THE BACHRACH MOTOR CO., INC., PLAINTIFF AND APPELLANT, VS. MARIANO LACSON LEDESMA, TALISAY-SILAY MILLING CO., INC., AND THE PHILIPPINE NATIONAL BANK, DEFENDANTS AND APPELLEES.

This is an action brought by the plaintiff to
recover the amount of the judgments obtained by it in civil cases Nos.
31597 and 31821 of the Court of First Instance of Manila, praying in
its complaint: (a) That the transfer of certificate of stock
dividends No. 772 of the Talisay-Silay Milling Co., Inc., made by
Mariano Lacson Ledesma in favor of the Philippine, National Bank, be
declared null and void, as against the plaintiff; (b) that the
Talisay-Silay Milling Co., Inc., be ordered to cancel the entry of the
transfer of the 6,300 stock dividends covered by certificate No. 772,
made by it on its books in favor of the Philippine National Bank; (c)
that said stock dividends be sold to satisfy the judgments obtained by
it in civil cases Nos. 31597 and 31821 of the Court of First Instance
of Manila; (d) that the Talisay-Silay Milling Co., Inc., be
ordered to pay to it the amount of P21,379.34, with interest on the
sums and from the dates set forth in paragraph XV of the complaint, or
any part thereof necessary to complete payment of said sums and
interest thereon, in case the 6,300 stock dividends can not be sold or
the proceeds of the sale thereof should be insufficient to cover the
sums in question, and (e) that the defendants pay the costs of
the suit. The plaintiff appealed from the judgment declaring the right
of the Philippine National Bank to the 6,300 stock dividends a
preferred one, and absolving the defendants from the complaint, with
costs.

The parties submitted the case upon the following stipulation of facts, to wit:

