8epubllc of Lhe hlllpplnes

SUkLML CCUk1
Manlla
Ln 8AnC
G.k. No. L-6060 September 30, 19S4
ILkNANDC A. IkCILAN, plalnLlff-appellee,
vs.
AN CkILN1AL SnIING CC., defendanL-appellanL,
kLU8LIC CI 1nL nILIINLS, lnLervenor-appellee.

AkAS, !"#"$
1he facLual anLecedenLs of Lhls case are sufflclenLly reclLed ln Lhe brlef flled by Lhe
lnLervenor-appellee as follows:
1. Cn lebruary 3, 1931, plalnLlff-appellee, lernando A. lrollan, flled a complalnL
agalnsL Lhe defendanL-appellanL, an CrlenLal Shlpplng Co., alleglng LhaL he
purchased from Lhe Shlpplng Commlsslon Lhe vessel lS-197 for 200,000, paylng
30,000 down and agreelng Lo pay Lhe balance ln lnsLallmenLs, LhaL Lo secure Lhe
paymenL of Lhe balance of Lhe purchase prlce, he execuLed a chaLLel morLgage of
sald vessel ln favor of Lhe Shlpplng Commlsslon, LhaL for varlous reason, among
Lhem Lhe non-paymenL of Lhe lnsLallmenLs, Lhe Shlpplng Commlsslon Look
possesslon of sald vessel and consldered Lhe conLracL of sale cancelled, LhaL Lhe
Shlpplng Commlsslon charLered and dellvered sald vessel Lo Lhe defendanL-
appellanL an CrlenLal Shlpplng Co. sub[ecL Lo Lhe approval of Lhe resldenL of
Lhe hlllpplnes, LhaL he appealed Lhe acLlon of Lhe Shlpplng Commlsslon Lo Lhe
resldenL of Lhe hlllpplnes and, ln lLs meeLlng on AugusL 23, 1930, Lhe CablneL
resLored hlm Lo all hls rlghLs under hls orlglnal conLracL wlLh Lhe Shlpplng
Commlsslon, LhaL he had repeaLedly demanded from Lhe an CrlenLal Shlpplng
Co. Lhe possesslon of Lhe vessel ln quesLlon buL Lhe laLLer refused Lo do so. Pe,
Lherefore, prayed LhaL, upon Lhe approval of Lhe bond accompanylng hls
complalnL, a wrlL of replevln be lssued for Lhe selzure of sald vessel wlLh all lLs
equlpmenL and appurLenances, and LhaL afLer hearlng, he be ad[udged Lo have
Lhe rlghLful possesslon Lhereof (8ec. on App. pp. 2-8).
2. Cn lebruary 3, 1931, Lhe lower courL lssued Lhe wrlL of replevln prayed for by
lrollan and by vlrLue Lhereof Lhe an CrlenLal Shlpplng Co. was dlvesLed of lLs
possesslon of sald vessel (8ec. on App. p. 47).
3. Cn March 1, 1931, an CrlenLal Shlpplng Co. flled lLs answer denylng Lhe rlghL
of lrollan Lo Lhe possesslon of Lhe sald vessel, lL alleged LhaL Lhe acLlon of Lhe
CablneL on AugusL 23, 1930, resLorlng lrollan Lo hls rlghLs under hls orlglnal
conLracL wlLh Lhe Shlpplng Commlsslon was null and vold, LhaL, ln any evenL,
lrollan had noL complled wlLh Lhe condlLlons precedenL lmposed by Lhe CablneL
for Lhe resLoraLlon of hls rlghLs Lo Lhe vessel under Lhe orlglnal conLracL, LhaL lL
suffered damages ln Lhe amounL of 22,764.39 for wrongful replevln ln Lhe
monLh of lebruary, 1931, and Lhe sum of 17,631.84 a monLh as damages
suffered for wrongful replevln from March 1, 1931, lL alleged LhaL lL had lncurred
necessary and useful expenses on Lhe vessel amounLlng Lo 127,037.31 and
clalmed Lhe rlghL Lo reLaln sald vessel unLll lLs useful and necessary expenses had
been relmbursed (8ec. on App. pp. 8-33).
