THE SHIP

MORTGAGE
DECREE OF 1978

Presidential Decree No. 1521

What is a ship mortgage?
● The pledging and charge upon title of a ship and its
machinery as security for a loan.

A mortgage of a ship is a common way of financing its

construction or purchase. In essence a mortgage provides a
creditor with security for the repayment of a loan or the
performance of some other obligation by the acquisition of a
property interest in the ship. It may in fact be used to secure
any financial obligation involving the ... operation of a ship.
Who may constitute a ship
mortgage? What may the object of the
● Any citizen of the Philippines; or
mortgage?
Any association or corporation
● The vessel itself and its
organized under the laws of the
equipment
Philippines, at least sixty per cent of the
capital of which is owned by citizens of
the Philippines To whom mortgaged?

● With any bank or other

Purpose of the ship
financial institutions, domestic
mortgage?
or foreign
● For financing the construction,
acquisition, purchase of vessels or
initial operation of vessels
Validity of the Ship Mortgage
● No mortgage shall be valid, in respect to such vessel, against any
person other than the mortgagor, his heir or assign, and a person
having actual notice thereof, until such mortgage is recorded in the
office of the Philippine Coast Guard of the port of documentation of
such vessel.
A copy of the instrument or mortgage shall be furnished the Central
Bank of the Philippines.
(Section 3 of PD 1521)
Preferred Mortgage
A valid mortgage which at the time it is made includes the whole of any vessel of domestic ownership
shall have, in respect to such vessel and as of the date of recordation, the preferred status given by
the provisions of Section 17 of PD 1521, if:

1. The mortgage is recorded as provided in Section 3 hereof;

(Section 4 of
2. An affidavit is filed with the record of such mortgage to the effect that the mortgage is made in PD 1521)
good faith and without any design to hinder, delay, or defraud any existing or future creditor of the
mortgagor or any lien or of the mortgaged vessel;

3. The mortgage does not stipulate that the mortgagee waives the preferred status thereof;

A vessel holding a Provisional Certificate of Philippine Registry is considered a vessel of domestic

ownership such that it can be subject of preferred mortgage.
Preferred Mortgage
A mortgage which includes property other than a vessel shall not be held a preferred mortgage
unless the mortgage provides for the separate discharge of such property by the payment of a
specified portion of the mortgage indebtedness. If a preferred mortgage so provides for the separate
discharge, the amount of the portion of such payment shall be endorsed upon the documents of the
vessel.
(Section 4 of
A preferred mortgage includes more than one vessel and provides for the separate discharge of each
vessel by the payment of a portion of mortgage indebtedness, the amount of such portion of such
PD 1521)
payment shall be endorsed upon the documents of the vessel. In case such mortgage does not provide for
the separate discharge of a vessel and the vessel is to be sold upon the order of a district court of the
Philippines in a suit in rem in admiralty, the court shall determine the portion of the mortgage
indebtedness increased by 20 per centum (1) which, in the opinion of the court, the approximate value of
all the vessels covered by the mortgage, and (2) upon the payment of which the vessel shall be discharged
from the mortgage.
Preferred Mortgage
Preferred Maritime Lien, Priorities, Other Liens (a) Upon the sale of any mortgaged vessel in any extra-
judicial sale or by order of a district court of the Philippines in any suit in rem in admiralty for the
enforcement of a preferred mortgage lien thereon, all pre-existing claims in the vessel, including any
possessory common-law lien of which a lienor is deprived under the provisions of Section 16 of this Decree,
shall be held terminated and shall thereafter attach in like amount and in accordance with the priorities
established herein to the proceeds of the sale.
(Section 17 of
The preferred mortgage lien shall have priority over all claims against the vessel, except the following claims PD 1521)
in the order stated: (1) expenses and fees allowed and costs taxed by the court and taxes due to the
Government; (2) crew's wages; (3) general average; (4) salvage; including contract salvage; (5) maritime
liens arising prior in time to the recording of the preferred mortgage; (6) damages arising out of tort; and (7)
preferred mortgage registered prior in time.

