., P.V. Christensen Lines and Theil Bolvinkel Shipping, A.S., and allowed respondents to present their evidence.

Respondents were able to present their evidence on February 27, 28 and March 3 and 4, 1986. Despite due notice, petitioners did not participate in the hearings to receive evidence. Instead, petitioners filed a motion for reconsideration and/or to expunge ex-parte evidence on March 3, 1986. At the March 4, 1986 hearing, petitioners’ counsel appeared and manifested that he purposely did not appear at the previous hearings because he did not want to waive petitioners’ right to question the proceedings, which he considered to be illegal. Said counsel further manifested that petitioners’ motion for reconsideration and/or to expunge ex-parte evidence remains unresolved. 11

On October 30, 1987, the RTC of Manila rendered a decision, the dispositive portion of which reads: 12

WHEREFORE, premises considered, judgment is hereby rendered ordering defendants M/V Fylyppa, Sextant Maritime, S.A., P.V. Christensen Lines, Theil Bolvinkel, A.S., to pay plaintiffs jointly and severally, the following amounts:chanrob1es virtual 1aw library

1) Wages, allowances, medical expenses and overtime charges of the 25 Korean crewmen — US$310,369.37;

2) To pay Shipmaster Ulstrup US$12,400.00 and Ship Superintendent Kim Jeong Seong US$4,500.00;

3) To plaintiff Nam Ung Marine Ltd., the amount of US$69,028.47 representing agent’s fees and other expenses incurred for manning the defendant M/V Fylyppa during its last voyage;

4) The amount of US$12,500.00 representing repatriation expenses for the 25 Korean crewmen and US$2,000.00 each for Shipmaster Ulstrup and Ship Superintendent Kim Jeong Seong;

5) Moral damages for US$1,000.00 each in favor of the 25 Korean crewmen and US$2,000.00 each for the Shipmaster Ulstrup and Ship Superintendent Kim Jeong Seong;

6) Attorney’s fees and expenses of litigation in the amount of US$60,000.00;chanrob1es virtua1 1aw 1ibrary

7) Interest at the rate of 12% per annum on all attorney’s fees in favor of plaintiffs computed from October 19, 1985 in respect to the claims of plaintiffs crewmembers, and with respect to the claim of Shipmaster Ulstrup computed from December 25, 1985 and on the claim of Ship Superintendent Kim Jeong Seong computed from October 19, 1985.

The awards granted herein in favor of plaintiffs to be paid in US dollars or its Philippine currency equivalent at the time of payment.

Further ordering the counterbond posted by the intervenors DnC Limited and Bankers Trust Company and issued by Prudential Guarantee and Assurance, Inc. in the amount of P10,211,361.02 which is the equivalent of plaintiffs’ maritime liens amounting to US$567,297.84, the said counterbond having been posted by intervenors in place of the res which is the defendant vessel M/V Fylyppa, as liable to answer for all the awards in favor of plaintiffs.

Granting, likewise, as it is hereby granted the Motion to Dismiss Complaint filed by JIBFAIR only; and denying as it is hereby denied, the Motion of Sextant Maritime to Lift Order of Default and the Motion of intervenors to lift writ of attachment, for lack of merit.

SO ORDERED.

Petitioners filed a notice of appeal from the aforementioned decision of the RTC of Manila on November 10, 1987. The appeal was docketed in the Court of Appeals as CA-G.R. CV No. 21343. On the same day, respondents filed a motion for execution pending appeal. In an order dated January 29, 1988, the RTC of Manila granted the motion for execution pending appeal.

To forestall the execution of the decision, petitioners instituted another action with the Court of Appeals assailing the January 29, 1988 order. This second case was docketed as CA-G.R. SP No. 13874. On October 11, 1988, the Court of Appeals promulgated its decision in CA-G.R. SP No. 13874, affirming in all respects the RTC of Manila’s January 29, 1988 order except the portion allowing execution pending appeal on the awards of moral damages, attorney’s fees, litigation expenses and interest. Petitioners and respondents separately filed motions for partial reconsideration. Both motions were denied and the decision in CA-G.R. SP No. 13874 became final and executory.

On January 29, 1993, the Court of Appeals rendered its decision in CA-G.R. CV No. 21343 dismissing the appeal and affirming in all respects the October 30, 1987 decision of the RTC of Manila. It is this decision that is the subject of the present petition.

