Title
Bachrach vs. Golingco
Case
G.R. No. 13660
Decision Date
Nov 13, 1918
Bachrach sued Golingco for unpaid promissory note; foreclosure sale violated Chattel Mortgage Law, but no damages proven. Attorney's fee reduced to P800.
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Case Digest (G.R. No. 13660)

Facts:

  1. Parties Involved:

    • Plaintiff and Appellee: E. M. Bachrach
    • Defendant and Appellant: Vicente Golingco
  2. Nature of the Case:

    • The case involves a suit for the recovery of a sum of money claimed as a balance due on a promissory note executed by Golingco in favor of Bachrach.
  3. Transaction Details:

    • The promissory note represented the purchase price of an automobile truck sold by Bachrach to Golingco.
    • As security for the payment of the debt, Bachrach took a chattel mortgage on the truck.
  4. Foreclosure of Chattel Mortgage:

    • After the note matured, Bachrach foreclosed the chattel mortgage.
    • At the foreclosure sale, Bachrach purchased the truck for P539, which was credited to the debt.
  5. Irregularities in Foreclosure:

    • The truck was moved from Albay (Golingco's residence) to Manila without Golingco's consent.
    • The sale was conducted in Manila, contrary to the Chattel Mortgage Law (Act No. 1508, Section 14), which requires the sale to occur in the municipality where the mortgagor resides or where the property is situated.
    • No notice of the sale was posted in Albay.
  6. Condition of the Truck:

    • At the time of the sale, the truck was in poor condition, with many parts removed (tires, generator, lamps, dynamo, etc.).
    • Bachrach testified that the truck's value at the time of sale was P539, which he paid.
  7. Attorney's Fee Stipulation:

    • The promissory note included a stipulation for a 25% attorney's fee in case of collection.
    • The trial court awarded P2,115.25 as attorney's fees.

Issue:

  1. Irregularities in Foreclosure:

    • Whether the foreclosure sale was valid despite the failure to comply with the Chattel Mortgage Law.
  2. Validity of Attorney's Fee Stipulation:

    • Whether the 25% attorney's fee stipulated in the promissory note is valid and enforceable.

Ruling:

  1. Irregularities in Foreclosure:

    • The foreclosure sale was improperly conducted because it violated the Chattel Mortgage Law.
    • However, Golingco failed to prove any damages resulting from the irregularity.
  2. Attorney's Fee Stipulation:

    • The stipulation for a 25% attorney's fee is valid in principle but excessive in this case.
    • The court reduced the attorney's fee to P800, deeming it a reasonable amount for the services rendered.

Ratio:

  • (Unlock)

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