9/23/24, 11:04 PM G.R. No.

35223

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Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 35223 September 17, 1931

THE BACHRACH MOTOR CO., INC., plaintiff-appellee,

vs.
TALISAY-SILAY MILLING CO., ET AL., defendants-appellees.
THE PHILIPPINE NATIONAL BANK, intervenor-appellant.

Roman J. Lacson for intervenor-appellant.

Mariano Ezpeleta for plaintiff-appellee.
Nolan and Hernaez for defendants-appellees Talisay-Silay Milling Co. and Cesar Ledesma.

ROMUALDEZ, J.:

This proceeding originated in a complaint filed by the Bachrach Motor Co., Inc., against the Talisay-Silay Milling Co.,
Inc., for the delivery of the amount P13,850 or promissory notes or other instruments or credit for that sum payable
on June 30, 1930, as bonus in favor of Mariano Lacson Ledesma; the complaint further prays that the sugar central
be ordered to render an accounting of the amounts it owes Mariano Lacson Ledesma by way of bonus, dividends, or
otherwise, and to pay the plaintiff a sum sufficient to satisfy the judgment mentioned in the complaint, and that the
sale made by said Mariano Lacson Ledesma be declared null and void.

The Philippine National Bank filed a third party claim alleging a preferential right to receive any amount which
Mariano Lacson Ledesma might be entitled to from the Talisay-Silay Milling Co. as bonus, because that would be
civil fruits of the land mortgaged to said bank by said debtor for the benefit of the central referred to, and by virtue of
a deed of assignment, and praying that said central be ordered to delivered directly to the intervening bank said sum
on account of the latter's credit against the aforesaid Mariano Lacson Ledesma.

The corporation Talisay-Silay Milling Co., Inc., answered the complaint stating that of Mariano Lacson Ledesma's
credit, P7,500 belonged to Cesar Ledesma because he had purchased it, and praying that it be absolved from the
complaint and that the proper party be named so that the remainder might be delivered.

Cesar Ledesma, in turn, claiming to be the owner by purchase in good faith an for a reconsideration of the P7,500
which is a part of the credit referred to above, answered praying that he be absolved from the complaint.

The plaintiff Bachrach Motor Co., Inc., answered the third party claim alleging that its credit against Mariano Lacson
Ledesma was prior and preferential to that of the intervening bank, and praying that the latter's complaint be
dismissed.

At the trial all the parties agreed to recognize and respect the sale made in favor of Cesar Ledesma of the P7,500
part of the credit in question, for which reason the trial court dismissed the complaint and cross-complaint against
Cesar Ledesma authorizing the defendant central to deliver to him the aforementioned sum of P7,500. And upon
conclusion of the hearing, the court held that the Bachrach Motor Co., Inc., had a preferred right to receive the
amount of P11,076.02 which was Mariano Lacson Ledesma's bonus, and it ordered the defendant central to deliver
said sum to the plaintiff.

The Philippine National Bank appeals, assigning the following alleged errors as committed by the trial court:

1. In holding that the bonus which the Talisay-Silay Milling Co., Inc., bound itself to pay the planters who had
mortgaged their land to the Philippine National Bank to secure the payment of the debt of said central to said
bank is not civil fruits of said land.

2. In not holding that said bonus became subject to the mortgage executed by the defendant Mariano Lacson
Ledesma to the Philippine National Bank to secure the payment of his personal debt to said bank when it fell

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due.

3. In holding that the assignment (Exhibit 9, P.N.B.) of said bonus made on March 7, 1930, by Mariano
Lacson Ledesma to the Philippine National Bank to be applied to the payment of his debt to said Philippine
National Bank is fraudulent.

4. In holding that the Bachrach Motor Co. Inc., in civil case No. 31597 of the Court of First Instance of Manila
levied a valid attachment upon the bonus in question.

5. In admitting and considering the supplementary complaint filed by the Bachrach Motor Co., Inc., alleging as
a cause of action the attachment of the bonus in question which said Bachrach Motor Co., Inc., in civil case
No. 31821 of the Court of First Instance of Manila levied after the filing of the original complaint in this case,
and after Mariano Lacson Ledesma in this case had been declared in default.

6. In holding that the Bachrach Motor Co., Inc., has a preferential right to receive from the Talisay-Silay Milling
Co., Inc., the amount of P11,076.02 which is in the possession of said corporation as the bonus to be paid to
Mariano Lacson Ledesma, and in ordering the Talisay-Silay Milling Co., Inc., to deliver said amount to the
Bachrach Motor Co., Inc.

