Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No.

L-22973 January 30, 1968

M M!UL O LUM!ER COMP N", plaintiff-appellant, vs. P#$L$PP$NE N T$ON L ! N% an& N CLETO #ER L'O '()u*y Pro+,n-,a. S/(r,00 o0 Ca1ar,n(2 Nor*(,defendants-appellees. Ernesto P. Vilar and Arthur Tordesillas for plaintiff-appellant. Tomas Besa and Jose B. Galang for defendants-appellees. NGELES, J.: An appeal from a decision, dated April 2, !"#, of the Court of $irst %nstance of Manila in Civil Case No. &2'(!, entitled )Mambulao *umber Compan+, plaintiff, versus Philippine National Ban, and Anacleto -eraldo, defendants), dismissin. the complaint a.ainst both defendants and sentencin. the plaintiff to pa+ to defendant Philippine National Ban, /PNB for short0 the sum of P1,&(2.&2 2ith interest thereon at the rate of "3 per annum from 4ecember 22, !" until full+ paid, and the costs of suit. %n see,in. the reversal of the decision, the plaintiff advances several propositions in its brief 2hich ma+ be restated as follo2s5 . 6hat its total indebtedness to the PNB as of November 2 , !" , 2as onl+ P&",#(&.(7 and not P&(,2 1.& as concluded b+ the court a quo8 hence, the proceeds of the foreclosure sale of its real propert+ alone in the amount of P&",!'(.'' on that date, added to the sum of P71(.&! it remitted to the PNB thereafter 2as more than sufficient to li9uidate its obli.ation, thereb+ renderin. the subse9uent foreclosure sale of its chattels unla2ful8 2. 6hat it is not liable to pa+ PNB the amount of P&,(2 .1& for attorne+:s fees and the additional sum of P2!(.&# as e;penses of the foreclosure sale8 1. 6hat the subse9uent foreclosure sale of its chattels is null and void, not onl+ because it had alread+ settled its indebtedness to the PNB at the time the sale 2as effected, but also for the reason that the said sale 2as not conducted in accordance 2ith the provisions of the Chattel Mort.a.e *a2 and the venue a.reed upon b+ the parties in the mort.a.e contract8 #. 6hat the PNB, havin. ille.all+ sold the chattels, is liable to the plaintiff for its value8 and &. 6hat for the acts of the PNB in proceedin. 2ith the sale of the chattels, in utter disre.ard of plaintiff:s vi.orous opposition thereto, and in ta,in. possession thereof after the sale thru force, intimidation, coercion, and b+ detainin. its )man-in-char.e) of said properties, the PNB is liable to plaintiff for and attorne+:s fees. 6he antecedent facts of the case, as found b+ the trial court, are as follo2s5

a. it 2as found that the plaintiff had alread+ stopped operation about the end of !&7 or earl+ part of !&(. !&". 2hich as of @eptember 22.a.ed b+ the plaintiff and made an inventor+ thereof in the presence of a PC @er.innin. and transportation e9uipments as collaterals. on =ul+ 1 .reed to pa+ to the former the said sum in five e9ual +earl+ installments at the rate of plus "3 annual interest therefore from @eptember 21. 1( of the land records of Camarines Norte. attorne+:s fees. =ul+ 1 .s and improvements e.m. at the .istin. the PNB sent notice to the plaintiff that the former 2as foreclosin.&!.round floor of the Court -ouse in 4aet. !" .&'' as part of the approved loan . thereon. the PNB sent a letter to the Provincial @heriff of Camarines Norte re9uestin. 1( of the land records of said province.&2(. the last of 2hich 2ould be on =ul+ 1 . !&7."#".ust 2. 2here the mort. bet2een !5'' and 25'' a.''' 2ith the Na.''' onl+. <n November (. unit and other fi. !" . the PNB made another release of P &.&''. all situated in its compound in the aforementioned municipalit+. !" . 6he plaintiff failed to pa+ the amorti>ation on the amounts released to and received b+ it. possession of the chattels mort.ed assets of the plaintiff. notice of e. him to ta. 4eput+ Provincial @heriff Anacleto -eraldo too. machiner+.ed chattels 2ere situated. !&".cludin."# be. as amended. and to sell it at public auction in accordance 2ith the provisions of Act No. <n November ".e possession of the chattels mort.ed propert+ 2ould be sold at public auction at '5'' a.ed b+ the latter and that the auction sale thereof 2ould be held on November 2 . thereon.."7!. in Mambulao.penses of the sale. to the notice. for the satisfaction of the unpaid obli. Accordin. 