Mekatrade Asia Pte. Ltd. v. Philippine Phosphate Fertilizer Corp.

FIRST DIVISION

[G.R. No. 226173. October 6, 2021.]

MEKATRADE ASIA PTE. LTD., petitioner, vs. PHILIPPINE PHOSPHATE FERTILIZER CORPORATION, respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution dated October 6, 2021 which reads as follows:

"G.R. No. 226173 (Mekatrade Asia Pte. Ltd. v. Philippine Phosphate Fertilizer Corporation).— All litigants must follow the procedural orderliness that the rules against forum shopping wish to foster. The rules cannot be disregarded as their convenience dictates. Otherwise, the acts of a party or his counsel constituting forum shopping shall be a ground for the summary dismissal of the case with prejudice, 1 direct contempt, and administrative sanctions against the lawyer. We observe this dictum in this petition for review on certiorari assailing the Court of Appeals' Decision dated March 22, 2016 in CA-G.R. SP No. 142284.

ANTECEDENTS

Mekatrade Asia Pte. Ltd. (Mekatrade) and Philippine Phosphate Fertilizer Corporation (PPFC) entered into a trade agreement. The contract provides that Mekatrade will sell raw materials to PPFC for the manufacture of fertilizer. On the other hand, PPFC will sell the finished fertilizer product to Mekatrade. From June 2011 to September 2012, the parties executed fourteen (14) contracts of purchase and sale, which contained an arbitration clause that all disputes arising from their agreement shall be referred to the International Chamber of Commerce of Paris.

On March 18, 2013, Mekatrade filed a request for arbitration with the ICC International Court of Arbitration in Paris, France, after PPFC failed to pay its obligation under the trade agreement. On January 27, 2015, the arbitral tribunal ruled in favor of Mekatrade and ordered PPFC to pay its obligation plus accrued interest. 2 On June 8, 2015, Mekatrade filed a petition for recognition and enforcement of the foreign arbitral award with prayer for issuance of a writ of preliminary attachment before the Regional Trial Court (RTC) docketed as Special Proceeding Case No. M-7831. 3 On June 9, 2015, the RTC ordered the issuance of the writ of preliminary attachment. 4 On June 10, 2015, the RTC issued the writ after Mekatrade posted the required bond.

Aggrieved, PPFC, through its counsel Azura Quiroz & Campos, filed an omnibus motion to reconsider the RTC Order dated June 9, 2015 and to lift the writ of preliminary attachment. The omnibus motion alleged that Mekatrade violated the Special Rules of Court on Alternative Dispute Resolution (Special ADR Rules) when it did not serve upon PPFC a copy of the petition with application for a writ of preliminary attachment prior to its filing with the RTC. Moreover, a petition to recognize or enforce a foreign arbitral award is not among those cases where an application for a writ of preliminary attachment may be had. 5 Likewise, PPFC opposed the petition on the grounds that the foreign arbitral award is not yet final and that copies of the Final Award and the arbitration agreements were not properly authenticated. 6

On September 3, 2015, the RTC resolved to deny PPFC's omnibus motion explaining that there is legal basis to grant the writ of preliminary attachment and that there was no violation of PPFC's right to due process. In the same order, the RTC granted Mekatrade's petition for recognition and enforcement of the foreign arbitral award, 7 thus: CHTAIc

x x x On the contrary, the Court finds the argument of respondent that the writ of preliminary attachment has no legal basis to be untenable.

Rule 13.3 of the Special ADR Rules specifically mentions the place of "the assets to be attached or levied upon" as a possible venue of a petition to recognize and enforce a foreign arbitral award. Consequently, by allowing the main action to be instituted at the Regional Trial Court having territorial jurisdiction over the assets to be attached, Rule 13.3 of the Special ADR Rules recognizes the likelihood of attachment at the commencement of the action.

A judgment, if left unexecuted, would be nothing but an empty triumph for the prevailing party. x x x The same principle must apply to an arbitral award. The availability of preliminary attachment during the pendency of this case serves this purpose, if only to ensure that the enforcement of the Final Award would not be an exercise in futility, especially since that an attachment lien continues until the judgment is satisfied. x x x. What is more, petitioner posted a bond that would answer for whatever damage that respondent might suffer in the event of a wrongful or excessive attachment.

