Case Summary (G.R. No. 213080)
Background and Trial Court Decision
Between 2008 and 2009, incidents occurred where La Filipina’s vessels touched bottom, allegedly due to Harbour Centre’s failure to dredge as obliged under the MOA. La Filipina filed a complaint in the Regional Trial Court (RTC) seeking specific performance, compliance with maritime law and contract terms, and damages. The RTC, in its October 11, 2011 Decision, ruled largely in favor of La Filipina, finding Harbour Centre in breach of its dredging and priority berthing obligations, and improperly increasing port and cargo handling charges.
The RTC ordered Harbour Centre to dredge the berthing area and navigational channel to -11.5 meters MLLW within 15 days, abide by the MOA formula for charges, and honor priority berthing. It awarded liquidated damages of US$2,000 per day from December 6, 2004, until compliance, actual damages amounting to approximately PhP7.3 million, exemplary damages of PhP10 million, attorney’s fees of PhP10 million, and ordered Harbour Centre to credit and reimburse La Filipina for excess port and cargo handling charges paid under protest.
Post-Trial Motions and Execution Pending Appeal
Following the RTC Decision, La Filipina filed a Motion for Partial Reconsideration and a Motion for Partial Execution Pending Appeal, seeking immediate enforcement of the dredging, payment of damages, and crediting of overcharged amounts. Harbour Centre opposed, arguing lack of good cause for execution pending appeal, disputing damages and charges, and contending the RTC lost jurisdiction upon their appeal.
On February 28, 2012, the RTC granted La Filipina’s motion for partial execution pending appeal, emphasizing the ongoing obligation to dredge under the MOA, hydrographic surveys demonstrating insufficient depth, and the risk of damage to vessels if dredging was delayed. The Court allowed execution for dredging and crediting of charges but denied immediate enforcement of damage payments. A writ of execution was issued on March 8, 2012.
Harbour Centre sought to quash the writ and appealed to the Court of Appeals (CA), which on March 3, 2014, dismissed the petition as moot, noting that since the records were already elevated to the CA, no justiciable controversy remained, and that any invalidity of the execution order could not undo acts already done, such as dredging or release of funds.
Contract for Dredging and Related Proceedings
Subsequent to the writ of execution, La Filipina entered into a contract with F.F. Cruz & Co., Inc. (FFC Cruz) to undertake the dredging due to Harbour Centre’s refusal to comply. Dredging was conducted between September and October 2014. Harbour Centre challenged the validity of this contract, citing that the performance of such specific acts should be by the judgment obligor only, under Rule 39, Section 11 of the Rules of Court, but the RTC dismissed this challenge.
Arguments on the Validity of Execution Pending Appeal
Harbour Centre argued before the Supreme Court that there was no good reason justifying the partial execution pending appeal. Petitioner denied any damage to respondents or disruption of supply chains, contended the appeal was not dilatory, and stated dredging was regularly performed as part of maintenance. Petitioner further claimed that the bond posted by La Filipina did not justify immediate execution and that evidence regarding damages was hearsay and inadmissible. It also insisted that the dredging contract with FFC Cruz violated procedural rules since the act was not performed by petitioner itself.
La Filipina contended the dredging was indispensable to its operations, that evidence demonstrated ongoing vessel grounding due to inadequate depth, and that the inadequate depth threatened maritime safety, cargo value, and supply stability of flour and animal feeds in the Philippines. Respondent emphasized the standard industrial practice of conducting pre-dredge hydrographic surveys to ascertain necessity and upheld the trial court’s exercise of discretion in granting the execution pending appeal.
Supreme Court’s Analysis on Jurisdiction and Requirements for Execution Pending Appeal
Under Rule 39, Section 2(a) of the Rules of Court and relevant jurisprudence, the Supreme Court affirmed that a trial court may order execution of judgment pending appeal if (1) it still has jurisdiction and possession of the case records, and (2) good reasons exist, which must be stated after due hearing in a special order.
