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Case Digest: Pollard vs. NDC, G.R. No. 143866

 

Pollard vs. NDC, G.R. No. 143866, August 22, 2005

Subject: Transportation Law


FACTS

Poliand is an assignee of the of the rights of Asian Hardwood over the outstanding obligation of National Development Corporation (NDC), the latter being the owner of Galleon which previously secured credit accommodations from Asian Hardwood for its expenses on provisions, oil, repair, among others. Galleon also obtained loans from Japanese lenders to finance acquisition of vessels which was guaranteed by DBP in consideration of a promise by Galleon to secure a first mortgage on the vessels. DBP later transferred ownership of the vessel to NDC.  A collection suit was filed after repeated demands of Poliand for the satisfaction of the obligation from Galleon, NDC and DBP went unheeded.

ISSUE

Whether or not Poliand has a maritime lien enforceable against NDC or DBP.

RULING

Yes, Poliand has a maritime lien which is more superior than DBP’s mortgage lien. Before POLIAND’s claim may be classified as superior to the mortgage constituted on the vessel, it must be shown to be one of the enumerated claims which Section 17, P.D. No. 1521 declares as having preferential status in the event of the sale of the vessel. One of such claims enumerated under Section 17, P.D. No. 1521 which is considered to be superior to the preferred mortgage lien is a maritime lien arising prior in time to the recording of the preferred mortgage. Such maritime lien is described under Section 21, P.D. No. 1521.

Under the aforequoted provision, the expense must be incurred upon the order of the owner of the vessel or its authorized person and prior to the recording of the ship mortgage. Under the law, it must be established that the credit was extended to the vessel itself.

In this case, the trial court found that GALLEON’s advances obtained from Asian Hardwood were used to cover for the payment of bunker oil/fuel, unused stores and oil, bonded stores, provisions, and repair and docking of the GALLEON vessels.

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