COMPANIA MARITIMA Vs CA

COMPANIA MARITIMA vs.
CA
FACTS:
Fernando A. Froilan purchased from the Shipping Administration a boat for the sum of P200,000.00,
with a down payment of P50,000.00. To secure payment of the unpaid balance of the purchase
price, a mortgage was constituted on the vessel in favor of the Shipping Administration. Froilan
incurred a series of defaults notwithstanding reconsiderations granted, so much so that. The
General Manager of the Shipping Administration directed its officers to take immediate possession
of the vessel. However, the boat was, not only actually repossessed, but the title thereto was
registered again in the name of the Shipping Administration, re-transferring the ownership thereof
to the government.
On the other hand, Pan Oriental, offered to charter the vessel for a monthly rent of P3,000.00 which
the government accepted Pan Oriental's offer on the condition that the latter shall cause the repair
of the vessel advancing the cost. In accordance with this charter contract, the vessel was delivered
to the possession of Pan Oriental.
In the meantime, Froilan tried to explain his failure to comply with the obligations he assumed and
asked that he be given another extension to file the necessary bond. The Shipping Administration
denied his petition for reconsideration.
The Shipping Administration and Pan Oriental formalized the charter agreement and signed a
bareboat contract with option to purchase.
The formal bareboat charter with option to purchase in favor of the Pan Oriental was returned to
the General Manager of the Shipping Administration without action because of a Cabinet resolution
restoring Froilan to his rights to said boat. But Froilan again failed to comply with these conditions.
This led to the authorization by the Cabinet, that the charter contract with Pan Oriental will
continue. The Cabinet yet again resolved to restore Froilan to his rights under the original contract
of sale.
Pan Oriental protested to this restoration of Froilan's rights under the contract of sale. Pan Oriental
refused to surrender possession of the vessel. The court ordered the seizure of the vessel from Pan
Oriental and its delivery to the plaintiff.
The Republic of the Philippines was allowed to intervene in the proceeding, also prayed for the
possession of the vessel in order that the chattel mortgage constituted thereon may be foreclosed.
Defendant Pan Oriental resisted said intervention, claiming to have its right of retention, in view of
the expenses it had incurred for the repair of the said vessel.
Subsequently, Compañia Maritima, as purchaser of the vessel from Froilan, was allowed to
intervene in the proceedings (RTC). The lower court rendered a decision upholding Froilan's and
Compañia Maritima's right to the ownership and possession of the ship.
ISSUE: Who has a better right to the ship?
RULING:
Neither Froilan nor the Pan Oriental holds a valid contract over the vessel. However, since the
intervenor Shipping Administration, representing the government practically ratified its proposed
contract with Froilan by receiving the full consideration of the sale to the latter, for which reason
the complaint in intervention was dismissed as to Froilan, and since Pan Oriental has no capacity to
question this actuation of the Shipping Administration because it had no valid contract in its favor,
the of the lower court adjudicating the vessel to Froilan and its successor Maritima, must be
sustained.
Nevertheless, under the already adverted to, Pan Oriental cannot be considered as in bad faith until
after the institution of the case. However, since it is not disputed that said made useful and
necessary expenses on the vessel, appellant is entitled to the refund of such expenses with the light
to retain the vessel until he has been reimbursed therefor (Art. 546, Civil Code).
For clarity, this court ordered to be paid by MARITIMA and the REPUBLIC, jointly and severally, to
PAN-ORIENTAL are: (a) the sum of P6,937.72 a month from February 3, 1951, the date of PAN-
ORIENTAL's dispossession, in the concept of damages for the deprivation of its right to retain the
vessel.

COMPANIA MARITIMA Vs CA

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COMPANIA MARITIMA Vs CA

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COMPANIA MARITIMA vs.

ISSUE: Who has a better right to the ship?

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