G.R. No. 90306-07 - K.K. Shell Sekiyu Osaka Hatsubaisho vs. Court of Appeals

Case Summary (G.R. No. 90306-07)

Factual Background

On January 7, 1987, Kumagai Kaiun Kaisha, Ltd. filed a complaint for collection with preliminary attachment against ATLANTIC VENUS CO., S.A., the vessel M/V "ESTELLA", and Crestamonte Shipping Corporation. The complaint alleged that Crestamonte, as bareboat charterer and operator of the M/V "ESTELLA", had appointed N.S. SHIPPING CORPORATION as its general agent in Japan by an Agency Agreement, and that Kumagai acted as NSS's local agent in Osaka and supplied the vessel without payment. N.S. SHIPPING CORPORATION and Keihin Narasaki Corporation filed complaints-in-intervention. Thereafter FU HING OIL CO., LTD. moved to intervene, alleging that it supplied marine diesel oil and barge services totaling US$152,412.56 and asserting a maritime lien; K.K. SHELL SEKIYU OSAKA HATSUBAISHO likewise moved to intervene, alleging supplies of marine diesel oil totaling US$16,996.96 and Y1,000,000 and asserting a maritime lien. The trial court allowed both interventions and issued writs of preliminary attachment.

Trial Court Proceedings

The trial court admitted the interventions of FU HING OIL CO., LTD. and K.K. SHELL SEKIYU OSAKA HATSUBAISHO on June 19, 1987 and August 11, 1987, respectively, and issued writs of preliminary attachment on August 25, 1987 upon bond posting. The writs were discharged on September 3, 1987 after the posting of counterbonds. ATLANTIC VENUS CO., S.A. and the vessel M/V "ESTELLA" moved to dismiss the complaints-in-intervention. The private respondents also filed a petition in the Court of Appeals, docketed CA-G.R. SP No. 12999, seeking annulment of the trial court orders which had allowed intervention.

Court of Appeals Decision

The Court of Appeals, in a decision dated June 14, 1989, annulled the trial court orders and directed the trial court to cease and desist from proceeding with Civil Case No. 87-38930. The Court of Appeals concluded that FU HING and K.K. SHELL were not independent suppliers but sub-agents of N.S. SHIPPING CORPORATION, and therefore bound by the Agency Agreement between Crestamonte and NSS. The CA relied on paragraph 12.0 of that agreement, which states that the agreement shall be governed by the laws of Japan and that any disputes shall be subject exclusively to the jurisdiction of the District Courts of Japan, to justify disallowing the interventions.

Issues Presented

The principal legal questions were whether K.K. SHELL SEKIYU OSAKA HATSUBAISHO was a sub-agent of N.S. SHIPPING CORPORATION such that it was bound by the Agency Agreement and its choice-of-forum clause; whether K.K. SHELL and FU HING held enforceable maritime liens under Presidential Decree No. 1521, Sec. 21; and whether the doctrine of forum non conveniens required dismissal of the Philippine action.

Parties' Contentions

K.K. SHELL contended that it supplied fuel to M/V "ESTELLA" upon request of N.S. SHIPPING CORPORATION but that the pleaded facts did not establish sub-agency or render the choice-of-forum clause binding upon it. K.K. SHELL further insisted that it enjoyed a maritime lien pursuant to Presidential Decree No. 1521, Sec. 21, entitling it to enforce its claim in rem against the vessel. Private respondents maintained that both petitioners were sub-agents bound by the Agency Agreement, that the dispute fell under the exclusive jurisdiction of Japanese courts, and, alternatively, urged dismissal under the doctrine of forum non conveniens. Private respondents further argued that the supplies were rendered for the benefit of Crestamonte generally and not exclusively to the vessel, thereby defeating a maritime lien which requires that credit be given to the vessel.

Supreme Court's Factual Review and Evidentiary Observations

The Supreme Court examined the Agency Agreement and the intervenors' pleadings and found that the Agreement contained no express provision creating sub-agency or extending the choice-of-forum clause to sub-agents. The Agreement detailed NSS's duties—husbanding services, cargo fixation, and accounting obligations—but did not mention contracting sub-agents or binding those sub-agents to paragraph 12.0. The Court noted that K.K. SHELL's complaint-in-intervention merely alleged that it supplied fuel upon NSS's request, which did not conclusively establish the legal relationship of sub-agency. The Court observed that an isolated allegation in a different proceeding describing K.K. SHELL as "one of the representatives" of NSS did not suffice to prove a contractual sub-agency for purposes of invoking the choice-of-forum clause.