4. Cn november 10, 1931, afLer Lhe leave of Lhe lower courL had been obLalned,
Lhe lnLervenor-appellee, CovernmenL of Lhe 8epubllc of Lhe hlllpplnes, flled a
complalnL ln lnLervenLlon alleglng LhaL lrollan had falled Lo pay Lo Lhe Shlpplng
Commlsslon (whlch name was laLer changed Lo Shlpplng AdmlnlsLraLlon) Lhe
balance due on Lhe purchase prlce of Lhe vessel ln quesLlon, Lhe lnLeresL
Lhereon, and lLs advances on lnsurance premlum LoLalllng 162,142.93,
excludlng Lhe dry-docklng expenses lncurred on sald vessel by Lhe an CrlenLal
Shlpplng Co., LhaL lnLervenor was enLlLled Lo Lhe possesslon of Lhe sald vessel
elLher under Lhe Lerms of Lhe orlglnal conLracL as supplemenLed by lrollan's
leLLer daLed !anuary 28, 1949, or ln order LhaL lL may cause Lhe exLra[udlclal sale
Lhereof under Lhe ChaLLel MorLgage Law. lL, Lherefore, prayed LhaL lrollan be
ordered Lo dellver Lhe vessel ln quesLlon Lo lLs auLhorlzed represenLaLlve, Lhe
8oard of LlquldaLors, LhaL lrollan be declared Lo be wlLhouL any rlghLs on sald
vessel and Lhe amounLs he pald Lhereon forfelLed or alLernaLely, LhaL Lhe sald
vessel be dellvered Lo Lhe 8oard of LlquldaLors ln order LhaL Lhe lnLervenor may
have lLs chaLLel morLgage exLra[udlclally foreclosed ln accordance wlLh Lhe
provlslons of Lhe ChaLLel MorLgage Law, and LhaL pendlng Lhe hearlng on Lhe
merlLs, Lhe sald vessel be dellvered Lo lL (8ec. on App. pp. 34-66).
3. Cn november 29, 1931, Lhe an CrlenLal Shlpplng Co. flled an answer Lo Lhe
complalnL ln lnLervenLlon alleglng LhaL Lhe CovernmenL of Lhe 8epubllc of Lhe
hlllpplnes was obllgaLed Lo dellver Lhe vessel ln quesLlon Lo lL by vlrLue of a
conLracL of bare-boaL charLer wlLh opLlon Lo purchase execuLed on !une 16,
1949, by Lhe laLLer ln favor of Lhe former, lL also alleged LhaL lL had made
necessary and useful expenses on Lhe vessel and clalmed Lhe rlghL of reLenLlon
of Lhe vessel. lL, Lherefore, prayed LhaL, lf Lhe 8epubllc of Lhe hlllpplnes
succeeded ln obLalnlng possesslon of Lhe sald vessel, Lo comply wlLh lLs
obllgaLlons of dellverlng Lo lL (an CrlenLal Shlpplng co.) or causlng lLs dellvery by
recoverlng lL from lrollan (8ec. on App. pp. 69-81).
6. Cn november 29, 1931, lrollan Lendered Lo Lhe 8oard of LlquldaLors, whlch
was llquldaLlng Lhe affalrs of Lhe Shlpplng AdmlnlsLraLlon, a check ln Lhe amounL
of 162,376.96 ln paymenL of hls obllgaLlon Lo Lhe Shlpplng AdmlnlsLraLlon for
Lhe sald vessel as clalmed ln Lhe complalnL ln lnLervenLlon of Lhe CovernmenL of
Lhe 8epubllc of Lhe hlllpplnes. 1he 8oard of LlquldaLors lssued an offlclal reporL
Lherefor sLaLlng LhaL lL was a 'deposlL pendlng Lhe lssuance of an order of Lhe
CourL of llrsL lnsLance of Manlla' (8ec. on App. pp. 92-93).