“STIPULATION OF FACTS.—That the plaintiff, the Bachrach Motor Co.,
Inc., on June 30, 1927, obtained judgment in civil case No. 31597 of
the Court of First Instance of Manila against the defendant Mariano
Lacson Ledesma, in the sum of P3,442.75, with interest thereon from
March 30, 1927, with costs. That a writ of execution of said judgment
was issued on August 20, 1927, and Jose Y. Orosa was appointed special
sheriff to execute it. That on October 4, 1927, said Jose Y. Orosa, as
special sheriff, in compliance with the writ of execution in question,
attached all right, title to and interest which the defendant Mariano
Lacson Ledesma may have in ‘Any bonus, dividend, shares of stock,
money, or other property which that defendant is entitled to receive
from the Talisay-Silay Milling Co., Inc., by virtue of the fact that
such defendant has mortgaged his land in favor of the Philippine
National Bank to guarantee the indebtedness of the TalisaySilay Milling
Co., Inc., or which such defendant is entitled to receive from the
Talisay-Silay Milling Co., Inc., on account of being a stockholder in
that corporation or which he is entitled to receive from that
corporation for any other cause or pretext whatsoever.’ That notice of
said attachment was served not only upon the defendant Mariano Lacson
Ledesma but also upon the herein defendant, the Talisay-Silay Milling
Co., Inc., which received a copy of the notice of attachment, as
evidenced by the Annex A attached to this stipulation of facts. That on
October 3, 1927, the herein plaintiff, the Bachrach Motor Co., Inc.,
obtained judgment in case No. 31821 of the Court of First Instance of
Manila against the defendant Mariano Lacson Ledesma, in the sum of four
thousand four hundred pesos and seventy-eight centavos with interest at
10 per cent per annum on the sum of P3,523.82 from April 30, 1927; in
the sum of P14,171.52 with interest at 10 per cent per annum on the sum
of P13,290.89 from April 30, 1927; and in the sum of P1,150.72 with the
legal interest of 6 per cent per annum thereon from May 25, 1927, and
the costs. A copy of said judgment is attached to this stipulation of
facts and marked Annex B. That a writ of execution of said judgment was
issued, thereby causing the attachment, sale and adjudication to the
plaintiff the Bachrach Motor Co., Inc., for the sum of P100, Philippine
currency, of the defendant Mariano Lacson Ledesma’s right of redemption
over the following properties, to wit: ‘Original certificate of title
No. 1929 (Lot No. 1473 of the Cadastral Survey of Bacolod) containing
an area of 2,647 square meters, more or less. Original certificate of
title No. 2978 (Lot No. 1475 of the Cadastral Survey of Bacolod)
containing an area of 8.501 square meters, more or less. Original
certificate of title No. 2624 (Lot No. 1474 of the Cadastral Survey of
Bacolod) containing an area of 8,714 square meters, more or less.
Original certificate of title No. 9443 (Lot No. 426 of the Cadastral
Survey of Talisay) containing an area of 150,301 square meters more or
less. Original certificate of title No. 1928 (Lot No. 1472 of the
Cadastral Survey of Bacolod) containing an area of 36,818 square
meters, more or less. Original certificate of title No. 2923 (Lot No.
1489 of the Cadastral Survey of Bacolod) containing an area of 286,879
square meters, more or less. Original certificate of title No. 356 (Lot
No. 4-A of the Cadastral Survey of Bacolod) containing an area of
641,448 square meters, more or less. Original certificate of title No.
356 (Lot No. 4-B of the Cadastral Survey of Bacolod) containing an area
of 280,556 square meters, more or less. Original certificate of title
No. 356 (Lot No. 4-C of the Cadastral Survey of Bacolod) containing an
area of 2,842,946 square meters, more or less.’ The certificate of sale
issued by the provincial sheriff of Occidental Negros in favor of the
Bachrach Motor Co., Inc., on March 29, 1928, is attached to this
stipulation of facts, and marked Annex C. That on the date of the
issuance of the execution in case No. 31597 of the Court of First
Instance of Manila as well as on that of the issuance of the execution
and sale of the properties described in Exhibit C, in case No. 31821 of
the same court, said real properties were mortgaged to the Philippine
National Bank to secure the payment to said bank by Mariano Lacson
Ledesma of the sum of P624,000, Philippine currency, by virtue of an
instrument executed by the debtor Mariano Lacson Ledesma in favor of
said bank on August 9, 1923. Said instrument of mortgage is copied on
pages 18 to 32, both inclusive, of the bill of exceptions in case No.
8136 of the Court of First Instance of Iloilo (G. R. No. 35223), which
is attached to this stipulation of facts and marked Annex D. That in
the same instrument of mortgage (pages 18 to 32 of Annex D) said debtor
Mariano Lacson Ledesma mortgaged in favor of the bank, as part of the
securities to ensure compliance with his obligation, the following
shares owned by him in the Talisay-Silay Milling Co., Inc./ to wit:
1,540 shares covered by Certificate No. 147; 520 shares covered by
Certificate No. 146; 40 shares covered by Certificate No. 145; that in
addition to the mortgage referred to in the preceding two paragraphs,
there was another mortgage constituted on the above-described real
properties in favor of the Philippine National Bank, to answer for the
debts contracted by the Central Talisay-Silay Milling Co. with said
bank. That on December 22, 1923, the defendant, Central Talisay-Silay
Milling Co. resolved to grant a bonus or compensation to the owners of
the real properties mortgaged to answer for the debts contracted by
said central with the Philippine National Bank, for the risk incurred
by said properties upon being subjected to said-mortgage lien, and
under the resolution in question the defendant Mariano Lacson Ledesma
was allotted the sum of P19,911.11, Philippine currency, which sum,
however, would not be payable until the month of January, 1930. That on
September 29, 1928, the Philippine National Bank brought an action
against the defendant Mariano Lacson Ledesma and his wife Concepcion
Diaz for the recovery of a mortgage credit which, together with
interest thereon, amounted to P853,729.49 on said date. Sometime later,
that is, on January 2, 1,929, the Philippine National Bank amended its
complaint by including the Bachrach Motor Co., Inc., as party
defendant, among others, ‘because they claim to have some right to
certain properties which are the subject matter of this complaint.’
Said case bears No. 4706 of the Court of First Instance of Occidental
Negros. That on January 30, 1929, the defendant Bachrach Motor Co.,
Inc., filed a general denial. That after due hearing, the Court of
First Instance of Bacolod, on September 3, 1930, rendered judgment in
case No. 4706 of said court in favor of the Philippine National Bank
and against the defendant Mariano Ikcson Ledesma, sentencmg the latter
to pay the amount claimed by said bank and ordering, upon failure to
satisfy said amount, the sale at public auction of the real properties
mortgaged under the instrument of mortgage appearing on pages 18 to 32
of Annex D. That the real estate and chattel mortgage deed in question
(pages 18 to 32 of Annex D), marked as Exhibit G, was among the
exhibits presented in said case No. 4706 of the Court of First Instance
of Occidental Negros. That likewise, among the exhibits presented in
said case No. 4706 of the Court of First Instance of Occidental Negros,
was Exhibit H which was a deed of mortgage of certain carabaos
belonging to the debtor Mariano Lacsori Ledesma, executed by the latter
in favor of the Philippine National Bank on January 21, 1925. That in
the decision rendered by the Court of First Instance of Occidental
Negros in case No. 4706 thereof, said court, referring to stock
certificates Nos. 145, 146 and 147 of the Talisay-Silay Milling Co.,
Inc., which were pledged or mortgaged by virtue of Exhibit G of said
case No. 4706, rendered the following ruling: ((e) With respect to the
chattels mortgaged by Mariano Lacson Ledesma to the Philippine National
Bank, which are described in Exhibits G and H, the Philippine National
Bank, as soon as this judgment becomes final, shall have authority to
sell them in accordance with the provisions of section 23 of Act No.
2938, immediately informing this court of whatever action it may take
in the premises/ That during the pendency of case No. 4706 of the Court
of First Instance of Bacolod referred to in the foregoing paragraphs,
the plaintiff Bachrach Motor Co,, Inc., on December 20, 1929, brought
an action in the Court of First Instance of Iloilo against the
Talisay-Silay Milling Co., Inc., tq recover from it the sum of P13,850
against the bonus or dividend which, by virtue of the resolution of
December 22, 1923, said Central Talisay-Silay Milling Co., Inc., had
declared in favor of the defendant Mariano Lacson Ledesma as one of the
owners of the hacienda which had been mortgaged to the Philippine
