GR 44058; (September, 1938) (Digest)
G.R. No. 44058 . September 30, 1938.
PHILIPPINE TRUST COMPANY, plaintiff-appellee, vs. SMITH NAVIGATION COMPANY, defendant-appellee. RAMON L. VERZOSA, ET AL., intervenors. EL VARADERO DE MANILA, intervenor-appellant.
FACTS
The defendant, Smith Navigation Company, mortgaged its vessels, the schooner Ethel Conklin and the motorship Ethel Edwards, to the plaintiff, Philippine Trust Company, to secure a loan. The mortgage was duly registered. The defendant defaulted on its payments, leading to foreclosure proceedings. The intervenor-appellant, El Varadero de Manila, claimed a preferred credit for repairs made on the vessels. However, this claim for repairs was not registered in the Bureau of Customs or any registry, and the mortgagee was not notified in writing of the repairs as required. The crew members (other intervenors) also claimed preferred credits for unpaid wages.
ISSUE
Whether the unregistered claim for repairs by El Varadero de Manila enjoys a right of preference over the registered mortgage credit of Philippine Trust Company.
RULING
No. The Supreme Court affirmed the lower court’s judgment. The credit for repairs, under Article 580 of the Code of Commerce, must appear by a contract recorded in the registry of vessels to enjoy preference. Since El Varadero de Manila’s claim was not registered, it did not acquire a preferred lien. Therefore, the registered mortgage credit of Philippine Trust Company has priority. The claim of the crew for wages earned on the last voyage was recognized as preferred over the mortgage credit, but only as to the specific vessel (Ethel Conklin) on which they served.
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