Philippine Refining Co., Inc.

vs Francisco Jarque

GR No. L-41506 March 25, 1935

Facts:

On various dates, Philippine Refining Co. (PRC) and Jarque executed three mortgages on motor vessels.
2 of the vessels had appended an affidavit of good faith, the 3 rd one had but this was not registered in
the customs within the period of 30 days prior to the commencement of insolvency proceedings against
Jarque. A 4 th mortgage was executed by Jarque on a motorship and was registered and again within the
30 day period before the institution of the insolvency proceedings.

Issue:

Was there any defect on the mortgages?

Ruling:

Yes. Vessels are considered personal property under the Civil Law and Code of Commerce. They
subject to the provisions of the Chattel Mortgage Law. However, It is now Necessary for a Chattel
Mortgage of a VESSEL to be noted in the registry of deeds and that a record of documents affecting the
title to a vessel be entered in the record of the Collector of Customs at the port of entry. Also, the Chattel
Mortgage Law requires that an affidavit of good faith be appended to the mortgage and recorded
therewith otherwise, the Chattel Mortgage Law is unenforceable against third persons.