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[No. 41506. March 25, 1935]

PHILIPPINE REFINING Co., INC., plaintiff andappellant, vs. FRANCISCO JARQUE, JOSE COROMINAS,and ABOITIZ & Co., defendants. JOSE COROMINAS, inhis capacity as assignee of the estate of the insolventFrancisco Jarque, appellee.

COURTS; JURISDICTION ; ADMIRALTY.—The meremortgage of a ship does not confer admiralty jurisdiction.

SHIPS AND SHIPPING; PROPERTY; CHATTELMORTGAGES; VESSELS, NATURE OF.—Vessels areconsidered personal property under the civil law and thecommon law.

ID.; ID.; ID. ; ID.—Vessels are subject to mortgageagreeably to the provisions of the Chattel Mortgage Law.

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230 PHILIPPINE REPORTS ANNOTATED

Philippine Refining Co. vs, Jarque

ID.; ID.; ID.; ID.—The only difference between a chattelmortgage of a vessel and a chattel mortgage of otherpersonalty is that it is not now necessary for a chattelmortgage of a vessel to be noted in the registry of theregister of deeds, but it is essential that a record ofdocuments affecting the title to a vessel be entered in therecord of the Collector of Customs at the port of entry.Otherwise a mortgage on a vessel is generally like otherchattel mortgages as to its requisites and validity.

ID. ; ID. ; ID. ; ID. ; EFFECT OF ABSENCE OFAFFIDAVIT OF GOOD FAITH.—The Chattel MortgageLaw, in its section 5, in describing what shall be deemedsufficient to constitute a good chattel mortgage, includesthe requirement of an affidavit of good faith appended tothe mortgage and recorded therewith. The absence of the

affidavit vitiates a mortgage as against creditors andsubsequent encumbrancers. As a consequence a chattelmortgage of a vessel wherein the affidavit of good faithrequired by the Chattel Mortgage Law is lacking, isunenforceable against third persons.

APPEAL from a judgment of the Court of First Instance ofCebu. Hontiveros, J.

The facts are stated in the opinion of the court.Thos. G. Ingalls, Vicente Pelaez and DeWitt, Perkins &

Brady for appellant.D. G. McVean and Vicente L. Faelnar for appellee.

MALCOLM, J.;

First of all the reason why this case has been decided bythe court in banc needs explanation. A motion waspresented by counsel for the appellant in which it wasasked that the case be heard and determined by the courtsitting in banc because the admiralty jurisdiction of thecourt was involved, and this motion was granted in regularcourse.

On further investigation it appears that this was error.The mere mortgage of a ship is a contract entered into bythe parties to it without reference to navigation or perils ofthe sea, and does not, therefore, confer admiraltyjurisdiction. (Bogart vs. Steamboat John Jay [1854], 17How., 399.)

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VOL. 61, MARCH 25, 1935 231Philippine Refining Co. vs. Jarque

Coming now to the merits, it appears that on varying datesthe Philippine Refining Co., Inc., and Francisco Jarqueexecuted three mortgages on the motor vessels Pandan andZaragoza. These documents were recorded in the record oftransfers and incumbrances of vessels for the port of Cebuand each was therein denominated a "chattel mortgage".Neither of the first two mortgages had appended anaffidavit of good faith. The third mortgage contained suchan affidavit, but this mortgage was not registered in thecustoms house until May 17, 1932, or within the period ofthirty days prior to the commencement of insolvencyproceedings against Francisco Jarque; also, while the lastmentioned mortgage was subscribed by Francisco Jarqueand M. N. Brink, there was nothing to disclose in what

capacity the said M. N. Brink signed. A fourth mortgagewas executed by Francisco Jarque and Ramon Aboitiz onthe motorship Zaragoza and was entered in the chattelmortgage registry of the register of deeds on May 12, 1932,or again within the thirty-day period before the institutionof insolvency proceedings. These proceedings were begunon June 2, 1932, when a petition was filed with the Courtof First Instance of Cebu in which it was prayed thatFrancisco Jarque be declared an insolvent debtor, whichsoon thereafter was granted, with the result that anassignment of all the properties of the insolvent wasexecuted in favor of Jose Corominas.

On these f acts, Judge Jose M. Hontiveros declined toorder the foreclosure of the mortgages, but on the contrarysustained the special defenses of fatal defectiveness of themortgages, In so doing we believe that the trial judge actedadvisedly.

Vessels are considered personal property under the civillaw. (Code of Commerce, article 585.) Similarly under thecommon law, vessels are personal property althoughoccasionally referred to as a peculiar kind of personalproperty. (Reynolds vs. Nielson [1903], 96 Am. Rep., 1000;Atlantic Maritime Co. vs. City of Gloucester [1917], 117

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232 PHILIPPINE REPORTS ANNOTATEDPhilippine Refining Co. vs. Jarque

N. E., 924.) Since the term "personal property" includesvessels, they are subject to mortgage agreeably to theprovisions of the Chattel Mortgage Law. (Act No. 1508,section 2.) Indeed, it has heretofore been accepted withoutdiscussion that a mortgage on a vessel is in nature achattel mortgage. (McMicking vs. Banco Español-Filipino[1909], 13 Phil., 429; Arroyo vs. Yu de Sane [1930], 54 Phil,511.) The only difference between a chattel mortgage of avessel and a chattel mortgage of other personalty is that itis not now necessary for a chattel mortgage of a vessel to benoted in the registry of the register of deeds, but it isessential that a record of documents affecting the title to avessel be entered in the record of the Collector of Customsat the port of entry. (Rubiso and Gelito vs. Rivera [1917],37 Phil., 72; Arroyo vs. Yu de Sane, supra.) Otherwise amortgage on a vessel is generally like other chattelmortgages as to its requisites and validity. (58 C. J., 92.)

The Chattel Mortgage Law in its section 5, in describingwhat shall be deemed sufficient to constitute a good chattel

mortgage, includes the requirement of an affidavit of goodfaith appended to the mortgage and recorded therewith.The absence of the affidavit vitiates a mortgage as againstcreditors and subsequent encumbrancers. (Giberson vs. A.N. Jureidini Bros. [1922], 44 Phil., 216; Benedicto deTarrosa vs. F. M. Yap Tico & Co. and Provincial Sheriff ofOccidental Negros [1923], 46 Phil., 753.) As a consequencea chattel mortgage of a vessel wherein the affidavit of goodfaith required by the Chattel Mortgage Law is lacking, isunenforceable against third persons.

In effect appellant asks us to find that the documentsappearing in the record do not constitute chattel mortgagesor at least to gloss over the failure to include the affidavitof good faith made a requisite for a good chattel mortgageby the Chattel Mortgage Law. Counsel would f urther haveus disregard article 585 of the Code of Commerce, but noreason is shown for holding this article not in force.Counsel would further have us revise doctrines heretoforeannounced in a series of cases, which it is not desirable todo

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VOL. 61, MARCH 25, 1935 233People vs. Aglahi

since those principles were confirmed after due deliberationand constitute a part of the commercial law of thePhilippines. And finally counsel would have us makerulings on points entirely foreign to the issues of the case.As neither the facts nor the law remains in doubt, theseven assigned errors will be overruled.

Judgment affirmed, the costs of this instance to be paidby the appellant.

Avanceña, C. J., Street, Villa-Real, Abad Santos, Hull,Vickers, Imperial, Butte, and Goddard, JJ., concur.

Judgment affirmed.

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