Macalinao, Romielyn P.

Subject: Constitutional Law 1

Topic: Non-suability of the State
Title: FROILAN vs PAN ORIENTAL SHIPPING
Reference: GR: L- 6060

FACTS

Defendant Pan Oriental took possession of the vessel in

question after it had been repossessed by the Shipping Administration
and title thereto reacquired by the government, following the original
purchaser, Fernando Froilans, default in his payment of the unpaid
balance and insurance premiums for the said vessel.

Pan Oriental chartered said vessel and operated the same after
it had repaired the vessel and paid the stipulated initial payment,
thereby exercising its option to purchase, pursuant to a bareboat
charter contract entered between said company and the Shipping
Corporation.

The Cabinet resolved to restore Froilan to his rights under the

original contract of sale on condition that hes hall pay a sum of money
upon delivery of the vessel tohim, that he shall continue paying the
remaining installments due, and that he shall assume the expenses
incurred for the repair and by docking of the vessel.

However, Pan Oriental protested to this restoration of Froilans

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, Froilan having already
relinquished whatever rights he may have thereon.
 Consequently, Froilan paid the required cash of P10,000.00 and
as Pan Oriental refused to surrender possession of the vessel, he filed
an action for in the CFI of Manila to recover possession thereof and
have him declared the rightful owner of said property.

Moreover, the Republic of the Philippines was allowed to

intervene in said civil case praying for the possession of the in order
that the chattel mortgage constituted thereon may be foreclosed.

ISSUES

Whether or not the Court has jurisdiction over the intervenor

with regard to the counterclaim?

RULINGS

Yes. The Supreme Court held that the government impliedly

allowed itself to be sued when it filed a complaint in intervention for
the purpose of asserting claim for affirmative relief against the plaintiff
to the recovery of the vessel.

It is a settled rule that when the government enters into a

contract, for the State is then deem to have divested itself of the
mantle of sovereign immunity and descended to the level of the
ordinary individual. Having done so, it becomes subject to judicial
action and processes.

In the case at bar, The state as plaintiff may avail itself of the
different forms of actions open to private litigants. The immunity of the
state from suits does not deprive it of the right to sue private parties
in its own courts.
 In short, by taking the initiative in an action against a private
party, the state surrenders its privileged position and comes down to
the level of the defendant. The latter automatically acquires, within
certain limits, the right to set up whatever claims and other defenses
he might have against the state.