7. Cn uecember 7, 1931, Lhe CovernmenL of Lhe 8epubllc of Lhe hlllpplnes
broughL Lhe maLLer of sald paymenL and Lhe clrcumsLance surroundlng lL Lo Lhe
aLLenLlon of Lhe lower courL "ln order LhaL Lhey may be Laken lnLo accounL by
Lhls Ponorable CourL ln connecLlon wlLh Lhe quesLlons LhaL are noL pendlng
before lL for deLermlnaLlon" (8ec. on App. pp. 82-86).
8. Cn lebruary 3, 1932, Lhe lower courL held LhaL Lhe paymenL by lrollan of Lhe
amounL of 162,376.96 on november 29, 1931, Lo Lhe 8oard of LlquldaLors
consLlLuLed a paymenL and a dlscharge of lrollan's obllgaLlon Lo Lhe CovernmenL
of Lhe 8epubllc of Lhe hlllpplnes and ordered Lhe dlsmlssal of Lhe laLLer's
complalnL ln lnLervenLlon. ln Lhe same order, Lhe lower courL made lL very clear
LhaL sald order dld noL pre-[udge Lhe quesLlon lnvolved beLween lrollan and Lhe
CrlenLal Shlpplng Co. whlch was also pendlng deLermlnaLlon ln sald courL (8ec.
on App. pp. 92-93). 1hls order dlsmlsslng Lhe complalnL ln lnLervenLlon, buL
reservlng for fuLure ad[udlcaLlon Lhe conLroversy beLween lrollan and Lhe an
CrlenLal Shlpplng Co. has already become flnal slnce nelLher Lhe CovernmenL of
Lhe 8epubllc of Lhe hlllpplnes nor Lhe an CrlenLal Shlpplng Co. had appealed
Lherefrom.
9. Cn May 10, 1932, Lhe CovernmenL of Lhe 8epubllc of Lhe hlllpplnes flled a
moLlon Lo dlsmlss Lhe counLerclalm of Lhe an CrlenLal Shlpplng Co. agalnsL lL on
Lhe ground LhaL Lhe purpose of sald counLerclalm was Lo compel Lhe
CovernmenL of Lhe 8epubllc of Lhe hlllpplnes Lo dellver Lhe vessel Lo lL (an
CrlenLal Shlpplng Co.) ln Lhe evenL LhaL Lhe CovernmenL of Lhe 8epubllc of Lhe
hlllpplnes recovers Lhe vessel ln quesLlon from lrollan. ln vlew, however, of Lhe
order of Lhe lower courL daLed lebruary 3, holdlng LhaL Lhe paymenL made by
lrollan Lo Lhe 8oard of LlquldaLors consLlLuLed full paymenL of lrollan's
obllgaLlon Lo Lhe Shlpplng AdmlnlsLraLlon, whlch order had already become flnal,
Lhe clalm of Lhe an CrlenLal Shlpplng Co. agalnsL Lhe 8epubllc of Lhe hlllpplnes
was no longer feaslble, sald counLerclalm was barred by prlor [udgmenL and
sLaLed no cause of acLlon. lL was also alleged LhaL movanL was noL sub[ecL Lo Lhe
[urlsdlcLlon of Lhe courL ln connecLlon wlLh Lhe counLerclalm. (8ec. on App. pp.
94-97). 1hls moLlon was opposed by Lhe an CrlenLal Shlpplng Co. ln lLs wrlLLen
opposlLlon daLed !une 4, 1932 (8ec. on app. pp. 19-104).
10. ln an order daLed !uly 1, 1932, Lhe lower courL dlsmlssed Lhe counLerclalm of
Lhe an CrlenLal Shlpplng Co. as prayed for by Lhe 8epubllc of Lhe hlllpplnes
(8ec. on App. pp. 104-106).
