G.R. No. 74694 - Nordic Asia Ltd. vs. Agton

Case Summary (G.R. No. 74694)

Factual Background of the Underlying Civil Action

The facts began with maritime documentation and charter relationships. JIBFAIR, acting as the charterers’ agent in the Philippines, received shipping documents from Kant GmbH at the loading port, which referred to Sextant Maritime S.A. as the registered owner of the vessel. However, the charter party attached to the petition showed that the vessel owner and time charterer was Christensen Lines, while Theilship acted as vessel manager.

After the vessel’s loading, JIBFAIR sought funds for inward remittance of US $27,000.00 for port expenses from Christensen. Christensen replied that it could not send the amount because it was already under receivership. As a result, JIBSEN was compelled to advance US $24,672.00 for one-third (one-third) of the bunker fuel and Suez Canal fees, and JIBFAIR was compelled to advance P49,599.70 for port expenses. The vessel arrived at its first port of destination, Davao City, twenty-two (22) days behind schedule.

Filing of Civil Case No. 17917 and the RTC Orders

On January 14, 1986, JIBSEN and JIBFAIR filed in the RTC of Davao City a case for sum of money with prayer for restraining order, mandatory injunction, and attachment against the foreign entities P. V. Christensen and/or Theilship and/or Sextant Maritime, S. A., docketed as Civil Case No. 17917. The case was raffled to Branch XVI presided over by respondent Judge Roque Agton.

On January 15, 1986, the respondent judge issued an order that (1) directed the unloading of the cargo; (2) enjoined the defendants from taking the vessel out of Philippine territory; and (3) directed the sheriff to attach the vessel. The unloading and the injunction were returned unimplemented because an arrest order against the vessel had already been issued by the RTC, National Capital Region, Branch 146, Makati, in another case involving the same defendants in Civil Case No. 17917. The attachment order, however, was implemented.

Intervention Motions and the Counterbond Controversy

On January 22, 1986, PHILBAKE filed a motion for leave to file a complaint-in-intervention for damages allegedly incurred due to the delay. The RTC granted the motion on January 23, 1986.

On January 23, 1986, petitioners Nordic Asia Limited (DnC Limited) and Bankers Trust Co. filed an urgent motion for leave to intervene and attached a complaint-in-intervention, alleging that they had legal interests in M/V “FYLYPPA” as the unpaid mortgagees of the vessel. JIBSEN and JIBFAIR opposed, contending that petitioners had no capacity to sue in the Philippines as foreign corporations. Petitioners also filed an urgent motion to approve counterbond and to discharge the attachment on February 28, 1986, and they posted a counterbond in the amount of P518,729.78, stated to be equal to the claims of JIBFAIR and JIBSEN.

On April 1, 1986, respondent judge granted the motion for intervention but denied the motion to approve the counterbond and discharge the attachment for two reasons: first, petitioners were not the owners of the vessel and were not appearing on behalf of its owners; second, a writ of attachment could be discharged on a counterbond only if the applicant posted a counterbond equal to the value of the property attached.

On April 8, 1986, petitioners filed a manifestation and urgent motion for partial reconsideration. They stated they were willing to post an additional counterbond to cover the other claims of JIBFAIR and JIBSEN prior to the sheriff of Manila. They maintained that although they were not owners, they had a direct, actual, subsisting, and substantial interest in the attached property as unpaid mortgagees. At the time of the ruling, the defendants were already declared in default.

The May 2, 1986 Order and the Rule 65 Petition

On May 2, 1986, respondent judge issued an order that, on equitable grounds, allowed discharge of the attachment only if certain conditions were met. The order required the movants to provide security acceptable to the parties and subject to the court’s assessment and final approval, and specifically required petitioners, as plaintiffs-in-intervention and alleged mortgagees, to file a counterbond in an amount equal to the value of the attached vessel, with the judge independently determining the value. The court directed all parties to submit proposals on the kind and amount of security and to submit an approximate valuation of the vessel within five (5) days from receipt.

