SIBAL v. VALDEZ
For the purpose of attachment and execution, and for the
purposes of the Chattel Mortgage Law, "ungathered products"
have the nature of personal property.
FACTS:
The Deputy Sheriff of the Province of Tarlac, by virtue of a writ
of execution issued by the Court of First Instance of Pampanga,
attached and sold to the defendant Emiliano J. Valdez the sugar
cane planted by the plaintiff and his tenants on seven parcels of
land. Included also in those attached were real properties
wherein 8mout of the 11 parcels of land, house and camarin
which was first acquired by Macondray & Co and then later on
bought by Valdez in an auction. First Cause for petitioner: That
Within one year from the date of the attachment and sale the
plaintiff offered to redeem said sugar cane and tendered to the
defendant Valdez the amount sufficient to cover the price paid
by the latter, the interest thereon and any assessments or taxes
which he may have paid thereon after the purchase, and the
interest corresponding thereto and that Valdez refused to accept
the money and to return the sugar cane to the plaintiff. Second
Cause for petitioner: That Valdez was trying to harvest palay
from four out of seven parcels of land. Petitioner filed for
preliminary injunction to stop defendant from 1) distributing the
lands 2) harvesting and selling the sugar canes, and 3)
harvesting and selling the palay. The writ was issued which
prevented defendant from planting and harvesting the lands.
Defendant later appealed claiming that he was the owner of
many of the alleged land thus he also owns the crops of it. The
court awarded the defendant 9,439.08 because the petitioner
unduly denied the defendant to plant in his land thus preventing
him to profit thereto.
ISSUE:
Whether the sugar cane is personal o real property? (The
relevance of the issue is with regards to the sugar cane of the
Petitioner which came from the land that now belongs to the
defendant)
RULING:
It is contended that sugar cane comes under the classification of
real property as "ungathered products" in paragraph 2 of article
334 of the Civil Code. Said paragraph 2 of article 334
enumerates as real property the following: Trees, plants, and
ungathered products, while they are annexed to the land or form
an integral part of any immovable property." That article,
however, has received in recent years an interpretation by the
Tribunal Supremo de Espaa, which holds that, under certain
conditions, growing crops may be considered as personal
property.
In some cases "standing crops" may be considered and dealt
with as personal property. In the case of Lumber Co. vs. Sheriff
and Tax Collector (106 La., 418) the Supreme Court said: "True,
by article 465 of the Civil Code it is provided that 'standing
crops and the fruits of trees not gathered and trees before they
are cut down . . . are considered as part of the land to which
they are attached, but the immovability provided for is only one
in abstracto and without reference to rights on or to the crop
acquired by others than the owners of the property to which the
crop is attached. . . . The existence of a right on the growing
crop is a mobilization by anticipation, a gathering as it were in
advance, rendering the crop movable quoad the right acquired
therein. Our jurisprudence recognizes the possible mobilization
of the growing crop."
For the purpose of attachment and execution, and for the
purposes of the Chattel Mortgage Law, "ungathered products"
have the nature of personal property. SC lowered the award for
damages to the defendant to 8,900.80 by acknowledging the fact
that some of the sugar canes were owned by the petitioner and
by reducing the calculated expected yield or profit that
defendant would have made if petitioner did not judicially
prevent him from planting and harvesting his lands.
Berkenkotter v. Cu UnjiengFacts:
On 26 April 1926, the Mabalacat Sugar Company obtained from
Cu Unjieng e Hijos, a loan securedby a first mortgage
constituted on 2 parcels of land "with all its buildings,
improvements, sugar-canemill, steel railway, telephone line,
apparatus, utensils and whatever forms part or is a
necessarycomplement of said sugar-cane mill, steel railway,
telephone line, now existing or that may in thefuture exist in said
lots.On 5 October 1926, the Mabalacat Sugar Company decided
to increase the capacity of its sugar central by buying additional
machinery and equipment, so that instead of milling 150 tons
daily, itcould produce 250. Green proposed to the Berkenkotter,
to advance the necessary amount for thepurchase of said
machinery and equipment, promising to reimburse him as soon
as he could obtainan additional loan from the mortgagees, Cu
Unjieng e Hijos, and that in case Green should fail toobtain an
additional loan from Cu Unjieng e Hijos, said machinery and
equipment would becomesecurity therefore, said Green binding
himself not to mortgage nor encumber them to anybody
untilBerkenkotter be fully reimbursed for the corporation's
indebtedness to him.Having agreed to said proposition made in a
letter dated 5 October 1926, Berkenkotter, on 9 October 1926,
delivered the sum of P1,710 to Green, the total amount supplied
by him to Green having beenP25,750. Furthermore,
Berkenkotter had a credit of P22,000 against said corporation for
unpaidsalary. With the loan of P25,750 and said credit of
P22,000, the Mabalacat Sugar Co., Inc., purchasedthe additional
machinery and equipment.On 10 June 1927, Green applied to Cu
Unjieng e Hijos for an additional loan of P75,000 offering
assecurity the additional machinery and equipment acquired by
