Bachrach Motors Co.

v Mariano Ledesma

Imperial, J.

Facts:

This is an action brought by the plaintiff to recover the amount of the judgments obtained
by it in civil cases; that the transfer of certificate of stock dividends be declared null and void.
Bachrach Motor Co., Inc obtained judgment in two civil cases against the Mariano
Lacson Ledesma. That a writ of execution of said judgment was issue, thereby causing the
attachment, sale and adjudication to the plaintiff the Bachrach Motor Co., Inc., of Mariano
Lacson Ledesma's right of redemption over some properties.
On the date the issuance of the execution and sale of the properties, real properties
were mortgaged to the Philippine National Bank to secure the payment to said bank by Mariano
Lacson Ledesma.
Philippine National Bank brought an action against the defendant Mariano Lacson
Ledesma and his wife for the recovery of a mortgage credit.
Philippine National Bank amended its complaint by including the Bachrach Motor Co.,
Inc., as party defendant, among other, because they claim to have some right to certain
properties which are the subject matter of this complaint."
Court of First Instance rendered judgment in favor of the Philippine National Bank and
against Mariano Lacson Ledesma.
That in the decision rendered by the Court of First Instance, said court, referring to stock
certificates of the Talisay-Silay Milling Co., Inc., which were pledged or mortgaged. The
Philippine National Bank shall have authority to sell them.
Bachrach Motor Co., brought an action against the Talisay-Silay Milling Co., Inc.,
recover the bonus or dividend.
Bachrach contends that the pledge could not legally exist because the certificate
was not the shares themselves, making it understood that a certificate of stock or of stock
dividends cannot be the subject matter of the contract of pledge or of chattel mortgage.

Issue:
Whether the certificate of stock can be the subject of pledge or mortgage

Ruling:
YES.
 Certificates 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.

Certificates of stock, while not negotiable in the sense of the law merchant, like bills and
notes, are so framed and dealt with as to be transferable when property endorsed, by mere
delivery, as good a title to the transferee as if they were negotiable. They are treated as quasi
negotiable, that is as having some of the attributes and partaking of the character of negotiable
instruments.