BACHRACH v.

TALISAY SILAY

ISSUE: Whether or not the bonus paid by Talisay-Silay to its planters for mortgaging their lands to
secure the company's debt should be considered civil fruits of the mortgaged properties

FACTS:
- In December of 1923, Talisay-Silay Milling Co., Inc. obtained a loan from PNB. In order to
secure the loan, Talisay-Silay convinced its planters to mortgage their properties to PNB, with a
promise to pay them bonuses for taking such risk. This promise was embodied in a resolution
passed by the milling company, which also stated that such bonus will be based upon the value
of the debt secured from PNB.
- Mariano Lacson Ledesma was one of those planters promised with a bonus by Talisay-Silay. He
also had an existing debt to Bachrach Motor Co., which at the time of this case, was already due
and demandable.
- Bachrach Motor then filed this case against Talisay-Silay, for the latter to deliver P13,850
representing the bonus it owed to Mariano Ledesma.
- PNB then filed a third-party claim, alleging a preferential right to receive Mariano's bonus, since
the said bonus are civil fruits of the mortgaged land. Since Talisay-Silay's debt has not yet been
fully paid, the bonus should therefore belong to them.
- The lower court ruled in favor of Bachrach Motor, holding that the bonus is not considered as
civil fruits, and that Bachrach has a prior and preferential right to that of PNB.
- PNB then appealed to the SC.

ARGUMENT(S):
- PNB - As per Art. 335 (now Art. 442), civil fruits are the rents of buildings, the prices of lease of
lands and other property, and the amount of perpetual or life annuities or other similar income.
- Since the bonus was given due to Ledesma's mortgaging of his land in favor of the milling
company, it should be considered as income derived from the mortgaged property, and as such,
must be considered civil fruits.

HELD:
The Supreme Court affirmed the lower court's decision.
- While the bonus may be considered as income, it cannot be said that such income was derived
directly from the mortgaged property itself. The bonus could be considered as civil fruits arising
from Ledesma's generosity or his act of risking his property, but it is not civil fruits arising from
the property itself.
- Furthermore, as per Talisay-Silay's resolution, the bonus was based upon the total value of the
debt secured. It is not based upon the value, importance, or any other circumstance of the
mortgaged property. Therefore, it cannot be said that the bonus was income derived from the
mortgaged property.

PETITION HAS NO MERIT, JUDGMENT APPEALED FROM IS AFFIRMED.