Cannot use entity (reference to file) in parameter file - DocBook 5

[John Brown <johnbrown105@hotmail.com>]

Hello all,

Consider the following DocBook 5 files:

test.xml
========
<?xml version="1.0" ?>
<!DOCTYPE book [
<!ENTITY % testent SYSTEM "test.ent">
%testent;
]>
<book xmlns="http://docbook.org/ns/docbook"; version="5.0">

  <info>
    <title>My First Book</title>
    <subtitle><orgname>&company;</orgname></subtitle>
    <author>
      <personname>
	<firstname>John</firstname><surname>Brown</surname>
      </personname>
    </author>
    <copyright>
      <year>2008</year><holder>&company;</holder>
    </copyright>
  </info>

 &test1;

<!-- &test1 = test1.xml, which contains the text below

    <chapter><title>Testing 1, 2, 3 ...</title>
    <para>OK</para>
    </chapter>
-->

</book>


test.ent
========
<!ENTITY company "Test Corporation">
<!ENTITY test1 SYSTEM "test1.xml">

test1.xml
=========
<chapter><title>Testing 1, 2, 3 ...</title>
    <para>OK</para>
</chapter>

When I run 'xmllint --noout --relaxng /path/to/docbook.rng test.xml',
it returns:
test.xml:1: element chapter: Relax-NG validity error : Did not expect element
chapter there
test.xml:1: element chapter: Relax-NG validity error : Element book failed to
validate content
test.xml fails to validate

If I comment out "&test1;" and uncomment the chapter definition, then
test.xml validates.

What am I doing wrong?