said Green and installed in the sugar central after the execution
of the original mortgage deed, on 27 April 1927, together with
whatever additional equipment acquired with said loan. Green
failed to obtain said loan. Hence, abovementioned mortgage was
in effect.
Issue:
Are the additional machines also considered mortgaged?
Held:
Article 1877 of the Civil Code provides that mortgage includes
all natural accessions, improvements,growing fruits, and rents
not collected when the obligation falls due, and the amount of
anyindemnities paid or due the owner by the insurers of the
mortgaged property or by virtue of theexercise of the power of
eminent domain, with the declarations, amplifications, and
limitationsestablished by law, whether the state continues in the
possession of the person who mortgaged it or whether it passes
into the hands of a third person.It is a rule, that in a mortgage of
real estate, the improvements on the same are included;
therefore, allobjects permanently attached to a mortgaged
building or land, although they may have been placedthere after
the mortgage was constituted, are also included.Article 334,
paragraph 5, of the Civil Code gives the character of real
property to machinery, liquidcontainers, instruments or
implements intended by the owner of any building or land for
use inconnection with any industry or trade being carried on
therein and which are expressly adapted tomeet the requirements
of such trade or industry. The installation of a machinery and
equipment in amortgaged sugar central, in lieu of another of less
capacity, for the purpose of carrying out theindustrial functions
of the latter and increasing production, constitutes a permanent
improvement onsaid sugar central and subjects said machinery
and equipment to the mortgage constituted thereon.
Davao Sawmill v. Castillo
DAVAO SAW MILL vs. APRONIANO G. CASTILLO and
DAVAO LIGHT & POWER CO., INC. G.R. No. L-40411
August 7, 1935
Facts:
Davao Saw Mill Co., Inc., is the holder of a lumber concession
from the Government of the Philippine Islands. However, the
land upon which the business was conducted belonged to
another person. On the land the sawmill company erected a
building which housed the machinery used by it. Some of the
implements thus used were clearly personal property, the
conflict concerning machines which were placed and mounted
on foundations of cement. In the contract of lease between the
sawmill company and the owner of the land there appeared the
following provision: That on the expiration of the period agreed
upon, all the improvements and buildings introduced and
erected by the party of the second part shall pass to the
exclusive ownership of the lessor without any obligation on its
part to pay any amount for said improvements and buildings;
which do not include the machineries and accessories in the
improvements.
In another action wherein the Davao Light & Power Co., Inc.,
was the plaintiff and the Davao, Saw, Mill Co., Inc., was the
defendant, a judgment was rendered in favor of the plaintiff in
that action against the defendant; a writ of execution issued
thereon, and the properties now in question were levied upon as
personalty by the sheriff. No third party claim was filed for such
properties at the time of the sales thereof as is borne out by the
record made by the plaintiff herein
It must be noted also that on number of occasion, Davao
Sawmill treated the machinery as personal property by
executing chattel mortgages in favor of third persons. One of
such is the appellee by assignment from the original mortgages.
The lower court rendered decision in favor of the defendants
herein. Hence, this instant appeal.
Issue:
whether or not the machineries and equipments were personal in
nature.
Ruling/ Rationale:
Yes. The Supreme Court affirmed the decision of the lower
court.
Machinery which is movable in its nature only becomes
immobilized when placed in a plant by the owner of the
property or plant, but not when so placed by a tenant, a
usufructuary, or any person having only a temporary right,
unless such person acted as the agent of the owner.
Engineering and Machinery Corporation v. CA
Facts:
Pursuant to a contract, petitioner undertook to install air
conditioning system in private respondents building. The
building was later sold to the National Investment and
Development Corporation which took possession of it. Upon
NIDCs failure to comply with certain conditions, the sale was
rescinded. NIDC reported to respondent that there were certain
defects in the air conditioning system. Respondent filed a
complaint against petitioner for non-compliance with the agreed
plans and specifications. Petitioner moved to dismiss the
complaint on the ground of the 6-month prescription of
warranty against hidden defects. Private respondent averred that
the contract was not of sale but for a piece of work, the action
for damages of which prescribes after 10 years.
Issue:
Is a contract for the fabrication and installation of a central air-
conditioning system in a building, one of "sale" or "for a piece
of work"?
Held:
A contract for a piece of work, labor and materials may be
distinguished from a contract of sale by the inquiry as to whether
the thing transferred is one not in existence and which would
never have existed but for the order, of the person desiring it. In
such case, the contract is one for a piece of work, not a sale. On
the other hand, if the thing subject of the contract would have
existed and been the subject of a sale to some other person even
if the order had not been given, then the contract is one of sale.