National Bank to secure the obligation of the Talisay-Silay Milling
Co., Inc. in favor of said bank. Copy of said complaint appears on
pages 2 to 5 of the bill of exceptions in case No. 8136 of the Court of
First Instance of Iloilo (G. R. No. 35223), Annex D of this stipulation
of facts. That on January 30, 1930, the Philippine National Bank sought
permission to intervene in said case No. 8136 of the Court of First
Instance of Iloilo and after the permission had been granted, said
bank, on February 13, 1930, filed a complaint in intervention alleging
that it had a preferred right to said bonus granted by the central to
the defendant Mariano Lacson Ledesma as one of the owners of the
haciendas which had been mortgaged tp said bank to answer for the
obligations of the Central Talisay-Silay Milling Co., Inc., basing such
allegation on the fact that, as said properties were mortgaged to it by
the debtor Mariano Lacson Ledesma, not only by virtue of the deed to
secure the obligations of the Talisay-Silay Milling Co., Inc., but also
by virtue of the deed of August 9, 1923 (pages 18 to 32 of Annex D),
and said bonus being a civil fruit of the mortgaged lands, said bank
was entitled to it on the ground that the mortgage of August 9, 1923,
had become due. That after the trial of civil case No. 8136 of the
Court of First Instance of Iloilo, said court, on December 8, 1930,
rendered judgment in favor of the plaintiff Bachrach Motor Co., Inc.
Upon appeal, the Supreme Court, on September 17, 1931^[1]
affirmed the judgment of the lower court, holding that the bonus had no
immediate relation to the lands in question but merely a remote and
accidental one and, therefore, it was not a civil fruit of the real
properties mortgaged to the Philippine National Bank to secure the
obligation of the Talisay-Silay Milling Co., Inc., being a mere
personal right of Mariano Lacson Ledesma. The decision of the Supreme
Court published in Volume 30, No. 104, of the Official Gazette, on
August 29, 1932, is attached to this stipulation of facts and marked
Annex E. That on January 24, 1930, the Talisay-Silay Milling Co., Inc.,
issued stock certificate No. 772 for 3,600 shares, as stock dividend,
to Mariano Lacson Ledesma, which certificate was ordered by Mariano
Lacson Ledesma to be delivered to Roman Lacson, attorney for the
Philippine National Bank, by virtue of the letter of February 27, 1930,
Annex G of this stipulation of facts, and of the letter of the
Philippine National Bank dated January 18, 1930, Annex G-l. Said 6,300
shares constituted the stock dividend allotted to Mariano Lacson
Ledesma for his 2,100 original shares in the Talisay-Silay Milling Co.,
Inc., which were given as pledge to the Philippine National Bank under
the deed of mortgage appearing on pages 18 to 32 of Annex D prior to
the issuance of stock certificate No. 772, and were covered by Stock
Certificates Nos. 145, 146 and 147 of the TalisaySilay Milling Co. Inc.
That stock certificate No. 772 was issued by virtue of resolution No. 4
of the general meeting of stockholders of the Talisay-Silay Milling
Co., Inc., which resolution is quoted in paragraph 8 of the complaint
in this case. That in a letter of March 25, 1930, addressed by the
Philippine National Bank to the Talisay-Silay Milling Co., said bank
informed the latter that the 6,300 shares represented by stock
certificate No. 772″ had been given by Mariano Lacson Ledesma as pledge
to the Philippine National Bank. Said letter is attached to this
stipulation of facts as Annex H. That said stock certificate No. 772
has continuously been in the possession of the Philippine National Bank
from February 27, 1930, to February 25, 1931, but, like stock
certificates Nos. 145, 146 and 147, it was registered in the books of
the TalisaySilay Milling Co. in the name of Mariano Lacson Ledesma.
That on August 11, 1930, the plaintiff Bachrach Motor Co., by virtue of
an alias execution issued in case No. 31821 of the Court of First
Instance of Manila, attached all right, title to and interest which the
defendant Mariano Lacson Ledesma might have in ‘Any bonus, dividend,
shares of stock, money or other property specially on the sum of
P19,911.11 which the defendant is entitled to receive from the
Talisay-Silay Milling Co., Inc., by virtue of the fact that such
defendant has mortgaged his lands in favor of the Philippine National
Bank to guarantee the indebtedness of the Talisay-Silay Milling Co.,
Inc., or which such defendant is entitled to receive from the
Talisay-Silay Milling Co., Inc., on account of being stockholder in
that corporation, or which he is entitled to receive from that
corporation for any other cause or pretext whatsoever.’ In connection
with the proceedings and attachment made, notice of garnishment was
served on the Talisay-Silay Milling Co., Inc., as evidenced by Annexes
I and J of this stipulation of facts. That on February 5, 1931, the
provincial sheriff of Occidental Negros, by virtue of paragraph (e) of
the dispositive part of the decision rendered in civil case No. 4706 of
the Court of First Instance of Occidental Negros, copy of which is
attached to this stipulation of facts as Annex I, sold at public
auction not only the 2,100 shares specified in the deed of August 9,
1923, but also the 6,300 shares covered by stock certificate No. 772,
the sale of said shares having been made by order and under the
direction of the attachment creditor Philippine National Bank. A copy
of the certificate of sale marked Exhibit K is attached hereto. That on
February 25, 1931, the Talisay-Silay Milling Co., Inc., upon petition
of the Philippine National Bank, as shown by the letter dated February
19, 1931, marked and attached to this stipulation as Annex L, which
letter was accompanied by the certificate of sale Exhibit K, issued
stock certificate No. 1155 representing 8,968 shares, which include the
6,300 shares formerly represented by stock certificate No. 772 and the
2,100 shares formerly represented by stock certificates Nos. 145, 146
and 147, the bank having acknowledged receipt of certificate No. 1155
in a letter of March 4, 1931, marked as Exhibit M. Attention is invited
to the fact that of the 8,968 shares represented by stock certificate
No. 1155, 568 shares formerly belonged to Concepcion Diaz de Lacson,
wife of the defendant Mariano Lacson Ledesma, and of the 568 shares,
142 were mortgaged under the deed of August 9, 1923, and 426 were the
stock dividend that had corresponded to said 142 shares. That on the
same date, February 25, 1931, Mariano Lacson Ledesma endorsed the back
of stock certificate No. 772 in favor of the Philippine National Bank.
Said stock certificate with the endorsement in question is attached to
this stipulation of facts and marked Annex N. That both on the date on
which the garnishment was carried out by the Bachrach Motor Co., that
is, on August 11, 1930, and on the date on which the 6,300 shares,
covered by stock certificate No. 772, were sold, case No. 8136 of the
Court of First Instance of Iloilo (G. K. No. 35223) was still pending.
That the amount of the actual indebtedness of the defendant Mariano
Lacson Ledesma to the plaintiff the Bachrach Motor Co. is P21,377.34
with the interest and other sums specified in paragraph XV of the
complaint. That the real properties mortgaged to the Philippine
National Bank were sold for P300,000 Philippine currency; the mortgaged
carabaos for P2,000 Philippine currency, and all the shares, that is,
the 8,968 shares for the sum of P90,000 Philippine currency, the bank
having been the highest bidder in all these sales, there still
remaining unpaid in civil case No. 4796 of the Court of First Instance
of Occidental Negros the sum of P695,421.74, as stated in Annex 9. That
the notices of garnishment issued by virtue of the executions in cases
Nos. 31597 and 31821 of the Court of First Instance of Manila are the
same notices of attachment and garnishment mentioned in the complaint
in the case No. 8136 of the Court of First Instance of Iloilo and
presented as evidence in said case, and are the same notices mentioned
in this case now submitted to the court for decision. That on March 20,
1925, the Philippine National Bank served notice on the Talisay-Silay
Milling Co., Inc., of the pledge made by Mariano Lacson Ledesma to said
bank of the shares represented by stock certificates Nos. 145, 146 and
147, and on March 25th the Talisay-Silay Milling Co., Inc.,
acknowledged receipt thereof and considered itself notified of said
pledge, as evidenced by Annexes P and Q of this stipulation of facts.
That prior to the declaration of stock dividend by virtue of resolution
No. 4 of the regular meeting of stockholders of the Talisay-Silay
Milling Co., Inc., the shares of this corporation were quoted in
private sales at P32 a share; and immediately after the declaration of
stock dividend, the quotation of said shares dropped by P1 or P8 a
share, the same having been PI 1.25 a share on the date of their sale
at public auction. Upon this stipulation of facts, the parties submit
the case to the court for decision.”