Petitioners did not comply with the May 2, 1986 order. Instead, on June 4, 1986, they filed in the Supreme Court a petition for mandamus and certiorari under Rule 65 of the Rules of Court, seeking to compel respondent judge to accept and approve their counterbond and order the immediate discharge of the attachment issued on January 15, 1986, and to annul the May 2, 1986 order.

On June 12, 1986, petitioners moved to amend the temporary restraining order dated June 9, 1986, seeking the deletion of the injunction against continuing detention of the vessel M/V “FYLYPPA”, because the vessel was no longer within Philippine waters. They informed the Court that on May 29, 1986, the vessel was sold at public auction by the Manila notary public Jaime M. Vibar upon petitioners’ application under P.D. 1521 (the Ship Mortgage Decree of 1978), and that the certificate of sale was confirmed by the RTC of Pasay, Branch CXIII in “Closure Proceedings” docketed as Civil Case No. 3699-P, entitled Nordic Asia Limited, et al. vs. MV FYLYPPA, et al., by order dated June 3, 1986. They also stated that on June 4, 1986, at about 6:26 p.m., the vessel sailed out of Manila port or anchorage pursuant to authority granted to the new owners to sail the vessel out of Philippine waters. No action was taken on the motion to amend by the Court.

Disposition and the Doctrine on Mootness

On March 2, 1987, the Court gave due course to the petition. After considering the petition, the answer, and the other pleadings, the Court recall[ed] its order giving due course. The Court held that resort to the petition was premature and that it had already become moot and academic. The Court stressed that nowhere in the assailed May 2, 1986 order did respondent judge require petitioners to post a counterbond of P30,000,000.00. Instead, the order required the submission of an approximate valuation to guide the judge in determining the vessel’s value.

More importantly, the Court found that petitioners had succeeded in removing the vessel out of Philippine territory even before the filing of the petition in the Supreme Court and despite the attachment writ issued by respondent judge. Given that the attachment no longer had practical efficacy over the vessel within the Philippines, the Court ruled that passing upon the merits would serve no useful purpose. It invoked the settled rule that courts do not determine moot questions or express opinions in cases where no practical relief can be granted, citing Central Azucarera Don Pedro v. Don Pedro Security Guards Union, L-21610 (March 15, 1968; 22 SCRA 1053); Bongat v. Bureau of Labor Relations, L-41039 (April 30, 1985; 136 SCRA 225); National Union of Garments Textile Cordage and General Workers of the Philippines (GATCORD) v. Ministry of Labor, G.R. 50336 (July 5, 1985; 137 SCRA 341); Lomo v. Mabelin, et al., G.R. 68649 (December 29, 1986; 146 SCRA 473); and Espina v. Provincial Board of Leyte, L-33058-59 (August 18, 1988; 164 SCRA 464).

Accordingly, the Supreme Court dismissed the petition. It was concurred in by Narvasa (Chairman), Cruz, Gancayco, and Grino-Aquino, JJ.

Legal Basis and Reasoning

The Court’s reasoning centered on the mootness of the controversy arising from the removal of the attached vessel from Philippine territory prior to the resolution o

Case Syllabus (G.R. No. 74694)

Parties and Procedural Posture

Nordic Asia Limited (now known as DNC Ltd.) and Bankers Trust Co. filed a petition under Rule 65 of the Rules of Court against Hon. Roque Agton, in his capacity as Judge, RTC-XVI, Davao City.
The respondents in the underlying Civil Case No. 17917 were JIBFAIR Shipping Agency Corporation, JIBSEN Trading Corporation, Philippine Bakers, Inc., P. V. Christensen Lines, Theilship, and Sextant Maritime, S. A..
JIBSEN and JIBFAIR initiated the underlying case for sum of money with prayer for restraining order, mandatory injunction, and attachment against multiple foreign entities.
PHILBAKE later sought to intervene through a complaint-in-intervention, which the trial court granted.
Nordic Asia Limited and Bankers Trust Co. sought leave to intervene and filed a complaint-in-intervention alleging interests as unpaid mortgagees of the vessel.
The trial court granted intervention but denied the petitioners’ request for relief related to counterbond and the discharge of attachment.
The petitioners invoked mandamus and certiorari to compel acceptance and approval of their proposed counterbond and to annul the order conditioning discharge of attachment.
The petition’s passage through the Supreme Court was procedurally affected by prematurity, followed by an eventual recall of the order giving due course.
After reconsideration, the Court dismissed the petition because the main relief sought had become incapable of practical effect due to events occurring during the pendency of the petition.

