Bachrach Motor v. Mariano Ledesma; Talisay Milling (Aug 1937)
-­‐ PNB brought an action against Ledesma and his wife for the
Facts:
-­‐ Bachrach brought this action to recover the amount of judgments. It
appealed form the judgment declaring the right of PNB to the 6,300
stock dividends as a preferred one absolving PNB and Ledesma
form the complaint.
-­‐ It prayed that:
o The transfer certificate of stock dividends of Talisay Milling of
the PNB be declared null and void
o That Talisay Milling be ordered to cancel the entry of the
transfer of 6,300 stock dividends made by it on its books in
favor of PNB
o That Talisay Milling be order to pay Php 22K in case the
6300 stock dividends could not be sold or if the proceeds of
the sale are insufficient.
o That the defendants pay the cost of suit.
Antecedent Facts:
-­‐ Bachrach obtained judgment against Ledesma in the sum of 3K.
-­‐ The special sheriff, in compliance with the writ of execution attached
all right, title to and interest w/c Ledesma may have in any bonus,
dividend, share of stock, money or property w/c Ledesma is entitled
to receive from Talisay Milling.
o This is by virtue of the fact that Ledesma mortgaged his land
in favor of PNB to guarantee the indebtedness of Talisay
Milling or w/c defendant is entitled to receive from Talisay on
account of being a stockholder.
o The notice of attachment was served to both Ledesma and
Talisay.
§ Talisay even received a copy of the notice of
attachment.
-­‐ On Oct 3, 1927, Bachrach obtained judgment against Ledesma
o Writ of execution caused attachment of Ledesma’s right of
redemption over parcels of land.
o On the day of issuance of the execution, real properties were
mortgaged to PNB to secure payment to said bank by
Ledesma of the sum of P624K
§ In the same instrument of mortgage, Ledesma
mortgaged in favor of PNB shares owned by him in
Talisay Millng.
§ Certificate covering 6,300 stock dividends were
delivered as security to Atty. Roman as
representative of bank PNB.
o Talisay Milling granted a bonus or compensation to the
owners of the real properties mortgaged to answer the debts
contracted by it with PNB.
§ Pursuant to this, Ledesma was allotted P19K.
recovery of mortgage credit.
o PNB amended its complaint to include Bachrach Motor as a
party because it claims to have some right to certain
properties which PNB was also claiming.
-­‐ CFI Bacolod rendered judgment in favor of PNB.
o Bachrach brought an action against Talisay to recover the
bonus or dividends declared by the corporation against
Mariano Ledesma as one of the owners of the hacienda w/c
had been mortgaged to PNB to secure obligation of Talisay.
Issues:
-­‐ WON pledge of stocks was ineffective against Bachrach because
evidence of its date was not made to appear in a public instrument.
-­‐ WON pledge could not legally exist because the certificate was not
the shares themselves.
o Certificate of stock cannot be the subject matter of the
contracts of pledge or chattel mortgage.
Held:
-­‐ The pledge of stock dividends is valid against Bachrach Motor
because the certificate was delivered to creditor bank PNB,
notwithstanding the fact that the contract DOESN'T appear in a
public instrument.
o Civ. Code provides that: no pledge shall be effective against
rd
a 3 person unless evidence of its date appears in a public
instrument.
§ But this provision has been modified by Chattel
Mortgage Law (Sec 4)
§ A chattel mortgage shall not be valid against any
person except the mortgagor, his
executor/administrator UNLESS the possession of
the property is delivered to and retained by the
mortgagee OR unless the mortgage is recorded in
the office of the Register of Deeds of the province in
w/c the mortgagor resides.
-­‐ Certificate of stock or of stock dividends under the corporation law
are QUASI NEGOTIABLE instruments in the sense that they may be
given in pledge or mortgage to secure an obligation.
o Petitioner Bachrach contends that pledge couldn't legally
exist because the certificate was not the shares themselves
and that the stock certificate cannot be the subject matter of
a contract of pledge or chattel mortgage.