(b) If the proceeds of the sale should not be sufficient to pay all creditors included in one number or grade,
the residue shall be divided among them pro rata. All credits not paid, whether fully or partially shall
subsist as ordinary credits enforceable by personal action against the debtor. The record of judicial sale or
sale by public auction shall be recorded in the Record of Transfers and Encumbrances of Vessels in the
port of documentation.
 PNB/NIDC v. CA and CBC; G.R. No. 128661
➔ Facts
To finance the acquisition of seven (7) ocean-going vessels, PISC applied for and was granted by petitioner NIDC guaranty
accommodations in favor of Ultrafin A.G. of Zurich and PNB. As security for these guaranty accommodations, PISC executed
in favor of petitioners a number of mortgage documents among which pertained to “ Deed of Chattel Mortgage dated
September 14, 1979 constituted on M/V "Asean Liberty" and M/V "Asean Nation" and recorded on September 25, 1979
with the Philippine Coast Guard Headquarters.

Meanwhile, on March 12, 1979, PISC entered into a Contract Agreement with Hong Kong United Dockyards, Ltd. for the
repair and conversion of the vessel M/V "Asean Liberty" at a contract price of HK$2,200,000.00 variable as provided
therein.

On May 28, 1979, the Central Bank of the Philippines authorized PISC to open with private respondent China Banking
Corporation a standby letter of credit for US$545,000.00 in favor of Citibank, to cover the repair and partial conversion of
the vessel M/V "Asean Liberty".

On September 17, 1979, a Promissory note for US$545,000.00 was executed by PISC in favor of Citibank pursuant to the
Loan Agreement for US$545,000.00 between PISC, as borrower, and Citibank, as lender.
On March 30, 1983, upon failure of PISC to fulfill its obligations under the said promissory note, CBC instructed its
correspondent Irving Trust Co., by cable, to pay to Citibank the amount of US$242,225.00.
Emotional
 PNB/NIDC v. CA and CBC; G.R. No. 128661
➔ Facts
For failure of PISC to settle its obligations, petitioner PNB conducted, thru the Sheriff’s Office, an auction sale of the
mortgaged vessels. Petitioner NIDC emerged as the highest bidder in these auctions.

Aggrieved, PISC instituted before the Regional Trial Court of Makati, a civil case against petitioners for the annulment of the
foreclosure and auction sale of its vessels and damages.

China bank file a complaint in intervention for recovery upon maritime liens against the proceeds of the sale of the
foreclosed vessels predicated on its Standby Letter of Credit in favor of Citibank, among others. China Bank’s claims are
premised on the above as being preferred maritime liens which claims were rejected by NIDC as not being maritime liens,
much less preferred maritime liens.

➔ Issue
Whether or not the claims of private respondent China Bank are maritime
liens?
 PNB/NIDC v. CA and CBC; G.R. No. 128661
➔ Ruling
YES, the claims of China Bank are preferred maritime claims.

The Court held that a maritime lien "constitutes a present right of property in the ship, a jus in re, to be afterward enforced in
admiralty by process in rem. From the moment the claim or privilege attaches, it is inchoate, and when carried into effect by legal
process, by a proceeding in rem, it relates back to the period when it first attached.“

In this case, the maritime lien over the vessel M/V "Asean Liberty" arose or was constituted at the time Hongkong United
Drydocks, Ltd. made repairs on the said vessel on credit. As such, as early as March 12, 1979, the date of the contract for the repair
and conversion of M/V "Asean Liberty," a maritime lien had already attached to the said vessel. When Citibank advanced the
amount of US$242,225.00 for the purpose of paying off PISC’s debt to Hongkong United Dockyards, Ltd., it acquired the existing
maritime lien over the vessel. When private respondent honored its contract of guarantee with Citibank on March 30, 1983, it
likewise acquired by subrogation the maritime lien that was already existing over the vessel M/V "Asean Liberty." Thus, when
private respondent CBC chose to exercise its right to the maritime lien during the proceedings in the trial court, it was actually
enforcing a privilege that attached to the ship as early as March 12, 1979.

