Facts:

The case involves the Board of Liquidators (petitioner and appellant) and Exequiel Floro, among others (opponents and appellees). The dispute arose from an order issued by the Court of First Instance of Manila on August 10, 1955, which denied the Board's petition to exclude certain pieces of steel matting from the assets of the insolvent M. P. Malabanan. The Board of Liquidators is a government agency established under Executive Order No. 372 on November 24, 1950, which took over the functions of the defunct Surplus Property Liquidating Committee. On June 14, 1952, Melecio Malabanan entered into a salvage agreement with the Board for surplus properties sunk in territorial waters off Mindoro, La Union, and Batangas. The contract stipulated that Malabanan would commence operations within 30 days and that the contract would last for one year, extendable for a maximum of six months.

Malabanan requested extensions for the salvage operations, which were granted by the Board....

Facts:

Background of the Case:

• The Board of Liquidators, a government agency created under Executive Order No. 372, took over the functions of the defunct Surplus Property Liquidating Committee. It entered into a salvage contract with Melecio Malabanan on June 14, 1952, for the recovery of surplus properties sunk in territorial waters off Mindoro, La Union, and Batangas.

Contract Terms and Extensions:

• The contract required Malabanan to commence operations within 30 days and was effective for one year, extendible for up to six months. Malabanan requested and was granted two extensions, first to November 30, 1953, and then to August 31, 1954.

Salvage Operations and Recovery:

• Malabanan submitted a recovery report on July 26, 1954, stating he had recovered 13,107 pieces of steel matting. Prior to this, on March 31, 1954, Malabanan entered into an agreement with Exequiel Floro, wherein Floro advanced funds up to P25,000.00, secured by steel matting. Floro claimed to have advanced P24,224.50.

Insolvency Proceedings:

• On August 21, 1954, Malabanan filed for voluntary insolvency, listing the Board as a creditor for P10,874.46 and Floro for P24,220.50. The inventory included 11,167 pieces of steel matting valued at P33,501.00.

Dispute Over Ownership:

• The Board filed a petition to exclude the steel matting from the insolvent’s inventory, claiming ownership. Floro opposed, asserting that the steel matting had been sold to Eulalio Legaspi under the terms of his contract with Malabanan.

Issue:

1. Whether Malabanan acquired ownership of the steel matting upon recovery, despite not fulfilling certain contractual conditions (e.g., payment, audit, and bond renewal).
2. Whether the sale of the steel matting by Floro to Legaspi was valid and not in violation of the Insolvency Law.
3. Whether the Board’s claim of ownership over the steel matting is valid, given the terms of the salvage contract.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Conclusion:

The Supreme Court affirmed the lower court’s ruling that the steel matting was the property of the insolvent, Malabanan, but allowed the assignee in insolvency to pursue any claims regarding the alleged fraudulent transfer of the steel matting to Legaspi. Costs were imposed on the Board of Liquidators.