The distinction between the two contracts depends on the
intention of the parties. Thus, if the parties intended that at some
future date an object has to be delivered, without considering the
work or labor of the party bound to deliver, the contract is one of
sale. But if one of the parties accepts the undertaking on the
basis of some plan, taking into account the work he will employ
personally or through another, there is a contract for a piece of
work.
Clearly, the contract in question is one for a piece of work. It is
not petitioner's line of business to manufacture air-conditioning
systems to be sold "off-the-shelf." Its business and particular
field of expertise is the fabrication and installation of such
systems as ordered by customers and in accordance with the
particular plans and specifications provided by the customers.
Naturally, the price or compensation for the system
manufactured and installed will depend greatly on the particular
plans and specifications agreed upon with the customers. The
remedy against violations of the warranty against hidden defects
is either to withdraw from the contract (redhibitory action) or to
demand a proportionate reduction of the price (accion quanti
manoris), with damages in either case.
While it is true that Article 1571 of the Civil Code provides for a
prescriptive period of six months for a redhibitory action, a
cursory reading of the ten preceding articles to which it refers
will reveal that said rule may be applied only in case of implied
warranties; and where there is an express warranty in the
contract, as in the case at bench, the prescriptive period is the
one specified in the express warranty, and in the absence of such
period, "the general rule on rescission of contract, which is four
years (Article 1389, Civil Code) shall apply". It would appear
that this suit is barred by prescription because the complaint was
filed more than four years after the execution of the contract and
the completion of the air-conditioning system. However, a close
scrutiny of the complaint filed in the trial court reveals that the
original action is not really for enforcement of the warranties
against hidden defects, but one for breach of the contract itself.
The governing law is Article 1715. However, inasmuch as this
provision does not contain a specific prescriptive period, the
general law on prescription, which is Article 1144 of the Civil
Code, will apply. Said provision states, inter alia, that actions
"upon a written contract" prescribe in ten (10) years. Since the
governing contract was executed on September 10, 1962 and the
complaint was filed on May 8, 1971, it is clear that the action
has not prescribed. The mere fact that the private respondent
accepted the work does not, ipso facto, relieve the petitioner
from liability for deviations from and violations of the written
contract, as the law gives him ten (10) years within which to file
an action based on breach thereof.
STANDARD OIL COMPANY V JARAMILLO
The Power of the Registry of Deeds is Ministerial, and The
absolute criterion to determine between real and personal
property is NOT supplied by the civil code. Parties may agree
what to treat as personal property and what to treat as real
property.
FACTS
On November 27, 1922, Gervasia de la Rosa was the lessee of a
parcel of land situated in the City of Manila and owner of the
house of really tough materials built thereon. She executed that
fine day a document in the form of a chattel mortgage,
purporting to convey to Standard Oil Company of New York
(by way of mortgage) both the leasehold interest in said lot and
the building.
After said document had been duly acknowledged and
delivered, Standard Oil presented it to Joaquin Jaramillo, as
register of deeds of the City of Manila, for the purpose of
having the same recorded in the book of record of chattel
mortgages. Upon examination of the instrument, Jaramillo
opined that it was not chattel mortgage, for the reason that the
interest therein mortgaged did not appear to be personal
property, within the meaning of the Chattel Mortgage Law, and
registration was refused on this ground only.
Later this confusion was brought to the Supreme Court upon
demurrer by Joaquin Jaramillo, register of deeds of the City of
Manila, to an original petition of the Standard Oil Company of
New York, demanding a mandamus to compel the respondent to
record in the proper register a document purporting to be a
chattel mortgage executed in the City of Manila by Gervasia de
la Rosa, Vda. de Vera, in favor of the Standard Oil Company of
New York.
The Supreme Court overruled the demurrer, and ordered that
unless Jaramillo interposes a sufficient answer to the petition for
mandamus by Standard Oil within 5 days of notification, the
writ would be issued as prayed, but without costs.
ISSUE:
w/n the Registry of Deeds can determine the nature of property
to be registered.
w/n the Registry of Deeds has powers beyond Ministerial
discretion.
RESOLUTION:
1.Jaramillo, register of deeds, does not have judicial or quasi-
judicial power to determine nature of document registered as
chattel mortgage Section 198 of the Administrative Code,
originally of Section 15 of the Chattel Mortgage Law (Act 1508
as amended by Act 2496), does not confer upon the register of
deeds any authority whatever in respect to the "qualification," as
the term is used in Spanish law, of chattel mortgages. His duties
in respect to such instruments are ministerial only. The efficacy
of the act of recording a chattel mortgage consists in the fact
that it operates as constructive notice of the existence of the