Legal Analysis on Maritime Lien and Forum Non Conveniens

The Court held that the applicability of P.D. No. 1521, Sec. 21, and the existence of a maritime lien were factual questions requiring trial. Section 21 grants a maritime lien to any person furnishing repairs, supplies, towage, dry-docking, or other necessaries to a vessel upon order of the owner or of a person authorized by the owner, and it requires proof that credit was given to the vessel. The Supreme Court declared that whether the fuel was supplied for the exclusive benefit of M/V "ESTELLA" or for Crestamonte in general was a factual determination that the trial court must make upon reception of evidence. The Court likewise found that invocation of the doctrine of forum non conveniens depended on the precise nature of the parties' relationships and on factual circumstances that had yet to be established, and that such a discretionary determination was for the trial court to resolve after full development of the record.

Reversal of the Court of Appeals and Ruling

The Supreme Court concluded that the Court of Appeals erred in annulling the trial court orders and in directing the trial court to cease and desist from proceeding with Civil Case No. 87-38930 insofar as K.K. SH

Case Syllabus (G.R. No. 90306-07)

Parties and Procedural Posture

K.K. Shell Sekiyu Osaka Hatsubaisho and Fu Hing Oil Co., Ltd. filed a petition questioning the Court of Appeals rulings that annulled trial court orders in Civil Case No. 87-38930.
Atlantic Venus Co., S.A., the vessel M/V Estella, and Crestamonte Shipping Corporation were parties in the trial court proceedings and were treated as “private respondents” in the petition.
Atlantic owned the M/V Estella, while Crestamonte acted as bareboat charterer and operator in the complaint.
N.S. Shipping Corporation (NSS) and Keihin Narasaki Corporation (Keihin) participated as complainants-in-intervention in the trial court.
The Court of Appeals rendered a decision dated June 14, 1989 in CA-G.R. SP No. 12999, which was consolidated with CA-G.R. SP No. 12341.
The Court of Appeals annulled the trial court’s orders and directed the trial court to cease and desist from proceeding with the case.
Fu Hing later moved to withdraw as co-petitioner on March 7, 1990, and the Court granted the withdrawal on March 19, 1990.
The Supreme Court reviewed the Court of Appeals decision only insofar as it related to the intervention of K.K. Shell.

Key Factual Allegations

Kumagai Kaiun Kaisha, Ltd. (Kumagai), a Japanese corporation, filed a complaint for collection of money with preliminary attachment against Atlantic, M/V Estella, and Crestamonte.
Kumagai alleged that Crestamonte appointed NSS as its general agent in Japan under an Agency Agreement.
NSS allegedly appointed Kumagai as its local agent in Osaka, Japan.
Kumagai alleged it supplied the vessel with supplies and services but Crestamonte failed to pay despite repeated demands.
Fu Hing, a corporation organized in Hong Kong and not doing business in the Philippines, sought leave to intervene and alleged it supplied marine diesel oil/fuel and incurred barge expenses totaling US$152,412.56, which remained unpaid despite demand.
Fu Hing asserted its claim constituted a maritime lien and prayed for writ of preliminary attachment.
K.K. Shell, a corporation organized in Japan and not doing business in the Philippines, likewise moved to intervene and alleged it provided marine diesel oil/fuel at ports of Tokyo and Mutsure in Japan.
K.K. Shell alleged unpaid amounts of US$16,996.96 and Y1,000,000.00 and asserted its claim constituted a maritime lien on M/V Estella.
The trial court allowed Fu Hing intervention on June 19, 1987 and allowed K.K. Shell intervention on August 11, 1987.
Writs of preliminary attachment were issued on August 25, 1987 after bonds were posted.
Upon posting of counterbonds, the writs of attachment were discharged on September 3, 1987.
Atlantic and M/V Estella moved to dismiss the complaints-in-intervention filed by Fu Hing and K.K. Shell.
Atlantic, the vessel M/V Estella, and related parties filed a petition in the Court of Appeals seeking annulment of trial court orders, docketed as CA-G.R. SP No. 12999.
The Court of Appeals annulled the trial court’s orders based on its view that Fu Hing and K.K. Shell were not suppliers but sub-agents, and thus were bound by the Agency Agreement’s choice-of-forum clause.

Agency Agreement and Choice-of-Forum

The Agency Agreement between Crestamonte (called “Owner”) and NSS (called “Agent”) appointed NSS as general agent for all Japan in connection with the Owner’s vessels.
The agreement required that cargo bookings, vessel fixtures/charters, and related undertakings by the Agent remained subject to the prior approval and consent of the Owner.
The agreement imposed on the Agent the responsibility for husbanding vessels in Japan ports and for issuing bills of lading to shippers using the form prescribed by the Owner.
The agreement required the Agent to set south-bound cargoes with revenues sufficient to cover specified ordinary liner operation expenses and to provide credit to the extent of vessel requirements, subject to an obligation secured by committing at least forty-eight (48) sailings per year.
The agreement required the Agent to settle outstanding payments for certain operation costs on the Owner’s liner service, subject to approval by the Owner’s representative in Japan.
The agreement addressed the start and cessation of the Agent’s cargo responsibilities with respect to imports and exports.
The agreement included an exclusive choice-of-forum clause, providing that the agreement was governed by the Laws of Japan