Title
Nordic Asia Limited vs. Court of Appeals
Case
G.R. No. 111159
Decision Date
Jul 13, 2004
Sextant Maritime defaulted on a loan secured by M/V "Fylyppa." Crewmen and manning agent filed claims; mortgagees intervened but failed to meet intervention requirements. Supreme Court upheld crewmen's claims, removed forum shopping finding.
collection case
crew members
intervention
A

Case Summary (G.R. No. 158930-31)

Factual Background

After filing the collection complaint, the manning agent (Nam Ung Marine Co., Ltd.) and the crew members caused the arrest of the vessel. Petitioners learned of the collection case and sought to participate by filing a motion for leave to intervene in the RTC proceedings. Petitioners alleged that they held a mortgage over the vessel and that their intervention was intended only to oppose what they characterized as respondents’ unfounded and grossly exaggerated claims. When the RTC granted intervention, petitioners discharged the attachment by posting a counterbond.

Jibfair Shipping moved to dismiss. The other defendants, however, failed to file responsive pleadings, and the RTC declared them in default, directing respondents to present their evidence ex parte. Respondents presented evidence in four separate hearings. Petitioners, although admitted as intervenors, did not attend these hearings.

Afterward, petitioners attempted to contest the default proceedings by filing a motion to lift the order of default and/or to expunge ex parte evidence. The RTC ultimately rendered a decision ordering payment of, among others, the crew’s wages and the manning agent’s agency fees and other expenses incurred during the vessel’s last voyage. The RTC also ordered that petitioners’ counterbond be used to answer for the awards.

Procedural History in the Court of Appeals

Petitioners appealed to the Court of Appeals, where the appeal was docketed as CA-G.R. CV No. 21343 (the Appeal Case). On respondents’ motion, the RTC issued an order of execution pending appeal. Petitioners responded by filing another action in the Court of Appeals questioning the execution pending appeal, docketed as CA-G.R. SP No. 13874 (the Certiorari Case).

The Certiorari Case was first resolved by the Court of Appeals. The order of execution pending appeal was affirmed in all respects except for portions allowing immediate execution on moral damages, attorneys fees, litigation expenses and interest, which the Court of Appeals held could not be the subject of execution pending appeal. That ruling became final and executory.

In the Appeal Case, the Court of Appeals affirmed the RTC decision in all respects and dismissed the appeal. Petitioners then elevated the appellate ruling to the Supreme Court through a petition for review on certiorari.

Supreme Court Decision of June 10, 2003

In its June 10, 2003 decision, the Supreme Court dismissed petitioners’ petition on two principal grounds: first, that petitioners had no right to intervene, because the complaint-in-intervention failed to state a cause of action and because the requisites for intervention were not present; and second, that petitioners were guilty of forum shopping.

The Court held that the allegations contained in petitioners’ complaint-in-intervention did not comply with the requirement that every complaint, including one for intervention, must state the ultimate facts supporting the cause of action. The Court further addressed the requisites for intervention. It reiterated that intervention requires (a) a legal interest in the matter in litigation, and (b) an evaluation of whether adjudication of the rights of the original parties may be delayed or prejudiced, or whether intervenor’s rights may be protected in a separate proceeding.

On the first requisite, the Court found petitioners’ purported interest insufficient. It reasoned that petitioners, as co-creditors, were not liable for the claims of the manning agent and the crew members. It also held that petitioners’ remedies as unpaid mortgagees remained preserved, since the collection case did not preclude foreclosure of the vessel. Moreover, petitioners’ potential adverse effect from the disposition of the property was contingent on two eventualities: successful foreclosure and insufficiency of sale proceeds to cover the loan amount. For that reason, the outcome of the collection case had no direct legal effect on petitioners.

On the second requisite, the Court held that petitioners’ rights were already protected through their extrajudicial foreclosure, while the rights of the original plaintiffs—namely, the manning agent and the crew members—had been unduly delayed or prejudiced. It noted that the RTC decision, rendered in October 30, 1987, had not attained finality despite the lack of appeal by the actual judgment obligors, and that the continuing delay was attributable to the intervenors, i.e., petitioners.

The Court then considered petitioners’ reliance on International Banking Corp. v. Pilar Corrales, et al. and their theory that their intervention was intervention pro interesse suo. It rejected both authorities as inapplicable. The Court explained that in International Banking Corp., intervention was allowed because the intervenor had a superior right of preference and sought to enforce its own claims against the defendant and foreclose on the subject property. By contrast, petitioners’ intervention was grounded only on their secondary position as unpaid mortgagees. The Court also found the Joaquin v. Herrera situation distinguishable. It reasoned that Joaquin involved a third party seeking to assert a right by asking that a license be issued to himself, while in the present case, petitioners sought to oppose respondents’ claims without asserting their unpaid mortgage in the manner contemplated by the cited precedent.

On forum shopping, the Court acknowledged that the Certiorari Case was intended to be limited to questioning the order of execution pending appeal, but it observed that petitioners also asked the Court of Appeals to reverse the main decision by declaring it null and void and by setting aside evidence received ex parte. Conversely, in the Appeal Case, petitioners had included a prayer to set aside the execution pending appeal. The Court also found that issues were repeated between the two cases, including objections already resolved with finality—particularly those related to the default of defendants and the reception of ex parte evidence. It therefore concluded that petitioners assailed the main decision and the execution pending appeal across the two actions, which amounted to forum shopping.

Petitioners attempted to avoid the finding by arguing that when they filed the second case, they disclosed the earlier case, and thus they should not be considered guilty of forum shopping. The Court noted the general rule that disclosure of related cases, even if admitted in the certification of non-forum shopping, does not automatically exculpate a party who deliberately seeks a more friendly forum. Still, it ultimately turned to the specific circumstances when it addressed the motion for reconsideration.

Motion for Reconsideration and Reassessment of Forum Shopping

Petitioners filed a motion for reconsideration of the June 10, 2003 decision. They insisted on their intervention theory and reasserted that their cause of

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