6o secure the pa+ment of the loan. the Provincial @heriff of Camarines Norte issued the correspondin. Camarines Norte.a. lo.a. =ul+ 1 . !" . him to ta. Repeated demands 2ere made upon the plaintiff to pa+ its obli. the latter e..ecuted another promissor+ note 2herein it a. !&7. !" .<n Ma+ &. <n November !.a. ?pon inspection and verification made b+ emplo+ees of the PNB. !" . e. %n compliance 2ith the re9uest.&!. !" .ed to it b+ the plaintiff and sell them at public auction also on November 2 . for the satisfaction of the sum of P&7."#". on November 2 . ho2ever. notice of public auction sale of the .aniban /formerl+ Mambulao0. e. !" .#' be. the plaintiff mort. and endin.ether 2ith the improvements e. attorne+:s fees e9uivalent to '3 of the amount due and the costs and e. !" . amounted to P&7. <n <ctober !. !" . <n @eptember 27.ned a promissor+ note 2herein it promised to pa+ to the PNB the said sum in five e9ual +earl+ installments at the rate of P". Camarines Norte. the PNB sent a letter to the Provincial @heriff of Camarines Norte re9uestin. 1 1&.aniban. on <ctober ".m. as 2ell as various sa2mill e9uipment. to. for 2hich the plaintiff si. situated in the poblacion of =ose Pan. !" . rollin. covered b+ 6ransfer Certificate of 6itle No. and covered b+ 6ransfer Certificate of 6itle No.istin.e possession of the parcel of land. !&" the plaintiff applied for an industrial loan of P &&.a Branch of defendant PNB and the former offered real estate. <n Au. !" . the said 4eput+ @heriff issued the correspondin. province of Camarines Norte.a.eant and a policeman of the municipalit+ of =ose Pan. 6he application.ation but it failed or other2ise refused to do so.ation of the plaintiff. to. the PNB released from the approved loan the sum of P27. the mort. 2as approved for a loan of P ''. <n the same da+.traAudiciall+ the chattels mort.ranted to the plaintiff and so on the said date. and ever+ +ear thereafter.ether 2ith the buildin.tra-Audicial sale and sent a cop+ thereof to the plaintiff.ed to defendant PNB a parcel of land.innin.

penses of the sale.ed chattels and so it advised the @heriff of Camarines Norte to defer it to 4ecember 2 .!'(. and the+ 2ere a2arded to the PNB for the sum of P#.a Branch of the PNB 2as construed b+ the latter as a re9uest for e. the proceeds of the foreclosure sale of parcel of land described in 6ransfer Certificate of 6itle No. the plaintiff sent separate letters.aniban.plained in said letter that the sum of P&7.a.rounds that the mort. A cop+ of said advice 2as sent to the plaintiff for its information and . 2ould be made. %n said letter to the Na. !" .e contracts. at '5'' a.all+ effected at a place other than the Cit+ of Manila.&! to the Na."#".a.uardin.s and improvements thereon. one to the Na. its obli.a. 1( .l+. the remittance of P71(.es on the .in.2'' and the correspondin.ation 2ould be settled satisfactoril+ because an important ne. %t 2as further e. ho2ever.ed chattels to be held on November 2 .a.!'(.iven an e. %n the said letter.a Branch of the PNB.s.ecuted a certificate of sale in favor of the PNB and a cop+ thereof 2as sent to the plaintiff. 6he foreclosure sale of the parcel of land. did not include the '3 attorne+:s fees and e. accordin.tension of ninet+ /!'0 da+s. the plaintiff advised the Provincial @heriff of Camarines Norte that it had full+ paid its obli.oin.e.edl+ in full settlement of the balance of the obli.ation to the PNB. alle. 4eput+ Provincial @heriff -eraldo e.innin. to the terms of the mort.uidance. !" .a. bill of sale 2as issued in its favor b+ 4eput+ Provincial @heriff -eraldo. to. 1( .ht of the plaintiff to redeem the same 2ithin a period of one +ear. fees. !" /but apparentl+ posted several da+s later0. a. 2as. the plaintiff 2as advised that the foreclosure sale scheduled on the 2 st of said month 2ould be stopped if a remittance of P!. should be made in Manila. !" .a.''