The maritime lien of China bank thus arose prior in time to the recording of petitioners’ mortgage on September 25, 1979. As such,
the said maritime lien has priority over the said mortgage lien. Pursuant to Section 17 of the Ship Mortgage Decree of 1978, a
"preferred mortgage lien shall have priority over all claims against the vessel" except, among others, "maritime liens arising prior in
time to the recording of the preferred mortgage." The maritime lien of China Bank is superior to the mortgage lien of petitioners.
Certified Copies of Mortgage; exhibition
- The Coast Guard District or Station Commander upon the recording of a preferred mortgage shall
deliver two certified copies thereof to the mortgagor.

- The mortgagor shall place, and use due diligence to retain, one copy on board the mortgaged vessel
notice of which shall be posted in a conspicuous place thereat and cause such copy and the
documents of the vessel to be exhibited by the master to any person having business with the vessel,
which give rise to a maritime lien upon the vessel or to the sale, conveyance, or mortgage thereof.

- The master of the vessel shall upon the request of any such person, exhibit to him the documents of (Section 5 of
the vessel placed on board thereof. PD 1521)
- The requirement that a copy of a preferred mortgage be placed and retained on board the
mortgaged vessel shall not apply in the case of a mortgaged vessel which is not self-propelled
(including but not limited to, barges, scors, lighters, and car floats).

- If the master of the vessel willfully fails to exhibit the documents of the vessel or the copy of any
preferred mortgage thereof, the Philippine Coast Guard may suspend or cancel the master's license.
Prior Maritime Liens on Mortgaged Vessel
The mortgagor shall, upon request of the mortgagee, disclose in writing to him prior to the execution of any
preferred mortgage, the existence of any maritime lien, prior mortgage, or other obligation or liability upon
the vessel to be mortgaged, that is known to the mortgagor (Section 6 of
PD 1521)
Subsequent Maritime Liens on Mortgaged Vessel
The mortgagor, without the consent of the mortgagee, shall not incur, after the execution of such mortgage
and before the mortgagee has had a reasonable time in which to record the mortgage and have indorsements
in respect thereto made upon the documents of the vessel, any contractual obligation creating a lien upon the
vessel other than a lien for wages of stevedores when employed directly by the owner, operator, master, ship's
husband, or agent of the vessel, for wages of the crew of the vessel, for general average, or for salvage,
including contract salvage, in respect to the vessel, tonnage dues and all other charges (not to exceed P20,000)
of the Philippine Government in respect to the vessel.

Effect of Violation of the Above Provisions thru Fraud

- A mortgagor shall be punished by a fine of not, more than P5,000 or imprisonment of not more
than two years, or both.
- The mortgage indebtedness shall thereupon become immediately due and payable at the election
of the mortgagee.
Record of Notice of Claim of Lien on Mortgaged Vessel; discharge of lien
(a) The Coast Guard District or Station Commander of the port of documentation shall, upon the request of
any person, record notice of his claim of a lien upon a vessel covered by a preferred mortgage, together with
the nature, date of creation, and amount of the lien, and the name and address of the person.

Discharge of Lien
- Any person who has caused notice of his claim of lien to be so recorded shall, upon a discharge in whole or in
part of the indebtedness, forthwith file with the Coast Guard District or Station Commander a certificate of
such discharge. The Coast Guard District or Station Commander shall thereupon record the certificate.
(Section 7 of
PD 1521)
- In case of a vessel covered by a preferred mortgage, the Coast Guard District or Station Commander at the
port of documentation shall endorse upon the documents of the vessel, or direct the Coast Guard District or
Station Commander at any port in which the vessel is found, to so endorse, the fact of such discharge.

- A certificate of such endorsement, giving the time, place and description of the endorsement, shall be
recorded with the Philippine Coast Guard.
Conditions Precedent to Record; interest on Preferred Mortgage
(a) No mortgage shall be recorded unless it states the interest of the mortgagor in the vessel, and the
interest so mortgaged.