In this petition for review, petitioners assign the following as errors:chanrob1es virtual 1aw library

I


The Court of Appeals, in affirming the decision of the RTC of Manila, totally disregarded the principles embodied in the due process clause of the Constitution, thus:chanrob1es virtual 1aw library

a. The Court of Appeals erred in finding that petitioners have waived their right to present evidence.

b. The Court of Appeals erred in ruling that a pre-trial conference is not mandatory in the present case.

c. The Court of Appeals erred in ruling that petitioners have no right to point out certain procedural lapses committed by the RTC of Manila.

II


The Court of Appeals erred in holding that the amount of US$501,797.84 awarded by the RTC of Manila is "fully supported by competent proof."cralaw virtua1aw library

III


The Court of Appeals erred in ruling that the RTC of Manila’s award of attorney’s fees cannot be challenged by petitioners.

IV


The Court of Appeals erred in awarding moral damages, there being no factual or legal basis.chanrob1es virtua1 1aw 1ibrary

A rudimentary doctrine on appealed cases is that this Court is clothed with ample authority to review matters, even if they are not assigned as errors on appeal, if it finds that their consideration is necessary at arriving at a just decision of the case. Thus, the Court may consider an unassigned error closely related to an error properly assigned or upon which the determination of the question properly assigned is dependent, notwithstanding the failure to assign it as error. 13

In examining the factual circumstances of the case at bar, the Court finds questionable the legal interest of petitioners to intervene and, eventually, file this petition. Petitioners entered their appearance as plaintiffs-in-intervention in the collection case, impleading respondents as defendants-in-intervention. In the complaint-in-intervention, petitioners alleged the following:chanrob1es virtual 1aw library

1) Plaintiffs-in-intervention hold and possess a Panamanian FIRST PREFERRED SHIP MORTGAGE dated May 29, 1981 over the vessel, M/V "Fylyppa," executed in their favor by Sextant Maritime S.A., one of the defendants in the action.

2) On January 29, 1986, plaintiffs-in-intervention filed with the sheriff of Manila a verified request or petition for extrajudicial foreclosure of the aforementioned Panamanian FIRST PREFERRED SHIP MORTGAGE over the vessel, M/V "Fylyppa."cralaw virtua1aw library

3) As a consequence of the extrajudicial foreclosure proceedings, plaintiffs-in-intervention filed a petition for an arrest order against the vessel M/V "Fylyppa."cralaw virtua1aw library

4) By virtue of their unpaid mortgage lien, plaintiffs-in-intervention have a clear, direct and substantial legal interest in the action and are so situated as to be adversely affected by any distribution or other disposition of the property involved in this action.

5) Their intervention is only for the purpose of opposing therein plaintiffs’ unfounded and/or grossly exaggerated claim and is entirely without prejudice to the result or outcome of the extrajudicial foreclosure proceedings against said vessel before the Sheriff of Manila.

A cursory reading of petitioners’ complaint-in-intervention plainly shows that petitioners’ intention in intervening in the collection case was not to enforce their maritime lien against the defendants therein, it already being enforced through extrajudicial foreclosure proceedings, but solely to oppose the claims of respondents. The reason is obvious. The higher the claims awarded to respondents in the collection case, which would be recovered from the attached vessel, the lesser the amount petitioners can obtain from their extrajudicial foreclosure proceedings given that respondents’ lien is superior to petitioners’ mortgage lien. 14

This Court is therefore left to ponder on the question of whether a claimant or creditor should be allowed to intervene in a collection case filed by a co-claimant/co-creditor possessing a superior lien or preferred credit, solely for the purpose of opposing such claims in order that the intervenor’s share may not be diminished substantially, or to prevent it from being diminished at all.

In Republic v. De los Angeles, 15 this Court ruled that every complaint, including a complaint-in-intervention, must state the ultimate facts upon which a party relies for his cause of action. A cause of action is the act or omission by which a party violates the right of another. 16

In the case at bar, the complaint-in-intervention merely alleged that petitioners possess a mortgage lien and that petitioners are so situated as to be adversely affected by respondents’ collection case. Putting things in perspective, petitioners’ mortgage lien only gives rise to a connection between them and the defendants, the vessel M/V "Fylyppa" and Sextant Maritime, S.A. Being just a mortgagee, the cause of action lies with the vessel and mortgagor, and not with a co-claimant. However, as aforestated, petitioners did not intervene to make a claim against the defendants, respondents herein, but merely to oppose their claims. Petitioners were unable to allege what specific act or omission can be attributed to respondents, which violated petitioners’ rights. Petitioners simply made a conclusionary statement that, by reason of their mortgage lien, they are so situated as to be adversely affected by the collection case. The complaint-in-intervention, therefore, failed to state a cause of action.