Moreover, the Court finds respondent's contention that its constitutional right to due process was violated by the ex-parte issuance of the writ of preliminary attachment to be without merit. Well established, "a distinction should be made between the issuance and the enforcement of the writ. The trial court has unlimited power to issue the writ upon commencement of the action even before it acquires jurisdiction over the person of the defendant, but enforcement thereof can only be validly done after it shall have acquired jurisdiction." x x x Verily, respondent admitted x x x to having been contemporaneously served with Summons during the enforcement of the writ. Perforce, not only was the Writ of Preliminary Attachment validly issued, but it was properly implemented as well.

Thus, the Court finds no cogent reason to reverse its earlier Order to grant the writ of preliminary attachment.

xxx xxx xxx

Having disposed of the pending incidents, the Court shall now address the merit of the Petition.

After a perspicacious study of the arguments/submissions of the parties, the Court finds that petitioner was able to sufficiently comply with the requirements under the Special ADR Rules and thereby GRANTS the petition.

xxx xxx xxx

Petitioner's compliance with the provisions of Rule 13 of the Special ADR Rules has created a prima facie presumption in favor of the enforceability of the Final Award. As a direct result thereof, respondent is now burdened with the responsibility of proving the existence of any ground that would justify the denial of the Petition. In other words, the Special ADR Rules gives the burden of proof to the adverse party to show that there are existing grounds to oppose the recognition and enforcement of the Final Award.

However, the respondent failed to discharge this burden.

xxx xxx xxx

In claiming that the Final Award is not yet final and binding, respondent argues that the pendency of its application for cancellation of the Final Award before the Paris Court of Appeal precludes the court from granting the Petition. However, the Court finds that other than its bare allegations, respondent was unable to support its claim that the Final Award is not yet binding and should therefore be refused recognition and enforcement by the Court.

xxx xxx xxx

In contrast, the contention of the respondent was readily rebutted by the provisions of the French Code of Civil Procedure cited by petitioner and the Legal Opinion rendered by a French counsel, which was attached by petitioner to its Brief. According to the legal opinion rendered by the French lawyer, the French Code of Civil Procedure is unequivocal that an application to annul an arbitral award does not suspend the enforceability of the award.

In fact, a clear reading of Rule 13.4(a)(v) of the Special ADR Rules reveals that in order to be a valid ground to refuse the recognition and enforcement of a foreign arbitral award, the Final Award should have already been set aside or suspended by the competent court. Stated simply, the mere pendency of an action to cancel is not sufficient to deny the Petition. Hence, until and unless the Paris Court of Appeal sets aside or suspends the Final Award, the presumption still stands in favor of the binding character and enforceability of the Final Award.

xxx xxx xxx

Finally, the Court is satisfied with the authenticated copies submitted by petitioner of the Final Award and the 14 contracts containing the arbitration clause. The failure of the respondent to repudiate the authenticity of the Final Award and the 14 contracts did not escape the attention of the Court. x x x. (Emphases Supplied)

Dissatisfied, PPFC filed a motion for reconsideration assailing the RTC's Resolution dated September 3, 2015 in Special Proceeding Case No. M-7831. PPFC reiterated that the arbitral award is not yet final and that the supporting foreign documents were not properly authenticated. 8 Simultaneously, PPFC filed a petition for review before the Court of Appeals docketed as CA-G.R. SP No. 142284 assailing the RTC's Order dated June 9, 2015 and Resolution dated September 3, 2015. PPFC insisted that its right to due process was violated and that there is no legal basis to grant the writ of preliminary attachment. 9

On October 8, 2015, the RTC denied PPFC's motion for reconsideration for being pro forma. Undaunted, PPFC filed another petition for review with the Court of Appeals docketed as CA-G.R. SP No. 143090 assailing the RTC's Resolution dated September 3, 2015 and Order dated October 8, 2015. On November 23, 2016, the CA dismissed the petition for failure of PPFC to file an appeal bond pursuant to the Special ADR Rules. 10 PPFC moved for a reconsideration but was denied.

