CASE DIGEST - TSUNEISHI HEAVY INDUSTRIES (CEBU), INC. V. MIS MARITIME CORPORATION G.R. No. 193572 04 April 2018 Jardeleza, J.:

TSUNEISHI HEAVY INDUSTRIES (CEBU), INC. V. MIS MARITIME CORPORATION

G.R. No. 193572 

04 April 2018

Jardeleza, J.: 

Doctrine: 

When a lien already exists, this is already equivalent to an attachment.

Facts:

MIS Maritime Corporation contracted Tsuneishi to dry dock and repair its vessel through an agreement. Thus, the same was dry-docked in Tsuneishi's shipyard. But, a month later, MIS conducted an engine test, the vessel's engine emitted smoke. The parties eventually discovered that this was caused by a burnt crank journal. The crankpin also showed hairline cracks due to defective lubrication or deterioration, Tsuneishi insists that the damage was not its fault while MIS insists on the contrary. Nevertheless, as an act of goodwill, Tsuneishi paid for the vessel's new engine crankshaft, crankpin, and main bearings. Then, it billed MIS for the payment of its repair and dry docking services. However, MIS refused to pay this amount. Instead, it demanded Tsuneishi to pay for the income lost when the vessel was not operational and dry docked at Tsuneishi's shipyard. 

This prompted Tsuneishi to file a complaint against MIS before the RTC to enforce a maritime lien under Section 21 of the Ship Mortgage Decree. It also alleged as a cause of action MIS' unjustified refusal to pay the amount it owes Tsuneishi under their contract. The complaint included a prayer for the issuance of arrest order/writ of preliminary attachment. The RTC issued a writ of preliminary attachment which consequently attached MIS' properties. MIS, then, moved to discharge the attachment but the same was denied. It filed a special civil action for certiorari before the Court of Appeals which ruled in favor of MIS. It ruled that the writ of preliminary attachment is fatally defective. Hence, the petition. 

Issue: 

Whether a writ of preliminary attachment is necessary to enforce a maritime lien. 

Ruling: 

A lien is a "legal claim or charge on property, either real or personal, as a collateral or security for the payment of some debt or obligation. It attaches to a property by operation of law and once attached, it follows the property until it is discharged. What it does is to give the party in whose favor the lien exists the right to have a debt satisfied out of a particular thing. It is a legal claim or charge on the property which functions as a collateral or security for the payment of the obligation. 

Section 21 of the Ship Mortgage Decree establishes a lien. It states: 

Sec. 21. Maritime Lien for Necessaries; Persons entitled to such Lien. - Any person furnishing repairs, supplies, towage, use of dry dock or marine railway, or other necessaries to any vessel, whether foreign or domestic, upon the order of the owner of such vessel, or of a person authorized by the owner, shall have a maritime lien on the vessel, which may be enforced by suit in rem, and it shall be necessary to allege or prove that credit was given to the vessel. 

In practical terms, this means that the holder of the lien has the right to bring an action to seek the sale of the vessel and the application of the proceeds of this sale to the outstanding obligation. Through this lien, a person who furnishes repair, supplies, towage, use of dry dock or marine railway, or other necessaries to any vessel, in accordance with the requirements under Section 21, is able to obtain security for the payment of the obligation to him. 

A party who has a lien in his or her favor has a remedy in law to hold the property liable for the payment of the obligation. A lienholder has the remedy of filing an action in court for the enforcement of the lien. In such action, a lienholder must establish that the obligation and the corresponding lien exist before he or she can demand that the property subject to the lien be sold for the payment of the obligation. Thus, a lien functions as a form of security for an obligation. 

Liens, as in the case of a maritime lien, arise in accordance with the provision of particular laws providing for their creation, such as the Ship Mortgage Decree which clearly states that certain persons who provide services or materials can possess a lien over a vessel. The Rules of Court also provide for a provisional remedy which effectively operates as a lien. This is found in Rule 57 which governs the procedure for the issuance of a writ of preliminary attachment. 

A writ of preliminary attachment is a provisional remedy issued by a court where an action is pending. In simple terms, a writ of preliminary attachment allows the levy of a property which shall then be held by the sheriff. This property will stand as security for the satisfaction of the judgment that the court may render in favor of the attaching party. In Republic v. Mega Pacific eSolutions (Republic), we explained that the purpose of a writ of preliminary attachment is two fold: 

First, it seizes upon property of an alleged debtor in advance of final judgment and holds it subject to appropriation, thereby preventing the loss or dissipation of the property through fraud or other means. Second, it subjects the property of the debtor to the payment of a creditor's claim, in those cases in which personal service upon the debtor cannot be obtained. This remedy is meant to secure a contingent lien on the defendant's property until the plaintiff can, by appropriate proceedings, obtain a judgment and have the property applied to its satisfaction, or to make some provision for unsecured debts in cases in which the means of satisfaction thereof are liable to be removed beyond the jurisdiction, or improperly disposed of or concealed, or otherwise placed beyond the reach of creditors. 

As we said, a writ of preliminary attachment effectively functions as a lien. This is crucial to resolving Tsuneishi's alleged novel question of law in this case. Tsuneishi is correct that the Ship Mortgage Decree does not provide for the specific procedure through which a maritime lien can be enforced. Its error is in insisting that a maritime lien can only be operationalized by granting a writ of preliminary attachment under Rule 57 of the Rules of Court. Tsuneishi argues that the existence of a maritime lien should be considered as another ground for the issuance of a writ of preliminary attachment under the Rules of Court. 

Tsuneishi's argument is rooted on a faulty understanding of a lien and a writ of preliminary attachment. As we said, a maritime lien exists in accordance with the provision of the Ship Mortgage Decree. It is enforced by filing a proceeding in court. When a maritime lien exists, this means that the party in whose favor the lien was established may ask the court to enforce it by ordering the sale of the subject property and using the proceeds to settle the obligation. 

On the other hand, a writ of preliminary attachment is issued precisely to create a lien. When a party moves for its issuance, the party is effectively asking the court to attach a property and hold it liable for any judgment that the court may render in his or her favor. This is similar to what a lien does. It functions as a security for the payment of an obligation. In Quasha Asperilla Ancheta Valmonte Peña & Marcos v. Juan, we held: 

An attachment proceeding is for the purpose of creating a lien on the property to serve as security for the payment of the creditors' claim. Hence, where a lien already exists, as in this case a maritime lien, the same is already equivalent to an attachment. X X X 

To be clear, we repeat that when a lien already exists, this is already equivalent to an attachment. This is where Tsuneishi's argument fails. 

Clearly, because it claims a maritime lien in accordance with the Ship Mortgage Decree, all Tsuneishi had to do is to file a proper action in court for its enforcement. The issuance of a writ of preliminary attachment on the pretext that it is the only means to enforce a maritime lien is superfluous. The reason that the Ship Mortgage Decree does not provide for a detailed procedure for the enforcement of a maritime lien is because it is not necessary. Section 21 already provides for the simple procedure-file an action in rem before the court.