7. In not holding that the Philippine National Bank has a preferential right to receive from the Talisay-Silay
Milling Co., Inc., the amount of P11,076.02 held by said corporation as Mariano Lacson Ledesma's bonus,
and in not ordering said Talisay-Silay Milling Co., Inc., to deliver said amount to the Philippine National Bank.

8. In not holding that the amended complaint and the supplementary complaint of the Bachrach Motor Co.,
Inc., do not state facts sufficient to constitute a cause of action in favor of the Bachrach Motor Co., Inc., and
against the Talisay-Silay Milling Co., Inc., or against the Philippine National Bank.

The appellant bank bases its preferential right upon the contention that the bonus in question is civil fruits of the
lands which the owners had mortgaged for the benefit of the central giving the bonus, and that, as civil fruits of said
land, said bonus was assigned by Mariano Lacson Ledesma on March 7, 1930, by virtue of the document Exhibit 9
of said intervening institution, which admitted in its brief that "if the bonus in question is not civil fruits or rent which
became subject to the mortgage in favor of the Philippine National Bank when Mariano Lacson Ledesma's personal
obligation fell due, the assignment of March 7, 1930 (Exhibit 9, P.N.B.), is null and void, not because it is fraudulent,
for there was no intent of fraud in executing the deed, but that the cause or consideration of the assignment was
erroneous, for it was based upon the proposition that the bonus was civil fruits of the land mortgaged to the
Philippine National Bank." (P. 31.)

The fundamental question, then, submitted to our consideration is whether or not the bonus in question is civil fruits.

This is how the bonus came to be granted: On December 22, 1923, the Talisay-Silay Milling Co., Inc., was indebted
to the Philippine National Bank. To secure the payment of its debt, it succeeded in inducing its planters, among
whom was Mariano Lacson Ledesma, to mortgage their land to the creditor bank. And in order to compensate those
planters for the risk they were running with their property under the mortgage, the aforesaid central, by a resolution
passed on that same date, i.e., December 22, 1923, undertook to credit the owners of the plantation thus mortgaged
every year with a sum equal to two per centum of the debt secured according to yearly balance, the payment of the
bonus being made at once, or in part from time to time, as soon as the central became free of its obligations to the
aforesaid bank, and of those contracted by virtue of the contract of supervision, and had funds which might be so
used, or as soon as it obtained from said bank authority to make such payment. (Exhibits 5, 6; P.N.B.)

Article 355 of the Civil Code considers three things as civil fruits: First, the rents of buildings; second, the proceeds
from leases of lands; and, third, the income from perpetual or life annuities, or other similar sources of revenue. It
may be noted that according to the context of the law, the phrase "u otras analogas" refers only to rent or income,
for the adjectives "otras" and "analogas" agree with the noun "rentas," as do also the other adjectives "perpetuas"
and "vitalicias." That is why we say that by "civil fruits" the Civil Code understands one of three and only three
things, to wit: the rent of a building, the rent of land, and certain kinds of income.

As the bonus in question is not rent of a building or of land, the only meaning of "civil fruits" left to be examined is
that of "income."

Assuming that in broad juridical sense of the word "income" it might be said that the bonus in question is "income"
under article 355 of the Civil Code, it is obvious to inquire whether it is derived from the land mortgaged by Mariano
Lacson Ledesma to the appellant bank for the benefit of the central; for it is not obtained from that land but from
something else, it is not civil fruits of that land, and the bank's contention is untenable.

It is to be noted that the said bonus bears no immediate, but only a remote accidental relation to the land mentioned,
having been granted as compensation for the risk of having subjected one's land to a lien in favor of the bank, for
the benefit of the entity granting said bonus. If this bonus be income or civil fruits of anything, it is income arising

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from said risk, or, if one chooses, from Mariano Lacson Ledesma's generosity in facing the danger for the protection
of the central, but certainly it is not civil fruits or income from the mortgaged property, which, as far as this case is
concerned, has nothing to do with it. Hence, the amount of the bonus, according to the resolution of the central
granting it, is not based upon the value, importance or any other circumstance of the mortgaged property, but upon
the total value of the debt thereby secured, according to the annual balance, which is something quite distinct from
and independent of the property referred to.

Finding no merit in this appeal, the judgment appealed from is affirmed, without express finding as to costs. So
ordered.

Johnson, Street, Malcolm, Villamor, Ostrand, Villa-Real, and Imperial, JJ., concur.

The Lawphil Project - Arellano Law Foundation

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