For being grossly disadvantageous to the seafarer, the Supreme Court voided a litigation financing agreement between a seafarer and a consultancy firm.

Associate Justice Jhosep Y. Lopez, in a decision he penned dated 6 November 2023, the Supreme Court’s Second Division denied the petition for review on certiorari filed by RODCO Consultancy and Maritime Services Corporation.

The petition assailed the rulings of the Court of Appeals (CA) which had reversed the Regional Trial Court’s (RTC) award of damages in favor of RODCO.

Floserfino G. Ross (Floserfino), a repatriated seafarer, sought the assistance of RODCO, a consultancy and professional services firm, in filing a claim against his local manning agency, foreign ship owner, and insurance company.

Floserfino thus executed a Special Power of Attorney (SPA) authorizing RODCO to represent him in his claims. The SPA also stated that Floserfino could not sign any document nor negotiate for settlement for any amount without consulting or acquiring the prior approval of RODCO.

He also executed an Affidavit of Undertaking stating that RODCO is his exclusive and recognized Pioneer Seaman Claims Consultancy Office in the complaint he filed against United Philippine Lines, Inc., et al. at the National Labor Relations Commission.

The Affidavit also stated that Floserfino obligates, without any need of demand, to turn over portion of proceeds of money claims in favor of RODCO.

All the terms and conditions in the foregoing documents were integrated and incorporated in the Irrevocable Memorandum of Agreement executed by Floserfino and his wife, Antonia T. Ross (Antonia).

RODCO claimed that after Floserfino’s money claim was successfully collected, he issued in RODCO’s favor two checks in the amounts of PHP 300,000 and PHP 940,800, respectively. However, the checks were dishonoured when presented to the drawee bank.

Floserfino, however, claimed that RODCO 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 guaranty payment. Further, when he learned that 35% of the actual monetary award will be given to RODCO, he asked for more time to think about the agreement.

RODCO sent several demand letters to Floserfino and Antonia to settle their obligations. When the demands remained unheeded, RODCO filed before the RTC a complaint for sum of money and damages against the spouses.

The RTC ruled in RODCO’s favor, ordering the spouses to pay RODCO PHP 1,240,800 representing the amount of the checks issued, plus 6% interest, and PHP 40,000 in damages and attorney’s fees.

The CA, however, reversed the RTC’s ruling, holding that the contract entered into by Floserfino and RODCO was void from the beginning because RODCO rendered legal services despite the fact that it was not composed of lawyers, and the Irrevocable Memorandum of Agreement, which does not indicate the amount of contingent fee, lacked consideration.

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