Froilanvs.PanOrientalShippingCo.S e p t e m b e r 3 0 , 1 9 5 4 1 0 3 P H I L . 4 7 3 P A R A S , J .

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Nature of the Case: Appeal from an Order of the CFI of M a n i l a .
FACTSD e f e n d a n t Pa n O r i e n t a l t o o k p o s s e s s i o n o f t h e v e s s e l i n
q u e sti on afte r i t h ad be e n re p osse sse d b y the
S hi p p in g Ad mi ni strati on an d ti tl e the re to re acq u i re d b y
th e g ove rn men t, f ol l owin g th e ori gi n al p u rch ase r,
Fe r n a n d o Fr o i l a n s , d e f a u l t i n h i s p a y m e n t o f t h e u n p a i d
b a l a n c e a n d i n s u r a n c e p r e m i u m s f o r t h e s a i d v e s s e l . Pa n
O rie n tal ch arte re d sai d ve sse l an d op e rate d th e same afte r i t
h ad re p ai re d th e ve sse l an d p ai d the sti p u l ate d in i ti al p ayme n t,
t h e r e b y e xe r c i s i n g i t s o p t i o n t o p u r c h a s e , p u r s u a n t t o a b a r e b o a t
ch arte r con tra ct e n te re d be twe e n sai d comp an y an d th e Sh i pp i n g
C o r p o r a t i o n . T h e C a b i n e t r e s o l v e d t o r e s t o r e Fr o i l a n t o h i s
rightsunder the original contract of sale on condition that heshall
pay a sum of money upon delivery of the vessel tohim, that he
sh al l con ti n ue p ayi n g th e re mai n in g in stal l me n ts du e , an d th at h e
sh al l assu me the expe n se si n cu rre d f or th e re p ai r an d b y d ock i n g
o f t h e v e s s e l . Pa n O r i e n t a l p r o t e s t e d t o t h i s r e s t o r a t i o n o f Fr o i l a n s
ri g h tsu n de r th e con trac t of sal e , f or th e re ason th at whe n
th e ve sse l was d el i ve re d to it, th e Sh i p pi n g Ad min i strati on h ad
a u t h o r i t y t o d i s p o s e o f s a i d a u t h o r i t y t o t h e p r o p e r t y , Fr o i l a n
h avi n g al re ad y re li n q ui sh e d wh ate ve r rig h ts he may h ave the re on .
Fr o i l a n p a i d t h e r e q u i r e d c a s h o f P 1 0 , 0 0 0 . 0 0 a n d a s Pa n O r i e n t a l
r e f u s e d t o s u r r e n d e r p o s s e s s i o n o f t h e v e s s e l , h e fi l e d a n a c t i o n
f or in th e CFIof Man il a to re cove r p osse ssi on th e re of an d h ave
h i m d e c l a r e d t h e r i g h t f u l o w n e r o f s a i d p r o p e r t y. T h e Re p u b l i c o f
the Philippines was allowed tointervene in said civil case praying
for the possession of the in order that the chattel mortgage
con sti tu te d th e re on may b e f ore cl ose d .
ISSUE
W h e t h e r o r n o t t h e g o v e r n m e n t s m o t i o n t o d i s m i s s Pa n O r i e n t a l
c o u n t e r c l a i m s m a y p r o s p e r.
HELD:
n d e r t h e c i r c u m s t a n c e s a l r e a d y a d v o t e d t o , Pa n O r i e n t a l c a n n o t b e
con si d e re d a p osse ssor in b ad f ai th un ti l afte r th e in sti tu ti on of the
instant case. However,since it is not disputed that said appellant
i s e n ti tl e d toth e re f un d of su ch exp e n se s wi th th e ri g h t to re tai n
th e ve sse l un til h e h as b ee n re i mb u rse d th e re f ore . As i t i s b yth e
c o r r e c t e d a c t s o f d e f e n d a n t a n d i n t e r v e n o r Re p u b l i c o f t h e
Philippines that the appellant ha a lien far hisexpenses, appellees
Fr o i l a n , C o m p a n i a M a r a t m a , a n d t h e Re p u b l i c o f t h e P h i l i p p i n e s a r e
d e cl are d li ab le f or the re i mb u rse me n t to ap pe ll an t of i ts le g i ti mate
exp en se s, asal l owe d b y l aw, wi th l eg al i n te re st f rom th e ti me
of disbursement.