FERNANDO A.

FROILAN, plaintiff-appellee,
vs.
PAN ORIENTAL SHIPPING CO., defendant-appellant,
REPUBLIC OF THE PHILIPPINES, intervenor-appellee.

FACTS:

- Feb. 3, 1951, Plaintiff-appellee, Fernando A Froilan filed a complaint against the

defendant-appelant, Pan Oriental, alleging that he purchased from the Shipping
Commission a vessel and due to non-payment of installment of chattel mortgage, the
Shipping Commission took possession of the said vessel and considered the contract
of sale canceled.

- The Shipping Commission delivered the said vessel to Pan Oriental. Froilan
appealed to the President and the Cabinet restored to him all his rights under his
original contract with the Shipping Commission. He demanded from Pan Oriental
possession of the vessel but the later refused.

- The Government of the Republic of the Philippines intervened alleging that

Froilan had failed to pay to the Shipping Commission the balance due on the ourchase
price of the vessel in question and that the state was entitled to the possession of the
said vessel under the terms of the original contract. Therefore, it prayed for Froilan to
deliver the vessel to its representative, the Board of Liquidators in accordance to the
revisions of the Chattel Mortgage Law.

- Pan Oriental filed a counterclaim that the Government was obligated to deliver
the vessel to it by virtue of a contract of bareboat charter with option purchase. It
alleged that it had made the necessary and useful expenses on the vessel and claimed
the right to it. It prayed that if the Government was successful in obtaining the
possession of the said vessel, it should comply with its obligations of delivering it to
Pan.

- Froilan tendered to the Board of Liquidators a check in payment of his balance/

obligation to the Shipping Commission as claimed by the Government.

- The lower court held that the payment of Froilan discharge his obligation to the
Government therefor the complaint in the intervention has been dismissed.

- The Government filed a motion to dismiss the counterclaim of Pan against it on

the ground that the purpose of the counterclaim was to compel the Government to
deliver the vessel to it in the event that the Government recovers the vessel from
Froilan however since payment has already been made by Froilan the counterclaim is
no longer feasible.

ISSUE:
Whether of not the Republic of the Philippines is immune from suit.
HELD:

No, the Government of the Republic of the Philippines is not immune from
suit.

By filing its complaint in intervention the Government in effect waived its

right of non-suability. The immunity of the State from the suit does not deprive it of
the right to sue private parties in its own courts. The state as plaintiff may avail itself
of the different form of actions open to private litigants. 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 defendant. The latter automatically acquires,
within certain limits, the right to set up whatever claims and other defense he night
have against the state.

It is however, contended for the intervenor that, if there was at all any waiver,
it was in favour of the plaintiff against whom the complaint in intervention was
directed. This contention is untenable. As already stated, the complaint in intervention
was in a sense a derogation of the defendants claim over the possession of the vessel
in question.