(b) No mortgage, notice of claim of lien, or certificate of discharge thereof, shall be recorded unless
previously acknowledged before the Coast Guard District or Station Commander of the port of
documentation or a notary public or other officer authorized by a law of the Philippines to take
acknowledgment of deeds or before a Philippine consul or consular agent.

(c) In case of a change in the port of documentation of a vessel of the Philippines, no mortgage shall be (Section 8 of
recorded at the new port of documentation unless there is furnished to the Coast Guard District or PD 1521)
Station Commander of such port, together with the copy of the mortgage to be recorded, a certified
copy of the record of the vessel at the former port of documentation furnished by the Coast Guard
District or Station Commander of such port. The Coast Guard District or Station Commander at the
new port of documentation is authorized and directed to record such certified copy.
Lien of preferred Mortgage; foreclosure; jurisdiction; procedure
A preferred mortgage shall constitute a lien upon the mortgaged vessel in the amount of the outstanding
mortgage indebtedness secured by such vessel. Upon the default of any term or condition of the mortgage such
lien may be enforced by the mortgagee by suit in remaining admiralty, wherein the vessel itself may be made a
partly defendant and be arrested in the manner as provided in Section 11 hereof. Original jurisdiction of all
such suits is granted to the Court of First Instance of the Philippines exclusively. In addition to any notice by
publication, actual notice of commencement of any such suit shall direct, to (1) the master, other ranking
officer, or caretaker of the vessel, and (2) any person who has recorded a notice of claim of an undischarged
lien upon the vessel, as provided in Section 7 hereof, unless after search by the mortgage satisfactory to the
court, such mortgagor, master, other ranking officer, caretaker, or claimant is not found within the Philippines.
Failure to give notice to any such person, as required by this Section, shall be liable to such person for damages
(Section 10 of
in the amount of his interest in the vessel terminated by the suit.
PD 1521)
In case of judicial foreclosure as provided herein, the provisions of Rule 68 of the New Rules of Court, if not
inconsistent herewith, shall apply.

The lien of a preferred ship mortgage may also be enforced by a suit in rem in admiralty or otherwise in any
foreign country in which the vessel may be found pursuant to the procedure of said country for the
enforcement of ship mortgages constituting maritime liens on vessels documented under the laws of said
country.
Arrest of Vessels
Upon the filing of the petition for the judicial foreclosure of a Preferred Ship Mortgage, or
immediately thereafter, the applicant may apply ex-parte for an order for the arrest of the mortgaged
vessel or vessels and the judge shall immediately issue the same, provided that it is made to appear by
affidavit of the applicant, or of some other person who personally knows the facts that a default in the
(Section 11 of
mortgage has occurred and that applicant files a bond executed to the adverse party in an amount to PD 1521)
be fixed by the judge, not exceeding the applicant's claim, conditioned that the latter will pay all the
costs which may be adjudged to the adverse party and all damages which he may sustain by reason of
such arrest, if the court shall finally adjudge that the applicant was not entitled thereto.
Discharge of Order of Arrest; Counterbond
At any time after an order of arrest has been granted, the party whose vessel or vessels had been
arrested, or the person appearing in his behalf, may, upon reasonable notice to the applicant, apply to
the judge who granted the order, or to the judge of the court in which the action is pending, for an
order discharging the order of arrest. That judge shall order the discharge of the arrest if a cash
(Section 12 of
deposit is made, or counterbond executed to the creditor is filed, on behalf of the adverse party, with PD 1521)
the clerk or judge of the court where the application is made in an amount double the value of the
claim to secure the payment of any judgment that the creditor may recover in the action. Upon the
filing of such counterbond, copy thereof shall forthwith be served on the creditor or his lawyer. Upon
discharge of the order of arrest, the property arrested or seized shall be delivered to the party making
the deposit or giving the counterbond, or the person appearing in his behalf, the deposit or
counterbond aforesaid standing in place of the vessel or vessels released. Should such deposit or
counterbond for any reason be found to be, or become insufficient, and the party furnishing the same
fails to file an additional co-counterbond, the attaching creditor may apply for a new order of arrest
or seizure.
Discharge of Order of Arrest for Improper or Irregular
Issuance
The party whose vessel/s has been arrested may also, at any time either before or after the release of
the arrested vessel, or before any arrest or seizure has been effected, upon reasonable notice to the
(Section 13 of
creditor, apply to the judge who granted the order, or to the judge of the court in which the action is
pending, for an order to discharge the order of arrest or seizure on the ground that the same PD 1521)
improperly or irregularly issued. After hearing, the judge shall order the discharge of the order of
arrest or seizure if it appears that it was improperly or irregularly issued and the defect is not cured
forthwith.
Tsuneishi Heavy Industries, Inc. v. MIS Maritime Corporation;
G.R. No. 193572
Facts:
Respondent MIS Maritime Corporation (MIS) contracted Tsuneishi to drydock and repair its vessel M/T MIS-
1 through an Agreement. On March 23, 2006, the vessel drydocked in Tsuneishi's shipyard. Tsuneishi rendered
the required services. However, about a month later and while the vessel was still drydocked, Tsuneishi
conducted an engine test on M/T MIS-1. The vessel's engine emitted smoke. The parties eventually discovered
that this was caused by a burnt crank journal. The crankpin also showed hairline cracks due to defective
lubrication or deterioration. Tsuneishi insists that the damage was not its fault while MIS insists on the
contrary. Nevertheless, as an act of goodwill, Tsuneishi paid for the vessel‘s new engine crankshaft, crankpin,
and main bearings.

