K.K. Shell Sekiyu Osaka Hatsubaisho and Fu Hing Oil Co., Ltd. v.

Court of Appeals

G.R. Nos. 90306-7, July 30, 1990

CORTES, J.:

Doctrine: The invocation of the doctrine of forum non conveniens requires that the exact nature
of the relationship of the parties be established.

Facts: Kumagai Kaiun Kaisha, Ltd. (Kaisha), a Japanese corporation, filed for a complaint for
the collection of sum of money with preliminary attachment against Atlantic Venus Co., S.A., a
corporation registered in Panama, the vessel MV Estella and Crestamonte Shipping Corporation
(Crestamonte), a Philippine Corporation. In its civil case, Kaisha alleged that Crestamonte, as
bareboat charterer and operator of the MV Estella, appointed N.S. Shipping Corporation (NSS),
a Japanese corporation, as its general agent in Japan, which was formalized in an Agency
Agreement. NSS in turn appointed Kumagai as its local agent in Osaka, Japan. Kumagai
supplied the MV Estella with supplies and services but despite repeated demands Crestamonte
failed to pay the amounts due.

Fu Hing Oil Co., Ltd. (Fu Hing), a corporation organized in Hong Kong and not doing business
in the Philippines, filed a motion for leave to intervene with an attached
complaint-in-intervention, alleging that Fu hin supplied marine diesel oil.fuel to the MV Estella
and incurred barge expenses for the total sum of $152,412.56) but such has remained unpaid
despite demand and that the claim constitutes a maritime lien. The complaint-in-intervention
sought the issuance of a writ of preliminary attachment.

K.K. Shell Sekiyuo Osaka Hatsubaisho (K.K. Shell), a corporation organized in Japan and not
doing business in the Philippines, likewise filed a motion to intervene with an attached
complaint-in-intervention alleging that upon the request of NSS, Crestamonte’s general agent in
Japan, K.K. Shell provided and supplied marine diesel oil/fuel to MV Estella at the ports of
Tokyo and Mutsure Japan and that despite previous demands Crestamonte has failed to pay the
amounts of $16,996.66 and Y 1,000,000.00. The complaint-in-intervention sought the issuance
of a writ of preliminary attachment.

Both interventions were allowed by the trial court and writs of preliminary attachment were
subsequently issued upon posting of the appropriate bonds. Upon posting of the counterbonds,
the writs of attachments were discharged.

Atlantic and MV Estella moved to dismiss the complaints-in-intervention filed by Fu Hing and
K.K. Shell. In the meantime, Atlantic and MV Estella filed a petition in the Court of Appeals
against the trial court judge, seeking to annul the orders of the trial court denying the motion to
reconsider allowing Fu Hing’s intervention and granting K.K. Shell’s motion to intervene. The
CA annulled the orders of the trial court. According to the CA, Fu Hing and K.K. Shell were not
suppliers but sub-agents of NSS, hence they were bound by the Agency Agreement between
Crestamonte and NSS, particularly, the choice of forum clause which provides that the
agreement shall be governed by Laws of Japan and disputes regarding the agreement shall be
exclusively to the jurisdiction of the District Courts of Japan.

Issue: Whether or not the doctrine of forum non conveniens is a valid ground to cause the
dismissal of K.K. Shell’s complaint-in-intervention?

Ruling: No. A reading of the Agency Agreement fails to support the conclusion that K.K. Shell
is a sub-agent of NSS and is therefore bound by the agreement. No express reference to the
contracting of sub-agents or to the applicability of the terms of the agreement, particularly the
choice-of-forum clause, to sub-agents is made in the text of the agreement.

The Court in this case elucidated that it was not ready to rule on Atlantic’s invocation of the
doctrine of forum non conveniens, as the exact nature of the relationship of the parties is still to
be established. The Court also left this determination to the sound discretion of the trial court
judge who is in the best position, after some vital facts are established, to determine whether
special circumstances require that his court desist from assuming jurisdiction over the suit.

There are still numerous material facts to be established in order to arrive at a conclusion as to
the true nature of the relationship between Crestamonte and K.K. Shell and between NSS and
K.K. Shell. The best recourse would have been to allow the trial court to proceed with the civil
case and consider whatever defenses may be raised by private respondents after they have filed
their answer and evidence to support their conflicting claim has been presented.