G.R. No. 111159 - Nordic Asia Limited vs. Court of Appeals

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

Upon default by Sextant Maritime, S.A., petitioners initiated extrajudicial foreclosure proceedings under Section 14 of Presidential Decree 1521 (the "Ship Mortgage Decree of 1978") on January 29, 1986.
Concurrently, petitioners filed a petition with the Regional Trial Court (RTC) of Pasay City for the issuance of an arrest order against the vessel.
On January 29, 1986, respondents—comprising Nam Ung Marine Co., Ltd. and twenty-seven crew members of the vessel—filed a separate complaint in the RTC of Manila, claiming maritime liens for unpaid wages, overtime, allowances, and other benefits due to services rendered on board.

Both RTC of Pasay City and RTC of Manila issued orders for the arrest/attachment of M/V "Fylyppa," which was effected on January 31, 1986.
On February 10, 1986, petitioners sought intervention in the collection case filed by respondents, asserting their right under the mortgage as a defense against the respondents’ claims.
Petitioners’ intervention was granted when they filed a verified counter pleading, and a motion for release of the vessel's attachment was subsequently filed, accompanied by the posting of a counterbond initially set at US$327,269.73 and later increased to US$567,297.84 after a motion for reconsideration by respondents.

The collection case saw various procedural developments, including a motion to dismiss filed by one defendant (Jibfair Shipping Agency Corporation) and default declarations against other impleaded defendants (e.g., Sextant Maritime, P.V. Christensen Lines and Theil Bolvinkel Shipping, A.S.).
The RTC of Manila rendered a decision on October 30, 1987, awarding significant monetary claims to respondents for crew wages, allowances, agent fees, repatriation expenses, moral damages, attorney’s fees, and interest.
As part of the RTC decision, the posted counterbond by petitioners was designated to answer for the awarded maritime liens, effectively linking the vessel's disposition to the satisfaction of respondents’ claims.

Following the RTC decision, petitioners filed an appeal on November 10, 1987, which was docketed as CA-G.R. CV No. 21343 before the Court of Appeals.
On the same day, respondents filed a motion for execution pending appeal, which was granted on January 29, 1988.
Petitioners brought a separate action (CA-G.R. SP No. 13874) to forestall the execution pending appeal, challenging both the RTC judgment and the execution order.
In CA-G.R. SP No. 13874, the Court of Appeals affirmed most parts of the RTC decision except certain awards (moral damages, attorney’s fees, litigation expenses, and interest).
Ultimately, on January 29, 1993, the Court of Appeals dismissed petitioners’ appeal (CA-G.R. CV No. 21343), affirming in all respects the RTC’s October 30, 1987 decision.

Petitioners raised several issues on review, alleging that the Court of Appeals:

Violated due process by mistaking their failure to appear for a waiver of the right to present evidence.
Erroneously ruled against the necessity of a pre-trial conference.
Dismissed their right to point out procedural lapses at the RTC level.

The award of US$501,797.84 being unsupported by competent evidence.
The ruling that attorney’s fees were unchallengeable.
The awarding of moral damages despite an alleged lack of factual or legal basis.

A pivotal issue also emerged regarding the propriety of petitioners’ intervention in the collection case, particularly since their claim was solely to oppose respondents’ claims rather than to assert a direct cause of action against the defendants.

Whether petitioners, by not participating in the hearings to receive evidence and later filing a motion for reconsideration, had waived their right to present evidence.
Whether the absence of a pre-trial conference was a departure from required procedural norms, thereby affecting due process.
Whether petitioners were precluded from highlighting procedural lapses committed by the RTC of Manila.

Whether the total award of US$501,797.84 to respondents was fully supported by competent evidence.
Whether the RTC’s award of attorney’s fees was beyond the scope of review or challenge by petitioners.
The appropriateness of awarding moral damages in the absence of a clear factual or legal basis.

Whether petitioners possessed a direct and substantial legal interest in intervening in the collection case given that they held only a mortgage lien and not ownership of the vessel.
Whether petitioners’ intervention, aimed solely at opposing the claims of respondents, was justified when their rights were already being secured through separate foreclosure proceedings.

Whether petitioners engaged in forum shopping by filing multiple actions (CA-G.R. CV No. 21343 and CA-G.R. SP No. 13874) in an apparent attempt to overturn adverse rulings from the RTC of Manila.
Whether such actions unduly complicated the litigation and delayed the resolution of the claims of the original parties.