Tsuneishi billed MIS the amount of US$318,571.50 for payment of its repair and drydocking services.
MIS refused to pay this amount. Instead, it demanded that Tsuneishi pay US$471,462.60 as payment for
the income that the vessel lost in the six months that it was not operational and drydocked at
Tsuneishi's shipyard. It also asked that its claim be set off against the amount billed by Tsuneishi. MIS further
insisted that after these settoff, Tsuneishi still had the obligation to pay it the amount of US$152,891.10.
Tsuneishi rejected MIS‘ demands. It delivered the vessel to MIS in September 2006. On November 6, 2006,
MIS signed an Agreement for Final Price. However, despite repeated demands, MIS refused to pay Tsuneishi
the amount billed under their contract.
Tsuneishi Heavy Industries, Inc. v. MIS Maritime Corporation;
G.R. No. 193572
On April 10, 2008, Tsuneishi filed a complaint against MIS before the RTC. This complaint stated that
it is invoking the admiralty jurisdiction of the RTC to enforce a maritime lien under Section 21 of the
Ship Mortgage Decree of 1978. It also alleged as a cause of action MIS‘ unjustified refusal to pay the (Section 13 of
amount it owes Tsuneishi under their contract. The complaint included a prayer for the issuance of
arrest order/writ of preliminary attachment. To support this prayer, the complaint alleged
PD 1521)
that Section 21 of the Ship Mortgage Decree as well as Rule 57 of the Rules of Court on attachment
authorize the issuance of an order of arrest of vessel and/or writ of preliminary attachment.

RTC issued a preliminary attachment. CA reversed RTC. It found that the RTC ordered the issuance
of the writ of preliminary attachment despite Tsuneishi's failure to prove the presence of fraud.

Issue:
Whether or not a maritime lien under Section 21 of the Ship Mortgage Decree may
been forced through a writ of preliminary attachment under Rule 57 of the Rules of
Court?
Tsuneishi Heavy Industries, Inc. v. MIS Maritime Corporation;
G.R. No. 193572
Ruling:
No. a maritime lien under Section 21 of the Ship Mortgage Decree may been forced through a writ
of preliminary attachment under Rule 57 of the Rules of Court.