11. lL lf from Lhls order of Lhe lower courL dlsmlsslng lLs counLerclalm agalnsL Lhe
CovernmenL of Lhe 8epubllc of Lhe hlllpplnes LhaL an CrlenLal Shlpplng Co. has
perfecLed Lhe presenL appeal (8ec. on App. p. 107).
1he order of Lhe CourL of llrsL lnsLance of Manlla, dlsmlsslng Lhe counLerclalm of Lhe
defendanL an CrlenLal Shlpplng Co., from whlch Lhe laLLer has appealed, reads as
follows:
1hls ls a moLlon Lo dlsmlss Lhe counLerclalm lnLerposed by Lhe defendanL ln lLs
answer Lo Lhe complalnL ln lnLervenLlon.
"1he counLerclalm sLaLes as follows:
"CCun1L8CLAlM
"As counLerclalm agalnsL Lhe lnLervenor 8epubllc of Lhe hlllpplnes, Lhe
defendanL alleges:
"1. 1haL Lhe defendanL reproduces hereln all Lhe perLlnenL allegaLlons of Lhe
foregolng answer Lo Lhe complalnL ln lnLervenLlon
"2. 1haL, as shown by Lhe allegaLlons of Lhe foregolng answer Lo Lhe complalnL ln
lnLervenLlon, Lhe defendanL an CrlenLal Shlpplng Company ls enLlLled Lo Lhe
possesslon of Lhe vessel and Lhe lnLervenor 8epubllc of Lhe hlllpplnes ls bound
under Lhe conLracL of charLer wlLh opLlon Lo purchase lL enLered lnLo wlLh Lhe
defendanL Lo dellver LhaL possesslon Lo Lhe defendanL - wheLher lL acLually has
Lhe sald possesslon or lL does noL have LhaL possesslon from Lhe plalnLlff
lernando A. lrollan and dellver Lhe same Lo Lhe defendanL,
"3. 1haL, noLwlLhsLandlng demand, Lhe lnLervenor 8epubllc of Lhe hlllpplnes has
noL Lo daLe complled wlLh lLs obllgaLlon of dellverlng or causlng Lhe dellvery of
Lhe vessel Lo Lhe defendanL an CrlenLal Shlpplng Company.!"#$%&'()*+
"8LLlLl
"WPL8LlC8L, Lhe defendanL respecLfully prays LhaL [udgmenL be rendered
orderlng Lhe lnLervenor 8epubllc of Lhe hlllpplnes alLernaLlvely Lo dellver Lo Lhe
defendanLs Lhe possesslon of Lhe sald vessel, or Lo comply wlLh lLs obllgaLlon Lo
Lhe defendanL or causlng Lhe dellvery Lo Lhe laLLer of Lhe sald vessel by
recoverlng Lhe same from plalnLlff, wlLh cosLs.
"1he defendanL prays for such oLher remedy as Lhe CourL may
deem [usL and equlLable ln Lhe premlses."
1he ground of Lhe moLlon Lo dlsmlss are (,) 1haL Lhe cause of acLlon ls barred by
prlor [udgmenL, (-) 1haL Lhe counLerclalm sLaLes no cause of acLlon, and (.) 1haL
Lhls Ponorable CourL has no [urlsdlcLlon over Lhe lnLervenor governmenL of Lhe
8epubllc of Lhe hlllpplnes ln connecLlon wlLh Lhe counLerclalm of Lhe defendanL
an CrlenLal Shlpplng Co.
1he lnLervenor conLends LhaL Lhe complalnL ln lnLervenLlon havlng been
dlsmlssed and no appeal havlng been Laken, Lhe dlsmlssal of sald complalnL ls
LanLamounL Lo a [udgmenL.
1he complalnL ln lnLervenLlon dld noL conLaln any clalm whaLsoever agalnsL Lhe
defendanL an CrlenLal Shlpplng Co., hence, Lhe counLerclalm has no foundaLlon.