.tension of the foreclosure sale of the mort.ainst it /plaintiff0 for said purpose and that the foreclosure proceedin.'' a da+ be.ed chattels 2as held at '5'' a.7". !" . Accordin. . !" . covered b+ 6ransfer Certificate of 6itle No.ed chattels be discontinued on the .ether 2ith the buildin. <n the same date. 4ecember !.penses of .ation of the plaintiff after the application thereto of the sum of P&". posted as re. !" . !" .uardin.m. " . the plaintiff sent a ban.istered air mail matter. the foreclosure sale of the mort. plus interest thereon and . subAect to the ri.'' representin. 6he letter of the plaintiff to the Na. the plaintiff reiterated its re9uest that the foreclosure sale of the mort.rounds that the+ could not be effected unless a Court:s order 2as issued a. held on November 2 . <n November !. <n 4ecember 2 .a. 2rote to the plaintiff ac.. at the plaintiff:s compound situated in the municipalit+ of =ose Pan.a Branch of the PNB. the Attorne+ of the Na.a. %n a letter dated 4ecember #. !" .ed chattels at the rate of P#. 2hich 2as stated in the re9uest for the foreclosure of the real estate mort.otiation 2as then .ation.no2led. and enclosed there2ith a cop+ of its letter to the latter dated 4ecember #.ed indebtedness had been full+ paid and that it could not be le.m. and the said propert+ 2as sold to the PNB for the sum of P&".a Branch of the PNB.7". " . the mort. draft for P71(. !" .a Branch of the PNB and another to the Provincial @heriff of Camarines Norte.mort.ainst the foreclosure of the real estate and chattel mort. %n a letter dated 4ecember ". it 2as intimated that if the public auction sale 2ould be suspended and the plaintiff 2ould be . protestin. ho2ever.a.&! 2ith the advice. on for the sale of its )2hole interest) for an amount more than sufficient to li9uidate said obli. that as of that date the balance of the account of the plaintiff 2as P!. Province of Camarines Norte. to 2hich should be added the e.&!. at the same time and place. <n 4ecember (.

e deliver+ of the thin. !" .ainst the PNB.ecuted in favor of the PNB amounts onl+ to P&".loads of e9uipment. 6he first 9uestion Mambulao *umber Compan+ poses is that 2hich relates to the amount of its indebtedness to the PNB arisin. 2hich in turn sold them to Mariano Bundo. t2o truc.'' D P27. 2ith the su. as per promissor+ note of the same date /E. and P &. and not P&(. %t is contended that its obli. 2hen the sale of real propert+ 2as effected.&! as of that date. %n the afternoon of the same da+.ado refuse.2 1.plained that should per cent /"30 per annum from the respective date of said notes )until paid). 6here is merit to this claim.e. and the+ informed *uis @al. 6he emplo+ees of the PNB e. arrived but @al. sum of mone+ b+ 2a+ of dama.a Branch of the PNB to the plaintiff.ercise its ri. sentenced the Mambulao *umber Compan+ to pa+ to the defendant PNB the sum of P1. he 2ould be e.'''.a Branch of the PNB advised the plaintiff .&''.ado 2as at first reluctant to allo2 an+ piece of propert+ to be b+ the PNB. it appears that in arrivin.s and men of Mariano Bundo.oin. ?pon at the total indebtedness of P&7. advised that the purchaser 2ould ta.ado. ho2ever. several emplo+ees of the PNB arrived in the compound of the plaintiff in =ose Pan.inall+ mort. as stated in the first para. %n the statement of account of the appellant as of @eptember of the Attorne+ of the Na.&2 2ith interest thereon at the rate of "3 per annum from 4ecember 22. submitted b+ the PNB. E. facts. @al. the PNB had compounded the principal of the loan and the accrued "3 interest thereon each time the +earl+ amorti>ations became due..ed additional delin9uenc+ interest on .ht of redemption and that it appl+ for the condonation of the attorne+:s fees. him not to deliver the )chattels) 2ithout court a. !" . that he 2ould ta. the Mana.a. that the properties therein had been auctioned and bou. of the local police and PC soldiers.hibit C-10. himself to a liti. it priorit+ to repurchase the chattels ac9uired b+ the former at public auction. !" /da+ follo2in.s he bou. <n Ma+ 2#.ado did not permit them to ta.'' released on <ctober !.'' released on Au. 2e find that the b+ it at the foreclosure sale and subse9uentl+ sold to Mariano Bundo. @al.ado received a tele.e out an+ e9uipment from inside the compound of the plaintiff. and on the basis of these compounded amounts char. Apprehensive of the ris. !" . out of the principal loans and the accrued interest thereon.. Chief @ecurit+ Buard of the premises. %n the meantime.en out of the compound of the plaintiff. 