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G.R. No. 155014 November 11, 2005

CRESCENT PETROLEUM, LTD., Petitioner,

vs.

M/V "LOK M!ES!R#," T!E S!#PP#NG CORPORT#ON O$ #ND#, %&'

PORTSERV L#M#TED %&'/or TRNSMR S!#PP#NG, #NC.,Respondents.

This petition for review on certiorari under Rule 45 seeks the (a) reversal of the

November !, ""# $ecision of the %ourt of &ppeals in %&'.R. No. %'54*", #

which dismissed for +want of urisdiction+ the instant case, and the -eptember ,

"" Resolution of the same appellate court,which denied petitioner/s motion for

reconsideration, and (b) reinstatement of the 0ul1 5, #**2 $ecisionof the Re3ional

Trial %ourt (RT%) in %ivil %ase No. %'#!26*, which held that respondents were

solidaril1 liable to pa1 petitioner the sum pra1ed for in the complaint.

The facts are as follows7 Respondent 89 +:ok 8aheshwari+ (essel) is an

ocean3oin3 vessel of ;ndian re3istr1 that is owned b1 respondent -hippin3

%orporation of ;ndia (-%;), a corporation or3ani

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>avin3 paid 8arine Petrobulk, petitioner %rescent issued a revised invoice dated

November #, #**5 to +Portserv :imited, and9or the 8aster, and9or @wners, and9or

@perators, and9or %harterers of 89 F:ok 8aheshwari/+ in the amount of

C-D#",544."" with instruction to remit the amount on or before $ecember #,

#**5. The period lapsed and several demands were made but no pa1ment was

received. &lso, the checks issued to petitioner %rescent as securit1 for the pa1mentof the bunker fuels were dishonored for insuEcienc1 of funds. &s a conseAuence,

petitioner %rescent incurred additional e=penses of C-D!,56.2# for interest,

trackin3 fees, and le3al fees.

@n 8a1 , #**2, while the essel was docked at the port of %ebu %it1, petitioner

%rescent instituted before the RT% of %ebu %it1 an action +for a sum of mone1 with

pra1er for temporar1 restrainin3 order and writ of preliminar1 attachment+ a3ainst

respondents essel and -%;, Portserv and9or Transmar. The case was raGed to

ranch #" and docketed as %ivil %ase No. %'#!26*.

@n 8a1 , #**2, the trial court issued a writ of attachment a3ainst the essel with

bond at P,6#","""."". Petitioner %rescent withdrew its pra1er for a temporar1

restrainin3 order and posted the reAuired bond.

@n 8a1 #!, #**2, summonses were served to respondents essel and -%;, and

Portserv and9or Transmar throu3h the 8aster of the essel. @n 8a1 !, #**2,

respondents essel and -%;, throu3h Pioneer ;nsurance and -uret1 %orporation

(Pioneer), Bled an ur3ent e='parte motion to approve Pioneer/s letter of undertakin3,

to consider it as counter'bond and to dischar3e the attachment. @n 8a1 *, #**2,

the trial court 3ranted the motionH thus, the letter of undertakin3 was approved as

counter'bond to dischar3e the attachment.

Ior failin3 to Ble their respective answers and upon motion of petitioner %rescent,

the trial court declared respondents essel and -%;, Portserv and9or Transmar in

default. Petitioner %rescent was allowed to present its evidence e='parte.

@n 0ul1 5, #**2, the trial court rendered its decision in favor of petitioner %rescent,

thus7

J>RI@R, premises considered, ud3ment is hereb1 rendered in favor of plaintiK

L%rescentM and a3ainst the defendants Lessel, -%;, Portserv and9or TransmarM.

%onseAuentl1, the latter are hereb1 ordered to pa1 plaintiK ointl1 and solidaril1, the

followin37

(a) the sum of C-D#",544."", representin3 the outstandin3 obli3ationH

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(b) interest of C-D#",*6!.5" as of 0ul1 , #**2, plus additional interest at #! per

annum for the period thereafter, until the principal account is full1 paidH

(c) attorne1/s fees of P"",""".""H and

(d) P"","""."" as liti3ation e=penses.

-@ @R$R$.

@n &u3ust #*, #**2, respondents essel and -%; appealed to the %ourt of &ppeals.

