SC voids deal between seafarer, consultancy firm

INQUIRER PHOTO / NINO JESUS ORBETA

The Supreme Court invalidated a litigation financing agreement between a seafarer and a consultancy firm because it was grossly disadvantageous to the seafarer.

In a 15-page decision promulgated on Nov. 6, 2023, but made public only on Thursday, the high court’s Second Division dismissed the certiorari petition filed by Rodco Consultancy and Maritime Services Corp., which challenged the Court of Appeals (CA) ruling that earlier dismissed its complaint for sum of money and damages against repatriated seafarer Floserfino Ross.

The high tribunal found the consultancy firm had no interest in the monetary claim of Ross against his former employers, yet it agreed to finance the expenses necessary to pursue its litigation in exchange for a promise to be reimbursed and a portion of the proceeds of his claim.

Profit from litigation

The Supreme Court noted that Rodco intended to profit from the litigation of Ross’ case as shown by the terms of the irrevocable memorandum of agreement and the supporting documents.

Ross earlier asked Rodco for assistance in filing a claim against his local manning agency, foreign shipowner, and insurance company.

He executed a special power of attorney authorizing the firm to represent him in his claims. The document also stated that he could not sign any document or negotiate a settlement for any amount without consulting or acquiring Rodco’s prior approval.

The firm said Ross issued two checks in the amounts of P300,000 and P940,800 after successfully collecting his money claim.

However, the checks were dishonored when presented to the bank.

Ross claimed the consultancy firm asked him to issue two blank checks, the details of which were allegedly never made known to him as Rodco’s officers took custody to guarantee payment.

Rodco’s 35-percent cut

Upon learning that 35 percent of the actual monetary award will be given to Rodco, Ross requested more time to think about the agreement.

The firm sent several demand letters to Ross and his wife to settle their obligations but they were unheeded. This prompted Rodco to file a complaint before a regional trial court (RTC) for a sum of money and damages against the couple.

The RTC ruled in Rodco’s favor, ordering the couple to pay the firm P1,240,800 representing the amount of the checks issued, plus 6-percent interest, P40,000 in damages and attorney’s fees.

READ: FFW hails SC ruling on seafarer’s claim

The CA, however, reversed RTC’s ruling, saying the contract the two parties entered into was void from the start because Rodco provided legal services despite not having lawyers from its team.

In resolving the present petition, the Court evaluated the contract between Ross and Rodco and found it has the features of litigation financing by a third party.

“It is grossly disadvantageous to Floserfino as there is no specific agreement as to the amount to be given to Rodco, in the event of a successful claim against the employer, to satisfy his obligation in exchange for the ‘consultancy service’ rendered by Rodco,” the Supreme Court said.

“Here, there is financial overreaching by a third party with superior bargaining position in the case of a financially pressed litigant,” it said. The Supreme Court concluded that Rodco cannot recover its monetary claim from the couple. INQ