contract, and the legal effects of the contract must be discovered
in the instrument itself in relation with the fact of notice.
2.Article 334 and 335 of the Civil Code does not supply
absolute criterion on distinction between real and personal
property for purpose of the application of the Chattel Mortgage
Law Article 334 and 335 of the Civil Code supply no absolute
criterion for discriminating between real property and personal
property for purposes of the application of the Chattel Mortgage
Law. Those articles state rules which, considered as a general
doctrine, are law in this jurisdiction; but it must not be forgotten
that under given conditions property may have character
different from that imputed to it in said articles. It is undeniable
that the parties to a contract may be agreement treat as personal
property that which by nature would be real property; and it is a
familiar phenomenon to see things classed as real property for
purposes of taxation which on general principle might be
considered personal property. Other situations are constantly
arising, and from time to time are presented to the Supreme
Court, in which the proper classification of one thing or another
as real or personal property may be said to be doubtful.]
Pastor D. Ago vs CA, Hon. Montao Ortiz, The Provincial
Sheriff of Surigao, and Grace Park Engineering, Inc.
GR No. L-17898
October 31, 1962
FACTS
Ago bought sawmill machineries and equipments from Grace
Park Engineer Domineering, Inc. (GPED) A chattel mortgage
was executed over the said properties to secure the unpaid
balance of P32,000, which Ago agreed to pay in installment
basis.
Because Ago defaulted in his payment, GPED instituted extra-
judicial foreclosure proceedings of the mortgage. To enjoin the
foreclosure, Ago instituted a special civil case in the CFI of
Agusan. The parties then arrived at a compromise agreement.
However, a year later, Ago still defaulted in his payment. GPED
filed a motion for execution with the lower court, which was
executed on September 23, 1959.
Acting upon the writ of execution, the Provincial Sheriff of
Surigao levied upon and ordered the sale of the sawmill
machineries and equipment.
Upon being advised that the public auction sale was set on
December 4, 1959, Ago filed a petition for certiorari and
prohibition on December 1, 1959 with the CA. He alleged that
his counsel only received the copy of the judgment on
September 25, 1959 two days after the execution of the writ;
that the order of sale of the levied properties was in grave abuse
of discretion and in excess of jurisdiction; and that the Sheriff
acted illegally by levying the properties and attempting to sell
them without prior publication of the notice of sale thereof in
some newspaper of general circulation as required by the Rules
of Court.
The CA issued a writ of preliminary injunction against the
Sheriff, but it turned out that the properties were already sold on
December 4, 1959. The CA ordered the Sheriff to suspend the
issuance of the Certificate of Sale until the decision of the case.
The CA then rendered its decision on November 9, 1960.
ISSUES
1. Is the fact that petitioner was present in open court as the
judgment was rendered, sufficient notice of the said judgment?
2. Was the Sheriff's sale of the machineries and equipment at a
public auction valid despite lack of publication of the notice of
sale?
HELD
1) No. The mere pronouncement of the judgment in open court
does not constitute a rendition of judgment.
The filing of the judge's signed decision with the Clerk of Court
constitutes the rendition of a valid and binding judgment.
Sec. 1, Rule 35 of the Rules of Court require that all judgments
be rendered in writing, personally and directly prepared by the
judge, and signed by him, stating clearly and distinctly the facts
and the law on which it is based, filed with the clerk of the court.
Prior to the filing, the decision could still be subject to
amendment and change and may not constitute the real judgment
of the court.
Moreover, the hearing of the judgment in open court does not
constitute valid notice thereof. No judgment can be notified to
the parties unless it has previously been rendered.
Sec.7 of Rule 27 expressly requires that final orders or
judgments be served either personally or by registered mail.
The signed judgment not having been served upon the petitioner,
said judgment could not be effective upon him who had not
received it. As a consequence, the issuance of the writ of
execution is null and void, having been issued before petitioner
was served a copy of the decision, personally or by registered
mail.
2) The subject sawmill machineries and equipment became real
estate properties in accordance with the provision of Art. 415 (5)
of the NCC:
ART. 415 The following are immovable property:
xxxx
(5) Machinery, receptacles, instruments or implements intended
by the owner of the tenement for an industry or works which
may be carried on in a building or on a piece of land, and which
tend directly to meet the needs of the said industry or works;
The installation of the sawmill machineries in the building of
Gold Pacific Sawmill, Inc., for use in the sawing of logs carried
on in the said building converted them into Real Properties as
they became a necessary & permanent part of the building or
real estate on which the same was constructed.
And if they are judicially sold on execution without the
necessary advertisement of sale by publication in a newspaper
as required in Sec.16 of Rule 39 of the Rules of Court, the sale
made by the sheriff would be null and void.
TITLE: PEOPLES BANK V DAHICAN LUMBER
PONENTE