The1 attached copies of the charter parties between respondent -%; and >alla,

between >alla and Transmar, and between Transmar and Portserv. The1 pointed out

that Portserv was a time charterer and that there is a clause in the time charters

between respondent -%; and >alla, and between >alla and Transmar, which states

that +the %harterers shall provide and pa1 for all the fuel e=cept as otherwise

a3reed.+ The1 submitted a cop1 of Part ;; of the unker Iuel &3reement between

petitioner %rescent and Portserv containin3 a stipulation that New Oork law 3overns

the +construction, validit1 and performance+ of the contract. The1 likewise

submitted certiBed copies of the %ommercial ;nstruments and 8aritime :ien &ct of

the Cnited -tates (C.-.), some C.-. cases, and some %anadian cases to support their

defense.

@n November !, ""#, the %ourt of &ppeals issued its assailed $ecision, which

reversed that of the trial court, viz7

J>RI@R, premises considered, the $ecision dated 0ul1 5, #**2, issued b1 the

Re3ional Trial %ourt of %ebu %it1, ranch #", is hereb1 RR-$ and -T &-;$,and a new one is entered $;-8;--;N the instant case for want of urisdiction.

The appellate court denied petitioner %rescent/s motion for reconsideration

e=plainin3 that it +dismissed the instant action primaril1 on the 3round of forum non

conveniensconsiderin3 that the parties are forei3n corporations which are not doin3

business in the Philippines.+

>ence, this petition submittin3 the followin3 issues for resolution, viz7

#. Philippine courts have urisdiction over a forei3n vessel found inside Philippine

waters for the enforcement of a maritime lien a3ainst said vessel and9or its owners

and operatorsH

. The principle of forum non conveniensis inapplicable to the instant caseH

. The trial court acAuired urisdiction over the subect matter of the instant case, as

well as over the resand over the persons of the partiesH

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4. The enforcement of a maritime lien on the subect vessel is e=pressl1 3ranted b1

law. The -hip 8ort3a3e &cts as well as the %ode of %ommerce provides for relief to

petitioner for its unpaid claimH

5. The arbitration clause in the contract was not ri3id or ine=ible but e=pressl1

allowed petitioner to enforce its maritime lien in Philippine courts provided thevessel was in the PhilippinesH

2. The law of the state of New Oork is inapplicable to the present controvers1 as the

same has not been properl1 pleaded and provedH

6. Petitioner has le3al capacit1 to sue before Philippine courts as it is suin3 upon an

isolated business transactionH

!. Respondents were dul1 served summons althou3h service of summons upon

respondents is not a urisdictional reAuirement, the action bein3 a suit quasi in remH

*. The trial court/s decision has factual and le3al basesH and,

#". The respondents should be held ointl1 and solidaril1 liable.

;n a nutshell, this case is for the satisfaction of unpaid supplies furnished b1 a

forei3n supplier in a forei3n port to a vessel of forei3n re3istr1 that is owned,

chartered and sub'chartered b1 forei3n entities.

Cnder atas Pambansa ilan3 #*, as amended b1 Republic &ct No. 62*#, RT%s

e=ercise e=clusive ori3inal urisdiction +(i)n all actions in admiralt1 and maritimewhere the demand or claim e=ceeds two hundred thousand pesos (P"",""") or in

8etro 8anila, where such demand or claim e=ceeds four hundred thousand pesos

(P4"",""").+ Two () tests have been used to determine whether a case involvin3 a

contract comes within the admiralt1 and maritime urisdiction of a court ' the

(o)%*+o&%( *e* and the -be)* m%**er *e*. The n3lish rule follows the

locational test wherein maritime and admiralt1 urisdiction, with a few e=ceptions, is

e=ercised onl1 on contracts made upon the sea and to be e=ecuted thereon. This is

totall1 reected under the &merican rule where the criterion in determinin3 whether

a contract is maritime depends on the nature and subect matter of the contract,

havin3 reference to maritime service and transactions.4 ;n #&*er&%*+o&%(

!%rve*er Com%& o *e P+(++&e v. r%3o&,5we adopted the &merican

rule and held that +(w)hether or not a contract is maritime depends not on the place

where the contract is made and is to be e=ecuted, makin3 the localit1 the test, but

on the subect matter of the contract, makin3 the true criterion a maritime service

or a maritime transaction.+

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& contract for furnishin3 supplies like the one involved in this case is maritime and

within the urisdiction of admiralt1.2;t ma1 be invoked before our courts throu3h an

action in rem or quasi in rem or an action in personam. Thus76

= = =

+&rticles 56* and 5!4 Lof the %ode of %ommerceM provide a method of collectin3 or

enforcin3 not onl1 the liens created under -ection 5!" but also for the collection of

an1 kind of lien whatsoever.+!;n the Philippines, we have a complete le3islation,

both substantive and adective, under which to brin3 an action in rema3ainst a

vessel for the purpose of enforcin3 liens. The substantive law is found in &rticle 5!"

