G.R. Nos. 90306-07 July 30, 1990
K.K. SHELL SEKIYU OSAKA HATSUBAISHO and FU HING OIL CO., LTD., petitioners, vs. THE HONORABLE COURT OF APPEALS, ATLANTIC VENUS CO., S.A., and THE VESSEL M/V “ESTELLA”, respondents.

FACTS

Petitioner K.K. Shell Sekiyu Osaka Hatsubaisho (K.K. Shell), a Japanese corporation, filed a complaint-in-intervention in a collection case before the Regional Trial Court (RTC) of Manila. K.K. Shell alleged it supplied marine fuel to the vessel M/V “Estella,” owned by respondent Atlantic Venus Co., S.A., upon the request of N.S. Shipping Corporation (NSS), which was the appointed general agent in Japan of the vessel’s bareboat charterer, Crestamonte Shipping Corporation. K.K. Shell claimed its unpaid charges constituted a maritime lien enforceable against the vessel. The RTC allowed the intervention and issued a writ of preliminary attachment. Atlantic Venus and the vessel moved to dismiss the intervention and filed a petition in the Court of Appeals (CA) seeking to annul the RTC’s orders.
The Court of Appeals annulled the RTC’s orders and directed it to cease proceedings. The CA ruled that K.K. Shell was a sub-agent of NSS and was therefore bound by the Agency Agreement between Crestamonte and NSS, which contained a choice of forum clause stipulating that disputes be subject exclusively to the jurisdiction of Japanese courts. Consequently, the CA held the RTC should have disallowed K.K. Shell’s intervention. K.K. Shell elevated the matter to the Supreme Court. (Co-petitioner Fu Hing Oil Co., Ltd. had earlier withdrawn its petition after a settlement.)

ISSUE

Whether the Court of Appeals erred in annulling the RTC’s orders and prohibiting further proceedings based on its conclusion that K.K. Shell was a sub-agent bound by the Agency Agreement’s forum selection clause, thereby precluding intervention.

RULING

Yes, the Court of Appeals committed reversible error. The Supreme Court held that the CA’s factual conclusion that K.K. Shell was a sub-agent of NSS, and thus bound by the Agency Agreement, was manifestly mistaken and premature. A reading of the Agency Agreement’s body did not support such a conclusion; it appointed NSS as a general agent but did not expressly authorize NSS to appoint sub-agents. The legal logic is that an agent has no inherent power to delegate its authority unless expressly granted by the principal or implied by the nature of the agency. The CA based its finding on a mere allegation in K.K. Shell’s complaint, without the benefit of a full trial where evidence on the precise nature of the relationships could be presented.
Furthermore, the Supreme Court emphasized that K.K. Shell’s claim was based on a purported maritime lien under Philippine law (Presidential Decree No. 1521), which grants a lien for supplies furnished to a vessel upon the order of the owner or an authorized person. Whether credit was extended to the vessel itself, a prerequisite for the lien, is a factual issue requiring evidentiary determination. The CA substituted its judgment for the trial court’s on the merits of the case despite the absence of a complete factual record, as the respondents had not even filed their answer in the RTC. The proper recourse was to allow the trial court to proceed, receive evidence, and resolve the factual and legal issues, including the applicability of the forum selection clause and the doctrine of forum non conveniens. The Supreme Court reversed the CA decision and reinstated the RTC’s orders allowing K.K. Shell’s intervention.