I. The
plaintiff bases the preferred right invoked by it over the 6,300 stock
dividends, certificate No. 772, on the garnishment made thereon by
reason of the issuance of the alias execution in civil case No. 31821
of the Court of First Instance of Manila, which garnishment was carried
out on August 11, 1930. The plaintiff contends in its first assignment
of error that these stock dividends were in custodia legis by
virtue of the garnishment, when certificate No. 772 thereof was
delivered to the Philippine National Bank and when the Talisay-Silay
Milling Co., Inc., entered them in its books in the name of said bank
and issued certificate No. 1166 in favor of the latter. The contention
is unfounded because it appears that the stock dividends in question
were pledged to the bank prior to the garnishment and because
certificate No. 772 was in the possession of said bank from February
27, 1930. The reasons upon which this court bases its opinion in
declaring that the stock dividends were pledged beforehand to the
Philippine National Bank will be stated in the discussion of the
following assignment of error.

II. In the stipulation of facts, it appears stipulated by the
parties that, by virtue of the letters of the Philippine National Bank
and having been so asked by Mariano Lacson Ledesma, certificate No. 772
covering the 6,300 stock dividends was delivered as security to
Attorney Roman Lacson, as representative of the bank, on February 27,
1930, in view of the fact that the original shares covered by
certificates Nos. 145, 146 and 147 had been previously mortgaged to the
same bank. On February 25, 1931, the Talisay-Silay Milling Co., Inc.,
in conformity with the letter of the Philippine National Bank of the
19th of said month, cancelled certificate No. 772 and in lieu thereof
issued certificate No. 1155 in favor of said bank, which certificate
includes the 6,300 stock dividends, among other shares. On the other
hand, the garnishment obtained by the plaintiff, upon which it bases
all its alleged preferred right, was notified to the parties and became
effective on August 11, 1930, more than five months after the delivery
of certificate No. 772. The plaintiff, in its second assignment of
error, maintains that the pledge is ineffective as against it because
evidence of its date was not made to appear in a public instrument and
concludes that its right to the 6,300 stock dividends is superior and
preferred. It is admitted that the delivery of the certificate in
question and the pledge thereof were not made to appear in a public
instrument.