When a lien already exists, this is already equivalent to an attachment. This is where
Tsuneishi's argument fails. Clearly, because it claims a maritime lien in accordance with the Ship Mortgage
Decree, all Tsuneishi had to do is to file a proper action in court for its enforcement. The issuance of a writ
of preliminary attachment on the pretext that it is the only means to enforce a maritime lien is superfluous.
The reason that the Ship Mortgage Decree does not provide for a detailed procedure for the enforcement of a
maritime lien is because it is not necessary. Section 21 already provides for the simple procedure — file an
action in rem before the court.

This alleged novel question of law is a mere device to remedy the error committed by Tsuneishi in
the proceedings before the trial court regarding the issuance of a writ of preliminary attachment.
The attachment before the trial court extended to other properties other than the lien itself, such as
bank accounts and real property. Clearly, what was prayed for in the proceedings below was not an
attachment for the enforcement of a maritime lien but an attachment, plain and simple.
Extrajudicial Foreclosure
- The provisions of the Chattel Mortgage Law on the remedy of extra-judicial foreclosure of mortgages
in so far as they are not inconsistent herewith shall still apply.
(Section 14 of
- For the purpose of taking possession of the vessel or vessels, the foreclosing creditor may secure from a PD 1521)
judge of the Court of First Instance of the province where the vessel may be found or where the creditor
or debtor resides an order for the arrest or seizure of the vessel.

- Upon such order of seizure or arrest being issued, the sheriff shall immediately take possession of the
vessel or vessels for the purpose of foreclosure and sale.

- The vessel may only be released in accordance with the provisions of Section 13 of this Act, or when the
debtor pays the outstanding obligation.
Foreign Ship Mortgage
The provisions of the Chattel Mortgage Law on the remedy of extra-judicial foreclosure of mortgages in
so far as they are not inconsistent herewith shall still apply. For the purpose of taking possession of the
vessel or vessels, the foreclosing creditor may secure from a judge of the Court of First Instance of the (Section 15 of
province where the vessel may be found or where the creditor or debtor resides an order for the arrest or PD 1521)
seizure of the vessel. Upon such order of seizure or arrest being issued, the sheriff shall immediately take
possession of the vessel or vessels for the purpose of foreclosure and sale. The vessel may only be released
in accordance with the provisions of Section 13 of this Act, or when the debtor pays the outstanding
obligation.
Receiver in Foreclosure; possession by sheriff
In any suit in rem in admiralty for the enforcement of the preferred mortgage lien, the court may
appoint a receiver and, in its discretion, authorize the receiver to operate the mortgaged vessel. The
sheriff may be authorized and directed by the court to take possession of the mortgaged vessel (Section 16 of
notwithstanding the fact that the vessel is in the possession or under the control of any person claiming a PD 1521)
possessory common law lien.
Suit in Personam in Admiralty on Default
(a) Upon the default of any term or condition of a preferred mortgage upon a vessel, the mortgagee may,
in addition to all other remedies granted by this Decree, bring suit in personal in admiralty in a district
court of the Philippines, against the mortgagor for the amount of the outstanding mortgage indebtedness (Section 18 of
secured by such vessel or any deficiency in the full payment thereof. PD 1521)
(b) This Decree shall not be construed, in the case of a mortgage covering, in addition to vessels, realty or
personality other than vessels, or both, to authorize the enforcement by suit in rem in admiralty of the
rights of the mortgage in respect to such realty or personality other than vessels.
Surrender of Documents; termination of mortgagee's interest; sale
of mortgaged vessel
(a) The documents of a vessel of the Philippines covered by a preferred mortgaged may not be surrendered (except in the case of the
forfeiture of the vessel or its sale by the order of any court of the Philippines or any foreign country) without the approval of the Maritime
Industry Authority. The Administrator shall not grant such approval without the mortgagee's consent.