Meantime, the CA rendered a Decision dated March 22, 2016 in CA-G.R. No. 142284 lifting the writ of preliminary attachment. 11 The CA held that Mekatrade's failure to serve upon PPFC a copy of the petition for recognition and enforcement of foreign arbitral award is sufficient reason for the RTC not to grant the writ of preliminary attachment. Moreover, resort to interim measure of protection is no longer available after the arbitral proceedings, thus:

Perusing Mekatrade's application for the issuance of the Writ of Attachment, it anchored and premised the same both on Rule 5 of the Special Rules of Court on ADR and Rule 57 of the Rules of Court. However, the court a quo, in granting such application, failed to consider that the same are not in accordance with the provisions of the Special Rules of Court on ADR.

First, Mekatrade did not furnish Phil Phosphate any copy of the Petition for Recognition and Enforcement of Foreign Arbitral Award with Prayer for Issuance of Writ of Preliminary Attachment before filing the same with the court a quo.

xxx xxx xxx

Based on the foregoing provisions, in a case for preliminary attachment of property, the petitioner is required under the Special Rules of Court on ADR to serve, either by personal service or courier, a copy of the petition upon the respondent before the filing thereof. Here, it is undisputed that Mekatrade did not serve any copy of the Petition for Recognition and Enforcement of Foreign Arbitral Award (with Prayer for Issuance of Writ of Preliminary Attachment to Phil Phosphate prior its filing with the court a quo. It was only on 10 June 2015 when the Writ of Attachment was issued that Phil Phosphate was notified of the application for the issuance thereof. On this score alone, the court quo should not have conducted an ex parte hearing and thereafter, granted the application.

Second, the resort to interim measure of protection of preliminary attachment was not available to Mekatrade at the time of the application for the issuance of the Writ of Attachment.

Rule 5.2 of the Special Rules of Court on ADR specifically delimits the period within which a petition for interim measure of protection may be made, to wit:

xxx xxx xxx

x x x A reading of Rule 5.2 shows that the interim measure of protection shall only be available before and during the arbitral proceedings. Any other period that is not included in the enumeration is excluded therefrom. There was no specific mention that an interim measure of protection is still available after the arbitral proceedings. Thus, Mekatrade can no longer avail of the interim measure of protection as the arbitral proceedings already concluded after rendition of the Foreign Arbitral Award.

xxx xxx xxx

WHEREFORE, premises considered, the instant Petition for Review is GRANTED. The Order dated 09 June 2015, and Resolution dated 03 September 2015, only insofar as the denial of the Omnibus Motion (for Reconsideration of the Order dated June 9, 2015 and Lifting of the Writ of Preliminary Attachment issued on June 10, 2015) dated June 25, 2015 is concerned, both rendered by the Regional Trial Court of Makati City, Branch 59 in Special Pro Case No. M-7831 are REVERSED and SET ASIDE. Accordingly, the attachments over the properties of Philippine Phosphate Fertilizer Corp. by virtue of the Writ of Attachment dated 10 June 2015 are hereby ordered LIFTED effective immediately.

SO ORDERED.

Mekatrade sought reconsideration but was denied. Hence, this recourse. In the main, Mekatrade argues that PPFC committed forum shopping when it simultaneously filed a motion for reconsideration with the RTC and a petition for review with the CA. On the other hand, PPFC contends that the motion for reconsideration filed with the RTC and the petition for review before the CA asserted different rights and reliefs. The motion for reconsideration questioned the grant of petition for recognition and enforcement of the foreign arbitral award, while the petition for review assailed the issuance of the writ of preliminary attachment. Lastly, PPFC pointed out that the CA's Decision in CA-G.R. SP No. 142284 made a qualification in that it only reversed the denial of the omnibus motion to reconsider and to lift the writ of preliminary attachment. EATCcI

RULING

The petition is meritorious.

Forum shopping is the institution of two or more actions or proceedings involving the same parties for the same cause of action, either simultaneously or successively, on the expectation that one or the other court would render a favorable disposition. 12 It exists when the following requisites concur: (1) that the parties to the action are the same or at least representing the same interests in both actions; (2) that there is substantial identity in the causes of action and reliefs sought, the relief being founded on the same facts; and (3) that the result of the first action is determinative of the second in any event and regardless of which party is successful or that judgment in one, would amount to res judicata 13 or constitute litispendentia. 14

Here, the elements of forum shopping are confluent when PPFC simultaneously filed a motion for reconsideration and a petition for review. Foremost, both the motion for reconsideration in Special Proceeding Case No. M-7831 and the petition for review docketed as CA-G.R. SP No. 142284 involve the same parties, i.e., Mekatrade and PPFC. More importantly, both cases arose from the same factual circumstance, namely, the enforcement of the foreign arbitral award. Also, there exists substantial identity in the rights asserted and relief sought by both parties. Both the motion for reconsideration and the petition for review prayed to set aside the RTC's Resolution dated September 3, 2015, to wit:

[Motion for Reconsideration in

WHEREFORE, premises considered, it is most respectfully prayed unto this Honorable Court to reconsider and set aside its September 3, 2015 Resolution.