It is true, acT0r4ing to article 1865 of the Civil Code, that in
order that a pledge may be effective as against third persons, evidence
of its date must appear in a public instrument in addition to the
delivery of the thing pledged to the creditor. This provision has been
interpreted in the sense that for the contract to affect third persons,
it must appear in a public instrument in addition to delivery of the
thing pledged (Ocejo, Perez & Co. vs. International Banking Corporation, 37 Phil., 631; Tec Bi & Co. vs. Chartered Bank of India, Australia & China, 41 Phil, 596; Te Pate vs.
Ingersoll, 43 Phil., 394). It cannot be denied, however, that section 4
of Act No. 1508, otherwise known as the Chattel Mortgage Law,
implicitly modified article 1865 of the Civil Code in the sense that a
contract of pledge and that of chattel mortgage, to be effective as
against third persons, need not appear in public instruments provided
the thing , pledged or mortgaged be delivered or placed in the
possession of the creditor. In the case of Mahoney vs. Tuason
(39 Phil., 952, 958), where this doctrine was laid down, it was stated:
“From the foregoing provisions of the abovecited Act, it is inferred
that the same does not entirely repeal the provisions of the Civil
Code, but only modify them in part and amplify them in another, as may
be seen from an examination of, and comparison between, the provisions
of the Civil Code regarding pledge and the above-quoted provisions of
Act No. 1508. Article 1865 of the Civil Code provides that no pledge
shall be effective against a third person unless evidence of its date
appears in a public instrument. The provision of this article has,
undoubtedly, been modified by section 4 of the Chattel Mortgage Law, in
so far as it provides that a chattel mortgage shall not be valid
against any, person except the mortgagor, his executors or
administrators, 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 which the mortgagor
resides. From the date the said Act No, 1508 was in force, a contract
of pledge or chattel mortgage should be deemed legally entered into and
should produce all its effects and consequences, provided it appears to
have been in some manner perfected and that the things pledged have
been delivered, and in a contrary case, and even if the creditor has
not received them or has not retained them in his custody, provided
that the contract of pledge or chattel mortgage appears in a notarial
document and is inscribed in the registry of deeds of the province.”
Therefore, this court holds that the pledge of the 6,300 stock
dividends is valid against the plaintiff for the reason that the
certificate was delivered to the creditor bank, notwithstanding the
fact that the contract does not appear in a public instrument.

