Fernando Froilan filed a complaint against Pan Oriental Shipping Co. to recover possession of a vessel he had purchased. The Philippines intervened, seeking possession to foreclose a mortgage. The lower court found for Froilan. Pan Oriental appealed, arguing: 1) the court lacked jurisdiction over the Philippines; and 2) Pan Oriental had a better claim to possession than Froilan. The Supreme Court ruled that by intervening, the Philippines waived immunity. It also rejected Pan Oriental's other arguments, finding its counterclaim was not barred by prior judgments and had foundation despite the Philippines not making a direct claim against Pan Oriental.
Fernando Froilan filed a complaint against Pan Oriental Shipping Co. to recover possession of a vessel he had purchased. The Philippines intervened, seeking possession to foreclose a mortgage. The lower court found for Froilan. Pan Oriental appealed, arguing: 1) the court lacked jurisdiction over the Philippines; and 2) Pan Oriental had a better claim to possession than Froilan. The Supreme Court ruled that by intervening, the Philippines waived immunity. It also rejected Pan Oriental's other arguments, finding its counterclaim was not barred by prior judgments and had foundation despite the Philippines not making a direct claim against Pan Oriental.
Fernando Froilan filed a complaint against Pan Oriental Shipping Co. to recover possession of a vessel he had purchased. The Philippines intervened, seeking possession to foreclose a mortgage. The lower court found for Froilan. Pan Oriental appealed, arguing: 1) the court lacked jurisdiction over the Philippines; and 2) Pan Oriental had a better claim to possession than Froilan. The Supreme Court ruled that by intervening, the Philippines waived immunity. It also rejected Pan Oriental's other arguments, finding its counterclaim was not barred by prior judgments and had foundation despite the Philippines not making a direct claim against Pan Oriental.
21. FERNANDO A. FROILAN (plaintiff- may have thereon.
Plaintiff paid the required
appellee) vs. PAN ORIENTAL SHIPPING CO. cash of P10,000.00 and as Pan Oriental refused (defendant-appellant) and REPUBLIC OF THE to surrender possession of the vessel, he filed PHILIPPINES (intervenor-appellee) an action to recover possession thereof and FACTS: have him declared the rightful owner of said Plaintiff, Froilan filed a complaint against the property. defendant-appellant, Pan Oriental Shipping Co., The Republic of the Philippines was allowed to alleging that he purchased from the Shipping intervene in said civil case praying for the Commission the vessel for P200,000, paying possession of the vessel in order that the chattel P50,000 down and agreeing to pay the balance mortgage constituted thereon may be in installments. foreclosed. MAIN ISSUE: The lower court erred in To secure the payment of the balance of the dismissing the counterclaim on the ground of purchase price, he executed a chattel mortgage alleged lack of jurisdiction over the intervenor of said vessel in favor of the Shipping Republic of the Philippines (NON-SUABILITY Commission. For various reasons, among them OF THE GOVERNMENT) the non-payment of the installments, the OTHER ISSUES: Shipping Commission tool possession of said A. The lower court erred in dismissing the vessel and considered the contract of sale counterclaim on the ground of prior judgment. B. The lower court erred in dismissing the cancelled. The Shipping Commission chartered counterclaim on the ground that the and delivered said vessel to the defendant- counterclaim had no foundation because made appellant Pan Oriental Shipping Co. subject to to a complaint in intervention that contained no the approval of the President of the Philippines. claim against the defendant. Plaintiff appealed the action of the Shipping Commission to the President of the Philippines RULING: (FOR THE MAIN ISSUE) and, in its meeting the Cabinet restored him to By filing its complaint in intervention the Government in effect waived its right of all his rights under his original contract with the nonsuability. Shipping Commission. Plaintiff had repeatedly demanded from the Pan Oriental Shipping Co. DOCTRINE: The immunity of the state from the possession of the vessel in question but the suits does not deprive it of the right to sue latter refused to do so. private parties in its own courts. The state as plaintiff may avail itself of the different forms of Plaintiff, prayed that, upon the approval of the actions open to private litigants. In short, by taking the initiative in an action against a bond accompanying his complaint, a writ of private party, the state surrenders its replevin be issued for the seizure of said vessel privileged position and comes down to the with all its equipment and appurtenances, and level of the defendant. The latter automatically that after hearing, he be adjudged to have the acquires, within certain limits, the right to set up rightful possession thereof . The lower court whatever claims and other defenses he might issued the writ of replevin prayed for by Froilan have against the state. and by virtue thereof the Pan Oriental Shipping (When the government enters into a contract, for the State is then deem to have divested itself of Co. was divested of its possession of said the mantle of sovereign immunity and vessel. descended to the level of the ordinary individual. Having done so, it becomes subject to judicial Pan Oriental protested to this restoration of action and processes.) Plaintiff‘s rights under the contract of sale, for the reason that when the vessel was delivered to it, the Shipping Administration had authority to dispose of said authority to the property, Plaintiff having already relinquished whatever rights he RULING OTHER ISSUES: A. The appellant's contention that its counterclaim is not barred by prior judgment (order of February 8, 1952, dismissing the complaint in intervention) 1. because said counterclaim was filed on November 29, 1951, before the issuance of the order invoked; and 2. because in said order of February 8, the court dismissed the complaint in intervention, "without, of course, precluding the determination of the right of the defendant in the instant case," and subject to the condition that the "release and cancellation of the chattel mortgage does not, however, prejudge the question involved between the plaintiff and the defendant which is still the subject of determination in this case." B. The lower court also erred in holding that, as the intervenor had not made any claim against the defendant, the latter's counterclaim had no foundation. The complaint in intervention sought to recover possession of the vessel in question from the plaintiff, and this claim is logically adverse to the position assumed by the defendant that it has a better right to said possession than the plaintiff who alleges in his complaint that he is entitled to recover the vessel from the defendant. At any rate a counterclaim should be judged by its own allegations, and not by the averments of the adverse party.
Petitioner-Appellee vs. vs. Respondent Appellant Solicitor General Antonio Barredo, Assistant Solicitor General Antonio G. Ibarra and Solicitor Bernardo P. Pardo Sta. Ana and Mariano