Other relief just and equitable under the premises are likewise prayed for.

[Petition for Review

WHEREFORE, premises considered, it is most respectfully prayed to this Honorable Court to:

xxx xxx xxx

2. To REVERSE AND SET ASIDE the June 9, 2015 Order and September 3, 2015Resolution and to thereafter immediately DISCHARGE all properties attached or garnished pursuant to the June 9, 2010 Order and the Writ of Attachment dated June 10, 2015.

Other relief just and equitable are likewise prayed for.

Contrary to PPFC's theory, the rights and reliefs asserted in the two actions are not distinct. The prayers in the motion for reconsideration and the petition for review is plain and simple — to set aside theSeptember 3, 2015 Resolution. To be sure, PPFC did not specifically indicate which aspect of the resolution is being assailed. As such, the reasonable conclusion is that PPFC questioned the September 3, 2015 Resolution in its entirety, which includes the grant of the petition for recognition and enforcement of the foreign arbitral award and the denial of the omnibus motion to reconsider and to lift the writ of preliminary attachment. In any event, the underlying objective in both remedies is to prevent the enforcement of the foreign arbitral award.

Lastly, the issues in both cases are determinative of each other regardless of which party is successful. A final judgment affirming the RTC's September 3, 2015 Resolution would divest PPFC of any interest to lift the writ of preliminary attachment or to set aside the grant of the petition for recognition and enforcement of the foreign arbitral award. Conversely, a final decision in favor of PPFC declaring the impropriety of the RTC's September 3, 2015 Resolution would result in the lifting of the writ and denial of the petition. Differently stated, if the RTC likewise granted PPFC's motion for reconsideration and reversed the recognition and enforcement of the foreign arbitral award, then there will be no occasion for the implementation of the writ of preliminary attachment, which is the subject matter of the petition for review before the CA. Clearly, the subject cases are so intimately related to each other and regardless of which party is successful, a judgment in one case would amount to res judicata in the other. 15

Notably, the prohibition against forum shopping seeks to prevent the possibility of conflicting decisions being rendered by the different fora upon the same or related issues. 16 In Guinto v. PPI Holdings, Inc., 17 the Court discussed the concept of forum shopping, viz.:

It is an act of malpractice for it trifles with the courts, abuses their processes, degrades the administration of justice and adds to the already congested court dockets. What is critical is the vexation brought upon the courts and the litigants by a party who asks different courts to rule on the same or related causes and grant the same or substantially the same reliefs and in the process creates the possibility of conflicting decisions being rendered by the different fora upon the same issues, regardless of whether the court in which one of the suits was brought has no jurisdiction over the action.

Also, in Philippine Postal Corp. v. Court of Appeals, 18 the Court emphasized the very evil that the proscription on forum shopping seeks to put right, thus:

x x x the Court stated that the grave evil sought to be avoided by the rule against forum shopping is the rendition by two competent tribunals of two separate and contradictory decisions. Unscrupulous party litigants, taking advantage of a variety of competent tribunals, may repeatedly try their luck in several different fora until a favorable result is reached. To avoid the resultant confusion, the Court adheres strictly to the rules against forum shopping, and any violation of these rules results in the dismissal of the case.

