Bachrach Motors v Ledesma

Facts:

 Bachrach obtained judgment against Ledesma in the sum of 3K.

The sheriff, in compliance with the writ of execution attached all right, title and interest w/c Ledesma
may have in any bonus, dividend, share of stock, money or property receive from Talisay Milling.

This is because Ledesma mortgaged his land in favor of PNB to guarantee the indebtedness of
Talisay Milling for being a stockholder. The notice of attachment was served to both Ledesma and Talisay.

Thereafter, Bachrach obtained judgment against Ledesma

Writ of execution caused attachment of Ledesmas right of redemption over parcels of land.

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 PNB.

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.

PNB brought an action against Ledesma and his wife for the recovery of mortgage credit.

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 rendered judgment in favor of PNB.

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 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.
- Civ. Code provides that: no pledge shall be effective against a 3rd 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.