Furthermore, jurisprudence has laid down the requirements for intervention: [a] it must be shown that the movant has legal interest in the matter in litigation; and [b] consideration must be given as to whether the adjudication of the rights of the original parties may be delayed or prejudiced, or whether or not the intervenor’s rights may be protected in a separate proceeding. 17 Petitioners failed to meet both requirements.

With respect to the first requisite, it has been explained that the interest which entitles a person to intervene in a suit between other parties must be in the matter in litigation and of such direct and immediate character that the intervenor will either gain or lose by direct legal operation and effect of the judgment. Otherwise, if persons not parties to the action were allowed to intervene, proceedings would become unnecessarily complicated, expensive and interminable. And this would be against the policy of the law. The words "an interest in the subject" mean a direct interest in the cause of action as pleaded, one that would put the intervenor in a legal position to litigate a fact alleged in the complaint without the establishment of which plaintiff could not recover. 18

Petitioners do not own the vessel, but merely hold a mortgage lien over it. Consequently, whatever judgment is rendered in the collection case against the vessel is not of such a direct and immediate character that the intervenor would either gain or lose by direct legal operation and effect of the judgment.chanrob1es virtua1 1aw 1ibrary

Assuming judgment is rendered against the vessel, petitioners are not precluded from proceeding with their foreclosure of the vessel. While there is a chance that petitioners would not be able fully to satisfy their claims due to respondents’ preferred claims, the effect is merely indirect as it is contingent upon two eventualities: 1) petitioners’ being able successfully to foreclose on the vessel; and 2) the proceeds of the sale being insufficient to cover the loan amount. It would have been different if petitioners were the owners of the vessel, for then petitioners may be said to have a direct interest in the cause of action pleaded, as the execution of the judgment would be implemented on their property.

The second requisite for intervention states that consideration must be given as to whether the adjudication of the rights of the original parties may be delayed or prejudiced, or whether or not the intervenor’s rights may be protected in a separate proceeding. In the present case, petitioners’ rights were already protected through their extrajudicial foreclosure proceedings. There was no exigency to grant the intervention. On the other hand, respondents’ rights have been unduly delayed or prejudiced by the intervention. The decision of the RTC of Manila in favor of respondents, rendered on October 30, 1987, has not attained finality through the sole efforts of petitioners, even though the actual judgment obligors, the defendants, did not appeal from the said decision.

The purpose of intervention is not to obstruct nor unnecessarily delay the placid operation of the machinery of trial, but merely to afford one not an original party, yet having a certain right or interest in the pending case, the opportunity to appear and be joined so he could assert or protect such right or interest. 19 Before this Court is a striking example of the disastrous results incident to an improper intervention. By being admitted as intervenors, petitioners were able to elevate the collection case all the way to this Court to contest the award of damages that was not directed against them but against the main defendants who did not appeal from the judgment.

In effect, petitioners’ intervention is a device to defeat the order of preference of claims enumerated in P.D. 1521. If petitioners’ tactics were allowed, it would virtually pave the way for any creditor with a secondary lien or junior mortgage to block the claims of a preferred creditor or claimant by simply intervening to oppose such credits or claims. This would inevitably delay and prejudice the rights of the original parties, unnecessarily complicate the case, and result in expensive and interminable litigation.

It is apt to mention Nordic Asia Limited v. Agton, 20 wherein a similar procedure wrought havoc on the other claimants against the vessel.

In that case, plaintiffs JIBSEN Trading Corp. and JIBFAIR Shipping Corp. filed a collection case against P.V. Christensen Lines, THEILSHIP and SEXTANT Maritime S.A. before the RTC of Davao. In the course of the proceedings, the same vessel M/V "Fylyppa" was attached. At this point, Nordic Asia Limited and Bankers Trust Company, the same petitioners herein, intervened, citing again their rights as unpaid mortgagees. Petitioners moved to lift the order of attachment by offering to post a counterbond. The counterbond was denied by the RTC of Davao as they were not the owners of the vessel nor were they appearing on behalf of its owners. The order of denial was appealed to this Court in G.R. No. 74694.