1he quesLlon as Lo wheLher Lhe CourL has [urlsdlcLlon over Lhe lnLervenor wlLh
regard Lo Lhe counLerclalm, Lhe CourL ls of Lhe oplnlon LhaL lL has no [urlsdlcLlon
over sald lnLervenor.
lL appearlng, Lherefore, LhaL Lhe grounds of Lhe moLlon Lo dlsmlss are well Laken,
Lhe counLerclalm of Lhe defendanL ls dlsmlssed, wlLhouL pronouncemenL as Lo
cosLs.
1he defendanL's appeal ls predlcaLed upon Lhe followlng asslgnmenLs of error:
l. 1he lower courL erred ln dlsmlsslng Lhe counLerclalm on Lhe ground of prlor
[udgmenL.
ll. 1he lower courL erred ln dlsmlsslng Lhe counLerclalm on Lhe ground LhaL Lhe
counLerclalm had no foundaLlon because made Lo a complalnL ln lnLervenLlon
LhaL conLalned no clalm agalnsL Lhe defendanL.
lll. 1he lower courL erred ln dlsmlsslng Lhe counLerclalm on Lhe ground of alleged
lack of [urlsdlcLlon over Lhe lnLervenor 8epubllc of Lhe hlllpplnes.
We agree wlLh appellanL's conLenLlon LhaL lLs counLerclalm ls noL barred by prlor
[udgmenL (order of lebruary 8, 1932, dlsmlsslng Lhe complalnL ln lnLervenLlon), flrsL,
because sald counLerclalm was flled on november 29, 1931, before Lhe lssuance of Lhe
order lnvoked, and, secondly, because ln sald order of lebruary 8, Lhe courL dlsmlssed
Lhe complalnL ln lnLervenLlon, "wlLhouL, of course, precludlng Lhe deLermlnaLlon of Lhe
rlghL of Lhe defendanL ln Lhe lnsLanL case," and sub[ecL Lo Lhe condlLlon LhaL Lhe "release
and cancellaLlon of Lhe chaLLel morLgage does noL, however, pre[udge Lhe quesLlon
lnvolved beLween Lhe plalnLlff and Lhe defendanL whlch ls sLlll Lhe sub[ecL of
deLermlnaLlon ln Lhls case." lL ls Lo be noLed LhaL Lhe flrsL condlLlon referred Lo Lhe rlghL
of Lhe defendanL, as dlsLlngulshed from Lhe second condlLlon LhaL expressly speclfled
Lhe conLroversy beLween Lhe plalnLlff and Lhe defendanL. 1haL Lhe flrsL condlLlon
reserved Lhe rlghL of Lhe defendanL as agalnsL Lhe lnLervenor, ls clearly Lo be deduced
from Lhe facL LhaL Lhe order of lebruary 8 menLloned Lhe clrcumsLance LhaL "Lhe
quesLlon of Lhe expenses of drydocklng lncurred by Lhe defendanL has been lncluded ln
lLs counLerclalm agalnsL Lhe plalnLlff," apparenLly as one of Lhe grounds for granLlng Lhe
moLlon Lo dlsmlss Lhe complalnL ln lnLervenLlon.
1he defendanL's fallure Lo appeal from Lhe order of lebruary 8 cannoL, Lherefore, be
held as barrlng Lhe defendanL from proceedlng wlLh lLs counLerclalm, slnce, as already
sLaLed, sald order preserved lLs rlghL as agalnsL Lhe lnLervenor. lndeed, Lhe malnLenance
of sald rlghL ls ln consonance wlLh 8ule 30, secLlon 2, of Lhe 8ules of CourL provldlng LhaL
"lf a counLerclalm has been pleaded by a defendanL prlor Lo Lhe servlce upon hlm of Lhe
plalnLlff's moLlon Lo dlsmlss, Lhe acLlon shall noL be dlsmlssed agalnsL Lhe defendanL's
ob[ecLlon unless Lhe counLerclalm can remaln pendlng for lndependenL ad[udlcaLlon by
Lhe courL."