In this case, the CA and the RTC have in fact rendered contradictory findings with respect to interrelated matters brought about by PPFC's simultaneous filing of a motion for reconsideration and a petition for review. As it happened, the RTC denied PPFC's motion for reconsideration of the September 3, 2015 Resolution and effectively affirmed the grant of the petition to recognize and enforce the foreign arbitral award as well as the issuance of the writ of preliminary attachment. In contrast, the CA granted the petition for review of the September 3, 2015 Resolution and nullified the writ of preliminary attachment. The qualification in the CA's Decision in CA-G.R. SP No. 142284 to the effect that it set aside only the denial of the omnibus motion to reconsider and to lift the writ of preliminary attachment does not help PPFC's position considering that similar conflicting decisions were generated all the same. Prudence dictates that PPFC should have waited the resolution of the motion for reconsideration before filing a petition for review. To avert conflicting decisions, PPFC should have raised all its issues altogether in the petition for review, considering that a motion for reconsideration is not required before appealing a judgment or final order. 19

In sum, PPFC deliberately violated the rule against forum shopping. Hence, the petition for review before the CA docketed as CA-G.R. SP No. 142284 should have been summarily dismissed. The Court reminds the litigants and their lawyers that forum shopping constitutes abuse of court processes, which tends to degrade the administration of justice, to wreak havoc upon orderly juridical procedure, and to add to the congestion of the already burdened dockets of the courts. Further, the rule proscribing forum shopping seeks to foster candor and transparency between lawyers and their clients in appearing before the courts — to promote the orderly administration of justice, prevent undue inconvenience upon the other party, and save the precious time of the courts. It also aims to prevent the embarrassing possibility of two or more courts or agencies rendering conflicting resolutions or decisions upon the same issue. 20

FOR THESE REASONS, the petition is GRANTED. The petition for review on certiorari assailing the Decision of the Court of Appeals dated March 22, 2016 in CA-G.R. SP No. 142284 is DISMISSED on the ground of deliberate forum shopping. The respondent Philippine Phosphate Fertilizer Corporation and its counsel Azura Quiroz & Campos are directed to show cause why they should not be cited for direct contempt. DHITCc

SO ORDERED."

By authority of the Court:

(SGD.) LIBRADA C. BUENADivision Clerk of Court

By:

MARIA TERESA B. SIBULODeputy Division Clerk of Court

 

Footnotes

1.Heirs of Marcelo Sotto v. Palicte, 726 Phil. 651, 662 (2014). See also Supreme Court Administrative Circular No. 28-91, February 8, 1994.

2.Rollo, pp. 483-605.

3.Id. pp. 467-481.

4.Id. pp. 120-121.

5.Id. pp. 254-267.

6.Id. p. 130.

7.Id. pp. 123-133.

8.Id. pp. 829-841.

9.Id. pp. 100-115.

10. Penned by Associate Justice Victoria Isabel A. Paredes and concurred, with the concurrence of Associate Justices Magdangal M. De Leon and Elihu A. Ybañez.

11.Rollo, pp. 83-95. Penned by Associate Justice Jane Aurora C. Lantion, with the concurrence of Associate Justices Fernanda Lampas-Peralta and Nina G. Antonio-Valenzuela.

12.Madara v. Hon. Perello, 584 Phil. 613 (2008).

13.Dayot v. Shell Chemical (Phils.), Inc., 552 Phil. 602 (2007); Taningco v. Taningco, 556 Phil. 567 (2007); Go v. Looyuko, 563 Phil. 36 (2007); Arquiza v. Court of Appeals, 498 Phil. 793 (2005); Sherwill Development Corp. v. Sitio Sto. Niño Residents Association, Inc., 500 Phil. 288 (2005); and Ssangyong Corporation v. Unimarine Shipping Lines, Inc., 512 Phil. 171 (2005).

14.Philippine Radiant Products, Inc. v. Metropolitan Bank & Trust Company, Inc., 513 Phil. 414 (2005); PAL Employees Savings and Loan Association, Inc. v. Philippine Airlines, Inc., 520 Phil. 502 (2006); Veluz v. Court of Appeals, 399 Phil. 539 (2000), citing Alejandrino v. Court of Appeals, 356 Phil. 851 (1998), and Dasmariñas Village Association, Inc. v. Court of Appeals, 359 Phil. 944 (1998).

15.Olayvar v. Olayvar, 98 Phil. 52 (1955).

16.Guinto v. PPI Holdings, Inc., G.R. No. 249752, February 3, 2020. See also Top Rate Construction v. Paxton Development Corporation, 457 Phil. 740 (2003).

17. G.R. No. 249752, February 3, 2020.

18. 722 Phil. 860 (2013).

19.Alfredo Tagle v. Equitable PCI Bank, et al., 575 Phil. 384 (2008).

20.Zamora v. Quinan, Jr., 821 Phil. 1009 (2017).