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Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-11897 October 31, 1964

FERNANO A. FRO!LAN,plaintiff-appellee,vs.PAN OR!ENTAL S"!PP!NG COMPAN#,defendant-appellant,REPU$L!C OF T"E P"!L!PP!NES, %&' COMPAN!A MAR!T!MA, intervenors-appellees.

Sycip, Salazar & Associates and Enrique Fernando & Emma Quisumbing-Fernando fordefendant-appellant.Te !o"ernment #orporate #ounsel for inter"enors-appellees.

$afael %inglasan for plaintiff-appellee.

$ARRERA, J.:

On March 7, !"7, #ernando A. #roilan purchased fro$ the %hippin& Ad$inistration a boatdescribed as M'(#% !7 for the su$ of P)**,***.**, +ith a do+n pa$ent of P*,***,**. osecure pa$ent of the unpaid balance of the purchase price, a $ort&a&e +as constituted on thevessel in favor of the %hippin& Ad$inistration in a contract+hich provides, a$on& others, thefollo+in&/

0n the event that the #0R% PAR1 should elect to e2ercise its ri&hts to rescind underthe ter$s of this contract, it shall have the ri&ht to ta3e possession of the vessel herein

sold in the condition that it is at the ti$e of rescission but in no case in a +orse conditionthan +hen ori&inall delivered to the second part, ordinar +ear and tear e2cepted andin case at the ti$e of rescission the condition of the vessel is not satisfactor to the#0R% PAR1, it shall have the ri&ht to have the vessel reconditioned, repaired, dr-doc3ed at the e2pense of the %ECON4 PAR1. he sa$e ri&ht is hereb &ranted to the#0R% PAR1 in case the %ECON4 PAR1 should for an reason refuse or fail toco$pl +ith this condition of sale and return the vessel herein sold in a condition notsatisfactor to the #0R% PAR1.

he ri&ht of rescission shall be considered as a cu$ulative re$ed &ranted to the #0R%PAR1 and shall not in an +a pre5udice his ri&ht to de$and i$$ediate and co$pletepa$ent of the purchase price of the vessel under the ter$s herein provided, and to

de$and and collect fro$ the %ECON4 PAR1 such da$a&es caused b the non-co$pliance +ith this contract.

his contract +as dul approved b the President of the Philippines.

#roilan appeared to have defaulted in spite of de$ands, not onl in the pa$ent of the firstinstall$ent on the unpaid balance of the purchase price and the interest thereon +hen the felldue, but also failed in his e2press underta3in& to pa the pre$iu$s on the insurance covera&eof the vessel, obli&in& the %hippin& Ad$inistration to advance such pa$ent to the insurance

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co$pan. Conse6uentl, the %hippin& Ad$inistration re6uested the Co$$issioner of Custo$son une , !"8 to refuse clearance on the vessel and the voa&e thereof +as orderedsuspended.

hereafter, #roilan as3ed for a reconsideration of the action ta3en b the %hippin&Ad$inistration, clai$in& that his failure to pa the re6uired install$ents +as due to the fact that

he +as a+aitin& the decision of the President on the petition of the shipo+ners for an e2tensionof the period of pa$ent of the purchased vessels, +hich petition +as favorabl acted upon.

On ul 9, !"8, the %hippin& Ad$inistration and #roilan entered into an a&ree$ent +herebthe latter undertoo3 to li6uidate i$$ediatel all of his outstandin& accounts, includin& theinsurance pre$iu$s, +ithin 9* das, and have the vessel overhauled, and pro$ised that incase of his default, he shall :+aive, an for$al notice of de$and and to redeliver the said vesselpeaceabl and a$icabl +ithout an other proceedin&s: ;E2h. 9!ed to ta3e i$$ediate possessionof said vessel. ;E2h. ??