rtgage lien of PNB/NIDC on the foreclosed vessel M/V Asean Liberty Held: Under the provisions of P.D. No. 1521, any person furnishing repairs, supplies, or other necessities to a vessel on credit will have a maritime lien. Such maritime lien, if it arose prior to the recording of a preferred mortgage lien, shall have priority over the said mortgage lien. In this case, it was Hongkong United Dockyards, Ltd. which originally possessed a maritime lien over the vessel M/V Asean Liberty by virtue of its repair of the said vessel on credit. CBC, however, stands as guarantor of the loan extended by Citibank to PISC. It was Citibank which advanced the money to PISC. It was only upon the failure of PISC to fulfill its obligations under its promissory note to Citibank that CBC was called upon by Citibank to exercise its duties under the Standby Letter of Credit. The applicable law, which is the Shipping Mortgage Decree of 1978, was patterned closely after the U.S. Ship Mortgage Act of 1920. Being of foreign origin, the provisions of the Ship Mortgage Decree of 1978 may thus be construed with the aid of foreign jurisprudence. Under American jurisprudence, “furnishing money to a master in good faith to obtain repairs or supplies or to remove liens, in order to forward the voyage of the vessel, raises a lien just as though the things for which money was obtained to pay for had been furnished by the lender”. This is in accord with Art5. 1302 of the Civil Code which provides that there is legal subrogation “when a third person, not interested in the fulfillment of the obligation, pays with the express or tacit approval of the debtor”. In this case, the amount for the repair of vessel M/V Asean Liberty was advanced by Citibank and was used for the purpose of paying off the original maritime lienor, Hongkong United Dockyards, Ltd. As a person not interested in the fulfillment of the obligation between PISC and Hongkong United Dockyards, Ltd., Citibank was subrogated to the rights of Hongkong United Dockyards, Ltd. as maritime lienor over the vessel. CBC, as guarantor, was itself subrogated to all the rights of Citibank as against PISC, the latter’s debtor. Art. 2067 of the civil Code provides that “the guarantor who pays is subrogated by virtue thereof to all the rights which the creditor had against the debtor”. When CBC honored its contract of guaranty with Citibank on March 30, 1983, it also acquired by subrogation the maritime lien over the vessel which attached to it on March 12, 1979 in favor of Hongkong United Drydocks, Ltd. The maritime lien of CBC thus arose prior to the recording of PNB/NIDC’s mortgage on September 25, 1979. As such, the said maritime lien has priority over the said mortgage lien. | case digests, case digests of supreme court decisions, case digest philippines, mobile phone deals, laptop computers, gadgets
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