Fausto Rubiso and Bonifacio Gelito v Florentino E.

Rivera
GR No. 11407, 30 October 1917
Topic: “Real” and “hypothecary” construed

FACTS:
 Fausto Rubiso and Bonifacio Gelito brought suit against Florentino Rivera in the CFI of Manila
alleging that they were the owners of the pilot boat Valentina, which had been in bad condition
since 1914 and was stranded in Tingloy in Bauan Batangas. They further alleged that Rivera
took charge or possession of said vessel without the knowledge or consent of both plaintiffs
causing Rubiso and Gelito unable to repair the vessel and derive profit from the boat.

 Rivera on the other hand said that pilot boat Valentina belonged to Gelito & Co., Gelito being
a copartner owning 2/3 and Sy Qui owning 1/3 of the business. However, Bonifacio sold his
shares to Sy Qui making him the sole owner of the vessel as registered with the Collector of
Customs. Sy Qui later sold the boat to Rivera who, now as sole owner, took possession of the
boat as of January 4, 1915, registered with the Bureau of Customs on 17 March 1915.

 However, in order to pay his creditor Fausto Rubiso, Sy Qui sold the boat in a public auction.
Fausto Rubiso was able to acquire the same vessel for P55.45. Fausto then entered the sale and
adjudication of the boat to his name in the commercial registry on 4 March 1915. The CFI
ruled against plaintiffs, hence this appeal.

ISSUE: Whether Rubiso was able to acquire ownership of such property.

RATIO: YES. Rubiso by registering the sale earlier than Rivera’s sale of the boat was held to be
the owner as registration of the sale of the vessel with the Bureau of Customs is a necessary and
indispensable in order for the purchaser’s right to be maintained against a claim filed by a third
person.

 Article 573 of the Code of Commerce provides, in its first paragraph:

"Merchant vessels constitute property which may be acquired and transferred by any
of the means recognized by law. The acquisition of a vessel must be included in a written
instrument, which shall not produce any effect with regard to third persons if not recorded in
the commercial registry."

 Pursuant to the above-quoted article, inscription in the commercial registry was indispensable,
in order that said acquisition might affect, and produce consequences with respect to third
persons. The requisite of registration in the registry, of the purchase of a vessel, is necessary
and indispensable in order that the purchaser's rights may be maintained against a claim filed
by a third person. Such registration is required both by the Code of Commerce and by Act No.
1900.

 Therefore, inasmuch as the sale to Rivera was valid, it was Rubiso who registered the sale in
the Bureau of Customs, a prerequisite for the sale of vessels with regard to third persons. Rivera
in the end became a third person in relation to the sale entered into by Rubiso and Sy Qui since
Rubiso was able to register the sale of the vessel a few days earlier than the sale made to Rivera.

 Ships or vessels, whether moved by steam or by sail, partake, to a certain extent, of the nature
and conditions of real property, on account of their value and importance in the world
commerce; and for this reason the provisions of article 573 of the Code of Commerce are nearly
identical with those of article 1473 of the Civil Code.