Key Factual Allegations

JIBSEN Trading Corp. was contracted by Philippine Bakers, Inc. (PHILBAKE) to supply 25,000 metric tons (MT) of 5% MOL wheat flour.
Alfred C. Toeffer International, described as the supplier and also the charterer, loaded on November 29, 1985 14,200 metric tons of wheat flour on board M/V “FYLYPPA”, consigned to PHILBAKE.
In the Philippines, JIBFAIR Shipping Corp. received shipping documents identifying Sextant Maritime S.A. as the registered owner.
The charter party attached to the petition indicated that the vessel owner and time charterer was P. V. Christensen Lines (CHRISTENSEN).
Theilship was identified as the vessel’s manager.
On December 27, 1985, JIBFAIR telexed CHRISTENSEN requesting inward remittance of US $27,000.00 for port expenses.
CHRISTENSEN replied that it could not send the amount because it was then under receivership.
JIBSEN advanced US $24,672.00 to pay for one-third of the bunker fuel cost and fees charged by the Suez Canal authorities for the vessel’s passage to the Philippines.
JIBFAIR was forced to advance P49,599.70 for port expenses.
The vessel arrived at Davao City twenty-two (22) days behind schedule.
On January 14, 1986, JIBSEN and JIBFAIR filed the underlying sum of money case with prayer for restraining order, mandatory injunction, and attachment against P. V. Christensen Lines and/or Theilship and/or Sextant Maritime, S. A., before the Regional Trial Court of Davao City and docketed as Civil Case No. 17917.
On January 15, 1986, the trial judge ordered unloading of the cargo, enjoined removal of the vessel from Philippine territory, and directed the sheriff to attach the vessel.
The unloading and removal-enjoining directives were initially returned unimplemented because an arrest order was previously issued in another case, but the attachment order was implemented.
PHILBAKE filed a motion for leave to file complaint-in-intervention seeking recovery for damages allegedly incurred due to the delay.
On January 23, 1986, Nordic Asia Limited and Bankers Trust Co. filed an urgent motion for leave to intervene, attaching a complaint-in-intervention alleging legal interests as unpaid mortgagees of M/V “FYLYPPA”.
Nordic Asia Limited and Bankers Trust Co. eventually proposed a counterbond of P518,729.78, stated to equal the amounts claimed by JIBFAIR and JIBSEN.
The trial court denied their motion to approve counterbond and discharge attachment on grounds that the petitioners were not owners and that the counterbond requirement for discharge required counterbond equal to the value of the property attached.
Despite later compliance discussions, the trial judge issued an order on May 2, 1986 allowing discharge of attachment only if conditions were met and requiring submission of proposals on security and an approximate valuation of the vessel.
The petitioners did not comply with the trial court’s May 2, 1986 order before filing the Supreme Court petition on June 4, 1986.
During the pendency of the petition, the petitioners alleged that the vessel was sold at public auction on May 29, 1986 under P.D. 1521 and confirmed in the RTC of Pasay in a closure proceeding docketed as Civil Case No. 3699-P entitled Nordic Asia Limited, et al. vs. MV FYLYPPA, et al.
The petitioners further alleged that the vessel sailed out and left Manila on June 4, 1986 and thus was no longer within Philippine waters.

Statutory and Rule Framework

The petition was brought as