The plaintiff further 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 can not be
the subject matter of the contract of pledge or of chattel mortgage.
Neither is this contention tenable. 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. The question is settled in this wise by the weight of
American authorities and it is the modern doctrine of general
acceptance by the courts.

“In view, however, of the fact that 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 properly indorsed, by mere delivery, and as they frequently
convey, by estoppel against the corporation or against prior holders,
as good a title to the transferee as if they were negotiable, and,
inasmuch as a large commercial use is made of such certificates as
collateral security, and it is to the public interest that such use
should be simplified and facilitated by placing them as nearly as
possible on the plane of commercial paper, they are often spoken of and
treated as quasi negotiable, that is, as having some of the attributes
and partaking of the character of negotiable instruments, in passing
from hand to hand, especially where they are accompanied by an
assignment and power of attorney, executed in blank, to transfer them
to anyone who may obtain possession as holders, even though such
assignment and power are under seal.” (14 C. J., 665, sec. 1034; South
Bend First Nat. Bank vs. Lanier, 20 Law. ed., 172; Weniger vs. Success Min. Co., 227 Fed., 548; Scott vs. Pequonnock Nat. Bank, 15 Fed., 494.)

III. In the third assignment of error, the plaintiff maintains that
the court erred in holding that the stock dividends are civil fruits or
an extension of the original shares. This court deems it unnecessary to
determine whether or not the stock dividends are civil fruits or an
extension of the original shares. This point becomes immaterial after
the case has been decided in the manner stated in the discussion of the
second assignment of error.

IV. In the fourth assignment of error, the plaintiff contends that
the court erred in not declaring null and void the sale of the 6,300
stock dividends in execution of the judgment rendered in favor of the
Philippine National Bank in civil case No. 4706 of the Court of First
Instance of Occidental Negros. Inasmuch as this court has declared that
the stock dividends in question were pledged to the bank, it follows
that the sale thereof in execution of said judgment is legal and valid.

V. In the fifth assignment of error, the plaintiff argues that the
court erred in declaring the Philippine National Bank’s right to the
stock dividends a preferred one. After it has been held that these
stock dividends had been pledged to the Philippine National Bank and
that this contract was prior to the garnishment of the plaintiff, it
appears clear that the court violated no law in holding the right of
the Philippine National Bank, as pledgee, a superior one.

VI. The plaintiff assigns as sixth and last error committed by the
court the fact of its having absolved all the defendants. The case
having been decided in favor of the Philippine National Bank, on the
grounds stated in passing upon the second assignment of error, the
absolution of the defendants is unavoidable, thereby making this last
assignment of error likewise untenable.

For the foregoing considerations, the appealed judgment is
affirmed, with the costs of this instance to the plaintiff-appellant.
So ordered.

Avancena, C. J., Villa-Real, Abad Santos, Diaz; Laurel, and Concepcion, JJ., concur.

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^[1] Bachrach Motor Co. vs. Talisay-Silay Milling Co., 56 Phil., 117.