2hich 2ere of the Na. an action for dama.ivin. Mambulao *umber Compan+ interposed the instant appeal. 2ere able finall+ to haul the properties ori.&(2.ust 2. Ce shall discuss the various points raised in appellant:s brief in seriatim. !"2. Camarines Norte. ?pon the fore.(7 as of November 2 .#(&.no2n of its intention to file appropriate action or actions for the protection of its interests.estion that it e. the truc. 6hru the intervention. <n the follo2in.ation under the terms of the t2o promissor+ notes it had e.e out from the plaintiff:s compound t2o truc.raph of this opinion.ado immediatel+ sent a 2ire to the President of the plaintiff in Manila.. the date of the 9uestioned foreclosure of plaintiff:s chattels0 until full+ paid.&''.hibit C-#0 D 2as si.posin. Mariano Bundo.%n a letter dated 4ecember 2". @al. !&" as per promissor+ note of even date /E. 6he plaintiff did not follo2 the advice but on the contrar+ it made . the terms of the promissor+ note e. 2ith the information that the compan+ 2as then filin.aniban.& as found b+ the trial court.ation 2herein he could be held liable to pa+ bi. !&".ecuted b+ the appellant in favor of the PNB. advice as to 2hat he should do. Ma+ 2&. !"2.s of Mariano Bundo. the trial court rendered the decision appealed from 2hich. and the costs. as. 2as able to ta.ed b+ the plaintiff to the PNB.reed interest on the loan of P#1.ram from plaintiff:s President directin. da+. 6his offer 2as reiterated in a letter dated =anuar+ 1.aminin."#". !"2.

penses of the foreclosure sale althou.ether 2ith the buildin. the trial of the case. Cith respect to the amount of P2!(. !" 8 and to this erroneousl+ computed total of P&7.'' as a reasonable allo2ance for t2o da+:s 2or. 2henever the debt is Audiciall+ claimed. da+s the sheriff concerned actuall+ spent in connection 2ith the e. n. the provisions of the Rules of Court for purposes of arrivin. interest on accrued interests from the time the various amorti>ations of the loan became due until the real estate mort.tra-Audicial foreclosure of mort. %n this respect. the trial court added "3 interest per annum from @eptember 21. 2ithout an+ a. processes of the court in connection 2ith Audicial foreclosure of mort. 2hich as added principal shall earn ne2 interest8 but such stipulation is no2here to be found in the terms of the promissor+ notes involved in this case. and n.pressl+ provides that in computin. that it actuall+ spent an+ amount in connection 2ith the said foreclosure a. the parties ma+.a. @ec. %t is true. Clearl+ therefore. factual or le. Admittedl+. 7.a.e2ise decries the a2ard of attorne+:s fees 2hich."#".penses in connection 2ith the foreclosure!'(. thereon covered b+ 6ransfer Certificate of 6itle No. !" . no evidence ho2 much 2as the e.reement in the real estate mort.. appellant maintains that the same has no basis.&!.h from the pertinent provisions of the Rules of Court. 6he court belo2 committed error in appl+in. 7. %n effect. Rule 1' of the <ld Rules0 and P2! interest onl+ from the time it is Audiciall+ demanded.reement to that effect and before the+ had been Audiciall+ demanded. onl+ b+ a sheriff servin. and of Article !&! of the same code 2hich ordains that interest due and unpaid shall not earn interest. compound interest shall not be rec. at the amount a2arded. the trial court said5 6he parcel of land. of Rule 1' /no2 Rule # 0 are demandable.penses of the e. %t is to be borne in mind that the fees enumerated under para. but also for the reason that the PNB neither spent nor incurred an+ obli. the interest on an+ obli. %t li.tra-Audicial foreclosure under consideration.tra-Audicial foreclosure sale. ho2ever. b+ stipulation.penses for publication of the notice be under Act 1 1&.&# as e. Appellant ne. 2ould be the amount of P '. 6here is reason for the appellant to assail the a2ard of P2!(. not onl+ because there is no e. @ec.them up to @eptember 22. 1( . D one for the .'' for each da+ of actual 2or.tra-Audiciall+ foreclosed on November 2 .cept b+ a.e contract to pa+ attorne+:s fees in case the same is e.a.