of the %ode of %ommerce. The procedural law is to be found in &rticle 5!4 of the

same %ode. The result is, therefore, that in the Philippines an1 vessel Q even thou3h

it be a forei3n vessel Q found in an1 port of this &rchipela3o ma1 be attached and

sold under the substantive law which deBnes the ri3ht, and the procedural law

contained in the %ode of %ommerce b1 which this ri3ht is to be enforced.*= = =.ut

where neither the law nor the contract between the parties creates an1 lien or

char3e upon the vessel, the onl1 wa1 in which it can be sei

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hac vice, or b1 an a3reed purchaser in possession of the vesselH but nothin3 in this

$ecree shall be construed to confer a lien when the furnisher knew, or b1 e=ercise

of reasonable dili3ence could have ascertained, that because of the terms of a

charter part1, a3reement for sale of the vessel, or for an1 other reason, the person

orderin3 the repairs, supplies, or other necessaries was without authorit1 to bind

the vessel therefor.

Petitioner %rescent submits that these provisions appl1 to both domestic and

forei3n vessels, as well as domestic and forei3n suppliers of necessaries. ;t contends

that the use of the term +an1 person+ in -ection # implies that the law is not

restricted to domestic suppliers but also includes all persons who suppl1 provisions

and necessaries to a vessel, whether forei3n or domestic. ;t points out further that

the law does not indicate that the supplies or necessaries must be furnished in the

Philippines in order to 3ive petitioner the ri3ht to seek enforcement of the lien with

a Philippine court.##

Respondents essel and -%;, on the other hand, maintain that -ection # of the P.$.

No. #5# or the -hip 8ort3a3e $ecree of #*6! does not appl1 to a forei3n supplier

like petitioner %rescent as the provision refers onl1 to a situation where the person

furnishin3 the supplies is situated inside the territor1 of the Philippines and not

where the necessaries were furnished in a forei3n urisdiction like %anada. #

Je Bnd a3ainst petitioner %rescent.

#.

P.$. No. #5# or the -hip 8ort3a3e $ecree of #*6! was enacted +to accelerate the3rowth and development of the shippin3 industr1+ and +to e=tend the beneBts

accorded to overseas shippin3 under Presidential $ecree No. #4 to domestic

shippin3.+#;t is patterned closel1 from the C.-. -hip 8ort3a3e &ct of #*" and the

:iberian 8aritime :aw relatin3 to preferred mort3a3es. #4Notabl1, -ections #,

and of P.$. No. #5# or the -hip 8ort3a3e $ecree of #*6! are identical to

-ubsections P, S, and R, respectivel1, of the C.-. -hip 8ort3a3e &ct of #*", which

is part of the Iederal 8aritime :ien &ct. >ence, C.-. urisprudence Bnds relevance to

determinin3 whether P.$. No. #5# or the -hip 8ort3a3e $ecree of #*6! applies in

the present case.

The various tests used in the C.-. to determine whether a maritime lien e=ists are

the followin37

O&e. +;n a suit to establish and enforce a maritime lien for supplies furnished to a

vessel in a forei3n port, whether such lien e=ists, or whether the court has or will

e=ercise urisdiction, depends on the (%8 o *e )o-&*r 8ere *e -(+e

8ere -r&+e', which must be pleaded and proved.+#5 This principle was laid

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down in the #!!! case of Te S)o*+%,#2 reiterated in Te K%+er +(e(m ###6

(#*#2), in Te o-'r+)em#!(#*#) and in Te C+* o *(%&*%#*(#*4).

T8o. Te L%-r+*9e&:Romero:Ro'+*+ *r+(o3 o )%e, which replaced such

sin3le'factor methodolo3ies as the law of the place of suppl1."

;n L%-r+*9e& v. L%re&,#a $anish seaman, while temporaril1 in New Oork, oined

the crew of a ship of $anish a3 and re3istr1 that is owned b1 a $anish citie

si3ned the ship/s articles providin3 that the ri3hts of the crew members would be

3overned b1 $anish law and b1 the emplo1er/s contract with the $anish -eamen/s

Cnion, of which he was a member. Jhile in >avana and in the course of his

emplo1ment, he was ne3li3entl1 inured. >e sued the shipowner in a federal district

court in New Oork for dama3es under the 0ones &ct. ;n holdin3 that $anish law and

not the 0ones &ct was applicable, the -upreme %ourt adopted a m-(*+(e:)o&*%)*

*e*to determine, in the absence of a speciBc %on3ressional directive as to the

statute/s reach, which urisdiction/s law should be applied. The followin3 factors

were considered7 ;1< (%)e o *e 8ro&3-( %)*= ;2< (%8 o *e >%3= ;