As aforestated, petitioners in the meantime succeeded in lifting the arrest order on the same vessel issued by the RTC of Manila in the collection case herein involved through the filing of the counterbond in the amount of US$567,297.84. As a result, petitioners were able to sell the vessel through public auction on May 29, 1986 and, thereafter, the vessel sailed out of Philippine territory, despite the writ of attachment issued by the RTC of Davao. This development effectively rendered moot G.R. No. 74694, causing its dismissal. The claimants in the RTC of Davao had lost their security.chanrob1es virtua1 1aw 1ibrary

In addition to petitioners’ lack of legal interest, this Court finds further justification to dismiss the petition on the ground that petitioners have violated the rule against forum shopping.

Forum shopping consists of filing multiple suits involving the same parties for the same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable judgment. 21 Forum shopping is an unethical practice that subverts justice. For this reason, rules have been promulgated authorizing the dismissal of multiple cases. 22

As aforementioned, the RTC of Manila issued two rulings adverse to petitioners: (1) the October 30, 1987 decision granting the award of claims and damages to respondents; and (2) the January 29, 1987 order granting the execution pending appeal of the October 30, 1987 decision. Petitioners filed CA-G.R. CV No. 21343 to nullify the October 30, 1987 decision. Petitioners also filed a separate petition before the Court of Appeals to assail the January 29, 1988 order, which was docketed as CA-G.R. SP No. 13874.

However, in CA-G.R. SP No. 13874, petitioners did not limit itself to questioning the January 29, 1988 order, but also sought to overturn the October 30, 1987 decision. 23 In fact, in petitioners’ second and third prayers for relief contained in the petition, they specifically prayed:chanrob1es virtual 1aw library

x       x       x


2. To declare null and void the Decision (Annex ‘A’).

3. To set aside the ex-parte evidence of the plaintiffs (herein private respondents), which was not directed against, and have no binding effect on herein petitioners. 24

It did not escape this Court’s attention that when petitioners filed their appellants’ brief in CA-G.R. CV No. 21343, the Court of Appeals had rendered a decision in CA-G.R. SP No. 13874, partially affirming the RTC of Manila’s order of execution pending appeal. In an apparent attempt to overturn the decision in CA-G.R. SP No. 13874, petitioners included in their appellants’ brief in CA-G.R. CV No. 21343 a prayer for: "b. Setting aside the execution pending appeal of said decision."25cralaw:red

It is quite apparent that when petitioners initiated the two actions before the Court of Appeals, purportedly seeking separately to reverse the two rulings, petitioners deliberately prayed for the reversal of both rulings in each of the cases. This is a precise instance of forum-shopping wherein petitioners have filed multiple cases hoping that one or the other case will be a favorable disposition. Petitioners are therefore guilty of forum shopping.

WHEREFORE, the petition is DENIED, and the assailed decision of the Court of Appeals is hereby AFFIRMED. Costs against petitioners.chanrob1es virtua1 1aw 1ibrary

SO ORDERED.

Davide, Jr., C.J., Vitug, Ynares-Santiago and Carpio, JJ., concur.

Endnotes:



1. Rollo, p. 46.

2. Id., p. 11.

3. Rollo, pp. 95–102, Annex "D" of Petition; Civil Case No. 3699–P.

4. Civil Case No. 86–34474.

5. Rollo, pp. 47–48.

6. Id., pp. 12 and 103.

7. Id., pp. 121–122, Annex "G" of Petition.

8. Id., pp. 123–132, Annex "H" of Petition.

9. RTC of Manila Records, p. 116.

10. Rollo, p. 49.

11. TSN, March 4, 1988, pp. 7–9.

12. Rollo, pp. 163–182, Annex "R" of Petition.

13. Roman Catholic Archbishop of Manila, Et. Al. v. Court of Appeals, 198 SCRA 300 (1991).

14. Under section 17 (b) of P.D. 1521, crew’s wages have priority over a preferred mortgage lien.

15. 41 SCRA 422 (1971).

16. Section 2, Rule 2 of the Rules of Court.

17. Magsaysay-Labrador v. Court of Appeals, 180 SCRA 266 (1989).

18. Ibid; Emphasis supplied.

19. Garcia v. David, 67 Phil. 279 (1939).

20. 186 SCRA 806 (1990).

21. Leyson, Jr. v. Office of the Ombudsman, 331 SCRA 227 (2000).

22. New Sampaguita Builders Construction, Inc., Et. Al. v. The Estate of Fermina Canoso, Et Al., G.R. No. 151447, February 14, 2003.

23. Rollo, p. 58.

24. CA Decision, Rollo, p. 58.

25. CA Rollo, Appellee’s brief, p. 64.

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