(b) The interest of the mortgage in a vessel of the Philippines covered by a mortgage, shall not be terminated by the forfeiture of the vessel
for a violation of any law of the Philippines, unless the mortgage authorized, consented, or conspired to effect the illegal act, failure, or
omission which constituted such violation. Neither shall the chance by the shipowner in the use or character of the vessel or in the business
of the mortgagor, without the consent of the mortgagee, nor the failure by the mortgagor to comply with the provisions of Section 5 hereof
affect the validity or preference of the preferred ship mortgage as against third persons.
(Section 19 of
(c) Upon the sale of any vessel of the Philippines covered by a preferred mortgage in any extrajudicial sale or by order of a district court of
the Philippines in any suit in rem in admiralty for the enforcement of a maritime lien other than a preferred maritime lien, the vessel shall
PD 1521)
be sold free from all pre-existing claims thereon; but the court shall, upon the request of the mortgagee, the plaintiff, or any intervenor,
require the purchase at such sale to give and the mortgagee to accept a new mortgage of the vessel for the balance of the term of the
original mortgage. The conditions of such new mortgage shall be the same, so far as practicable, as those of the original mortgage and shall
be subject to the approval of the court. If such new mortgage is given, the mortgagee shall not be paid from the proceeds of the sale and the
amount payable as the purchase price shall be held diminished in the amount of the new mortgage indebtedness.

(d) No vessel of domestic ownership shall be mortgaged, nor, any rights under said mortgage shall be assigned, to any person not a citizen
of the Philippines without the approval of the Maritime Industry Authority. The penalties and sanctions provided for under
Commonwealth Act No. 606 shall apply in case of any violation hereof.

(e) The foreclosure sale of vessels mortgaged under the provisions of this Decree, whether judicially or extra- judicially, shall not require
the approval of the Maritime Industry Authority.
Who May Bid in the Foreclosure Sale
The following persons are qualified to bid in the foreclosure sale of the mortgaged vessel:

(a) Citizens of the Philippines or corporations 60% of the capital of which is owned by Filipino citizens. (Section 20 of
PD 1521)
(b) A foreign mortgagee or foreign national whose country has diplomatic relations with the Philippines
or whose country grants reciprocal rights to Filipino citizens.
In case the purchaser is a foreign individual or entity, the Philippine Coast Guard shall, upon
presentation of the certificate of sale, cancel the registration of the vessel and issue a certificate to that
effect upon request.
Maritime Lien for Necessaries; persons entitled to such lien
Any person furnishing repairs, supplies, towage, use of dry dock or marine railway, or other necessaries
to any vessel, whether foreign or domestic, upon the order of the owner of such vessel, or of a person (Section 21 of
authorized by the owner, shall have a maritime lien on the vessel, which may be enforced by suit in rem, PD 1521)
and it shall be necessary to allege or prove that credit was given to the vessel.

Persons Authorized to Procure Repairs, Supplies, and Necessaries

The following persons shall be presumed to have authority from the owner to
procure repairs, supplies, towage, use of dry dock or marine railway, and
other necessaries for the vessel: The managing owner, ship's husband,
master or any person to whom the management of the vessel at the port of
supply is entrusted. No person tortuously or unlawfully in possession or
charge of a vessel shall have authority to bind the vessel.

(Section 22 of PD 1521)
Notice to Person Furnishing Repairs, Supplies, and Necessaries
The officers and agents of a vessel specified in Section 22 of this Decree shall be taken to include such officers and
agents when appointed by a character, by an owner pro hac vice, or by an agreed purchaser in possession of the (Section 23 of
vessel; but nothing in this Decree shall be construed to confer a lien when the furnisher know, or by exercise of
reasonable diligence could have ascertained, that because of the terms of a charter party, agreement for sale of PD 1521)
the vessel, or for any other reason, the person ordering the repairs, supplies, or other necessaries was without
authority to bind the vessel therefor.

Waiver of Right to Lien

Nothing in this Decree shall be construed to prevent the furnisher of repairs, supplies,
towage, use of dry dock or marine railway, or other necessaries, or the mortgagee, from
waiving his right to a lien, or in the case of a preferred mortgage lien, to the preferred
status of such lien, at any time by agreement or otherwise.

(Section 24 of PD 1521)