: shall be replaced with others to be thereafter acquired by
DIZON,J
DATE
: circumstances, the original value of the properties given
May
16, 1967
SUBJECT MATTER
: Chattel mortgage-subject matter: machinery
I.
FACTS
A. Dahican lumber company (DAMCO) obtained several loans
amounting to 250,000pesos from Peoples bank (BANK) and
,together with DALCO, another loan amounting to$250,000
from Export-Import bank secured by five promissory notes
through peoples bank. Inboth loans, DAMCO executed and
registered respective mortgages with inclusion of after acquired
properties. DAMCO and DALCO failed to satisfy the fifth
promissory note in favor ofExport bank so Peoples bank paid it
and subsequently filed an action for the foreclosure ofthe
mortgaged properties of DAMCO including the after acquired
machinery, equipmentand spare parts upon the latter's failure to
fulfill its obligation.
B. Contention of the Petitioner
Peoples bank asserted that the after acquired machinery and
equipment ofDAMCO are subject to the deed of mortgage
executed by DAMCO. Hence, these can beincluded in the
foreclosure proceedings.
C. Contentions of the Respondent
DALCO argued that the mortgages were void as regards the
after acquired propertiesbecause they were not registered in
accordance with the chattel mortgage law. Moreover,provision
of the fourth paragraph of each of said mortgages did not
automatically makesubject to such mortgages the "after
acquired properties", the only meaning thereof beingthat the
mortgagor was willing to constitute a lien over such properties.
II.
ISSUES TO BE RESOLVED
Whether the after acquired machinery and equipment of
DAMCO are included as subjectof the Real Estate mortgage,
thus can be foreclosed.
III.
RULING OFTHE SUPREME COURT
Judgment rendered in favor of Plaintiff Peoples bank. The after
acquired machinery andequipment are included in the executed
mortgages.It is not disputed in the case at bar that the "after
acquired properties" were purchased byDALCO in connection
with, and for use in the development of its lumber concession
and thatthey were purchased in addition to, or in replacement of
those already existing in the premiseson July 13, 1950. In Law,
therefore, they must be deemed to have been
Immobilized, with theresult that the real estate mortgages
involved herein which were registered as such did nothave to
be registered a second time as chattel mortgages in order to bind
the "after acquiredproperties" and affect third parties.Under the
fourth paragraph of both deeds of mortgage, it is crystal clear
that all propertyof every nature and description taken in
exchange or replacement, as well as all buildings,machineries,
fixtures, tools, equipments, and other property that the
mortgagor may acquire,construct, install, attach; or use in, to
upon, or in connection with the premises that is, itslumber
concession "shall immediately be and become subject to the
lien" of both mortgagesin the same manner and to the same
extent as if already included therein at the time of their
execution. As the language thus used leaves no room for doubt
as to the intention of the parties,We see no useful purpose in
discussing the matter extensively. Suffice it to say that the
stipulationreferred to is common, and We might say logical, in
all cases where the properties given ascollateral are perishable or
subject to inevitable wear and tear or were intended to be sold,
or tobe used thus becoming subject to the inevitable wear and
tear but with the understanding express or implied that they
themortgagor. Such stipulation is neither unlawful nor immoral,
its obvious purpose being tomaintain, to the extent allowed by
assecurity. Indeed, if such properties were of the nature already
referred to, it would be poor judgment on the part of the creditor
who does not see to it that a similar provision is included inthe
contract
Board of Assessment Appeals, Q.C. vs Meralco
10 SCRA 68
GR No. L-15334
January 31, 1964
FACTS
On November 15, 1955, the QC City Assessor declared the
MERALCO's steel towers subject to real property tax. After the
denial of MERALCO's petition to cancel these declarations, an
appeal was taken to the QC Board of Assessment Appeals,
which required respondent to pay P11,651.86 as real property
tax on the said steel towers for the years 1952 to 1956.
MERALCO paid the amount under protest, and filed a petition
for review in the Court of Tax Appeals (CTA) which rendered a
decision ordering the cancellation of the said tax declarations
and the refunding to MERALCO by the QC City Treasurer of
P11,651.86.
ISSUE
Are the steel towers or poles of the MERALCO considered real
or personal properties?
HELD
Pole long, comparatively slender, usually cylindrical piece of
wood, timber, object of metal or the like; an upright standard to
the top of which something is affixed or by which something is
supported.
MERALCO's steel supports consists of a framework of 4 steel
bars/strips which are bound by steel cross-arms atop of which
are cross-arms supporting 5 high-voltage transmission wires, and
their sole function is to support/carry such wires. The exemption
granted to poles as quoted from Part II, Par.9 of respondent's
franchise is determined by the use to which such poles are
dedicated.
It is evident that the word poles, as used in Act No. 484 and
incorporated in the petitioner's franchise, should not be given a
restrictive and narrow interpretation, as to defeat the very object
for which the franchise was granted. The poles should be taken
and understood as part of MERALCO's electric power system
for the conveyance of electric current to its consumers.