1he lower courL also erred ln holdlng LhaL, as Lhe lnLervenor had noL made any clalm
agalnsL Lhe defendanL, Lhe laLLer's counLerclalm had no foundaLlon. 1he complalnL ln
lnLervenLlon soughL Lo recover possesslon of Lhe vessel ln quesLlon from Lhe plalnLlff,
and Lhls clalm ls loglcally adverse Lo Lhe poslLlon assumed by Lhe defendanL LhaL lL has a
beLLer rlghL Lo sald possesslon Lhan Lhe plalnLlff who alleges ln hls complalnL LhaL he ls
enLlLled Lo recover Lhe vessel from Lhe defendanL. AL any raLe a counLerclalm should be
[udged by lLs own allegaLlons, and noL by Lhe avermenLs of Lhe adverse parLy. lL should
be recalled LhaL Lhe defendanL's Lheory ls LhaL Lhe plalnLlff had already losL hls rlghLs
under Lhe conLracL wlLh Lhe Shlpplng AdmlnlsLraLlon and LhaL, on Lhe oLher hand, Lhe
defendanL ls relylng on Lhe charLer conLracL execuLed ln lLs favor by Lhe lnLervenor
whlch ls bound Lo proLecL Lhe defendanL ln lLs possesslon of Lhe vessel. ln oLher words,
Lhe counLerclalm calls for speclflc performance on Lhe parL of Lhe lnLervenor. As Lo
wheLher Lhls counLerclalm ls merlLorlous ls anoLher quesLlon whlch ls noL now before
us.
1he oLher ground for dlsmlsslng Lhe defendanL's counLerclalm ls LhaL Lhe SLaLe ls
lmmune from sulL. 1hls ls unLenable, because by flllng lLs complalnL ln lnLervenLlon Lhe
CovernmenL ln effecL walved lLs rlghL of nonsuablllLy.
1he lmmunlLy of Lhe sLaLe from sulLs does noL deprlve lL of Lhe rlghL Lo sue
prlvaLe parLles ln lLs own courLs. 1he sLaLe as plalnLlff may avall lLself of Lhe
dlfferenL forms of acLlons open Lo prlvaLe llLlganLs. ln shorL, by Laklng Lhe
lnlLlaLlve ln an acLlon agalnsL a prlvaLe parLy, Lhe sLaLe surrenders lLs prlvlleged
poslLlon and comes down Lo Lhe level of Lhe defendanL. 1he laLLer auLomaLlcally
acqulres, wlLhln cerLaln llmlLs, Lhe rlghL Lo seL up whaLever clalms and oLher
defenses he mlghL have agalnsL Lhe sLaLe. 1he unlLed SLaLes Supreme CourL Lhus
explalns:
"no dlrecL sulL can be malnLalned agalnsL Lhe unlLed SLaLes. 8uL when an
acLlon ls broughL by Lhe unlLed SLaLes Lo recover money ln Lhe hands of a
parLy who has a legal clalm agalnsL Lhem, lL would be a very rlgld
prlnclple Lo deny Lo hlm Lhe rlghL of seLLlng up such clalm ln a courL of
[usLlce, and Lurn hlm around Lo an appllcaLlon Lo Congress." (Slnco,
hlllpplne ollLlcal Law, 1enLh Ld., pp. 36-37, clLlng u. S. /0. 8lnggold, 8
eL. 130, 8 L. ed. 899.)
lL ls however, conLended for Lhe lnLervenor LhaL, lf Lhere was aL all any walver, lL was ln
favor of Lhe plalnLlff agalnsL whom Lhe complalnL ln lnLervenLlon was dlrecLed. 1hls
conLenLlon ls unLenable. As already sLaLed, Lhe complalnL ln lnLervenLlon was ln a sense
ln derogaLlon of Lhe defendanL's clalm over Lhe possesslon of Lhe vessel ln quesLlon.
Wherefore, the appea|ed order |s hereby reversed and set as|de and the case
remanded to the |ower court for further proceed|ngs. So ordered, w|thout costs.