In this case, the RTC retained jurisdiction as the motion was filed within the appeal period and before transmission of records to the appellate court. The Court emphasized that execution pending appeal is discretionary and requires “good reasons” amounting to superior circumstances demanding urgency, such as when denying execution would render the judgment ineffectual or cause irreparable harm.
The Court held that dredging obligation was admitted by petitioner and unaffected by pending appeals on other issues. Evidence, including hydrographic surveys and reports of vessel grounding and operational disruptions, justified the urgency of dredging to prevent serious damage to vessels and cargo. The potential harm to La Filipina outweighed the costs to Harbour Centre, which could not claim damage since dredging was a continuing contractual obligation.
Supreme Court’s Ruling on Crediting and Release of Overcharged Fees
Regarding the crediting and release of the amounts paid under protest for port and cargo handling charges, the Court declared the order invalid as these amounts remained disputed in the appeal, and the bond offered was not itself a sufficient ground for execution pending appeal. Payments not yet finalized should not be released before final judgment, to prevent prejudice to petitioner.
Supreme Court’s Determination on Forum Shopping Allegation
Petitioner was accused of forum
...continue readingCase Syllabus (G.R. No. 213080)
Facts and Background of the Case
- Harbour Centre Port Terminal, Inc. (Harbour Centre) operates a port in the Manila Harbour Centre.
- La Filipina Uygongco Corporation and Philippine Foremost Milling Corporation (collectively La Filipina) are engaged in importing various goods including fertilizers, dairy products, soybean meal, sugar, wheat, and animal feeds.
- Negotiations for La Filipina to become a locator at Manila Harbour Centre began in 1997 and culminated in a Memorandum of Agreement (MOA) on November 19, 2004.
- The MOA outlined mutual rights and obligations, including berthing and dredging, port and cargo handling charges.
- Harbour Centre was obligated to regularly dredge the navigational channel and berthing area to a depth of -11.5 meters Mean Lower Low Water (MLLW).
- In 2008, La Filipina’s vessels reportedly touched bottom, allegedly due to Harbour Centre's failure to maintain the required depth.
- On November 10, 2009, La Filipina filed a complaint before the Regional Trial Court (RTC) citing breach of contract and maritime law provisions.
Trial Court Findings and Decision
- The RTC found Harbour Centre violated the MOA by failing regular dredging and breaching priority berthing rights.
- Hydrographic surveys confirmed the navigational channel’s and berthing area's depth did not meet the -11.5 meters MLLW standard.
- Harbour Centre overcharged port and cargo handling fees, deviating from the MOA’s prescribed formula.
- Claims for rental fees by Harbour Centre were denied based on Philippine Ports Authority issuances exempting certain port areas from rentals.
- The RTC ordered:
- Immediate dredging to required depth within 15 days.
- Strict adherence to handling charges formula.
- Observance of priority berthing rights.
- Payment of liquidated damages for failure to dredge (US$2,000/day starting December 6, 2004), actual damages, exemplary damages (P10 million), attorney’s fees (P10 million).
- Crediting La Filipina for amounts paid under protest for excess charges.
- Release of excess deposits by the Court Clerk.
- Permanent injunction issued.
- Dismissal of Harbour Centre’s counterclaim with costs against Harbour Centre.
Post-Trial Motions and Appeals
- La Filipina filed a Motion for Partial Reconsideration and a Motion for Partial Execution Pending Appeal on November 9, 2011.
- They sought immediate enforcement of dredging, payment of damages, and crediting and release of excess charges despite the pending appeal.
- Harbour Centre opposed, denying violations, damages, asserting improper jurisdiction of the RTC due to pending appeal, and maintaining charges were proper.
- RTC, on February 28, 2012, granted partial execution, ordering immediate dredging and crediting of excess charges, but denied immediate payment of actual and liquidated damages.
- Writ of Execution issued on March 8, 2012.
- La Filipina contracted F.F. Cruz & Co. for dredging in 2014 after court approval, which was completed later that year.
- Harbour Centre questioned the execution's validity before the Court of Appeals.
- The Court of Appeals dismissed the petition for being moot due to the elevation of records and lack of justiciable controversy.
- The same Court also denied writ of prohibition, citing that such re