Art. 415 of the NCC classifies the following as immovable

property:
(1) Lands, buildings, roads and constructions of all kinds
adhered to the soil;
xxx
(3) Everything attached to an immovable in a fixed manner, in
such a way that it cannot be separated therefrom without
breaking the material or deterioration of the object;
xxx
(5) Machinery, receptacles, instruments or implements intended
by the owner pf the tenement for an industry ot works which
may be carried on in a building or on a piece of land, and which
tend directly to meet the needs of the said industry or works;
RULING:
Yes. Personal property includes vessels. They are subject to
the provisions of the Chattel Mortgage Law. The Chattel
Mortgage Law says that a good chattel mortgage includes an
affidavit of good faith. The absence of such affidavit makes
mortgage unenforceable against creditors and subsequent
encumbrances. The judge was correct.
Note: A mortgage on a vessel is generally like other chattel
mortgages. The only difference between a chattel mortgage of a
vessel and a chattel mortgage of other personalty is that the first
must be noted in the registry of the register of deeds.

Following these classifications, MERALCO's steel towers

should be considered personal property. It should be noted that
the steel towers:

(a) are neither buildings or constructions adhered to the soil;

(b) are not attached to an immovable in a fixed manner they

can be separated without breaking the material or deterioration
of the object;

are not machineries, receptacles or instruments, and even if

they are, they are not intended for an industry to be carried on in
the premises.

PHILIPPINE REFINING COMPANY V. JARQUE

FACTS:
Plaintiff Philippine Refining Co. and defendant Jarque executed
three mortgages on the motor vessels Pandan and Zargazo. The
documents were recorded as transfer and encumbrances of the
vessels for the port of Cebu and each was denominated a chattel
mortgage.

The first two mortgages did not have an affidavit of good faith.
A fourth mortgage was executed by Jarque and Ramon Aboitiz
over motorship Zaragoza and was entered in the Chattel
Mortgage Registry on May 12, 1932, within the period of 30
days prior to the foreclosure/institution of the insolvency
proceedings.

Jose Curaminas filed with the CFI of Cebu a petition praying

that Francisco Jarque be declared an insolvent debtor. This was
granted and Jarques properties were then assigned to
Curaminas.

A problem arose when Judge Jose Hontiveros declined to order

the foreclosure of the mortgages, and instead, ruled that they
were defective because they did not have affidavits of good
faith.

ISSUE:
Whether or not the mortgages of the vessels are governed by the
Chattel Mortgage Law
Whether or not an affidavit of good faith is needed to enforce
achattel mortgage on a vessel