&# allo2ed as e. and should not have been a2arded. 6he la2 applicable is @ection # of Act 1 1& 2hich provides that the officer conductin. . and the trial court has adAudicated to it.istin. accordin. @ection & of Act No. to. 2"&& e. promissor+ note or other instrument or contract.penses of the foreclosure sale in favor of the PNB.ation. the sale /par.&# as his commission for the sale /par.penses of the sale. should not be deducted from the proceeds of the sale of the real propert+.ecuted to secure the loan 2as e. <f course. 6here is reall+ no evidence of record to support the conclusion that the PNB is entitled to the amount a2arded as e.s and improvements e. 6here 2as.tra-Audicial foreclosure sale. the trial court fell into error 2hen it a2arded interest on accrued interests.penses of the e.reement. and not in cases of e..e e. !" to November 2 of the same +ear. 6his is an error. Neither ma+ e. or in default thereof. the PNB failed to prove durin.ation to pa+ attorne+:s fees in connection 2ith the said e.e Audicial notice of the fees provided for b+ la2 2hich need not be proved8 but in the absence of evidence to sho2 at least the number of 2or. the PNB has claimed. @ection 7.&#. to the appellant.raphs . Rule 1' of the <ld Rules0 or a total of P2!(.es under Rule "( of the ne2 Rules.all+ allo2ed in the absence of evidence on record to support it.tra-Audicial sale of the real propert+.tra-Audiciall+ foreclosed. the @heriff:s fees 2ould be P for advertisin. 2as sold for P&". the sale is entitled to collect a fee of P&. 6his is also the clear mandate of Article 22 2 of the ne2 Civil Code 2hich provides that interest due shall earn le. the most that he ma+ be entitled to.t assails the a2ard of attorne+:s fees and the e. as pointed out b+ the appellee ban. performed in addition to his e. that courts should ta. capitali>e the interest due and unpaid.

a.clusive of all fees allo2ed b+ la2.or hereb+ appoints the Mort. the claim for such fees should be denied8 2 and /20 that attorne+:s fees 2ill not be allo2ed 2hen the attorne+ conductin.a.raph /c0 thereof.a.a. considerin.ed under Act 1 1&. inter alia5 . appellant cites authorities to the effect5 / 0 that 2hen the mort.or hereb+ consents to the appointment of the Mort. . .tra-Audiciall+.htenin. benefits and profits derived from the mort. At an+ rate.or and shall 2ith priorit+. 2e find merit in the contention of the appellant that the a2ard of P&. to si. 2ithout an+ bond.penses of collection shall be the obli.n all documents and to perform all acts re9uisite and necessar+ to accomplish said purpose and to appoint its substitute as such attorne+-in-fact 2ith the same po2ers as above specified.a.tra-Audicial foreclosure found in the first sentence and to Audicial foreclosure mentioned in the ne. 6he parties to the mort.e contract under 2hich appellant became liable to pa+ the same.or hereb+ a. certificate of sale in favor of the bu+er. < services performed b+ him for the corporation.8 but the+ should not be applied in this case. i. attorne+:s fees hereb+ fi. %n support of this proposition. b+ 2a+ of attorne+:s fees in connection 2ith the sale. of the 2hole conte.ests that said principle is not absolute.rees further that in all cases.penses of the sale should be set aside.ested and pointed out b+ the appellant b+ reason of the fault+ sentence construction should not be made to defeat the other2ise clear intention of the parties in the a. %n case of Audicial foreclosure.a.(2 .. .1& for attorne+:s fees has no le. %t is su.a.tra-Audicial foreclosure sale of its real properties. considerin.&# as e..e shall li. still.reement bet2een the parties in the mort. the auction sale and issuance of the correspondin.onerate herein appellant from the pa+ment of the stipulated attorne+:s fees on this . the a2ard of P2!(. and the other for conductin. 1 6hese authorities are indeed enli.. as 2ould readil+ be revealed b+ an e.round alone.a.(2 .ee out of an+ sums reali>ed as rents and profits derived from the mort.:s 2ere handled b+ an attorne+ of the a.amination of the pertinent provision of the mort.ed at 6en Per cent / '30 of the total indebtedness then unpaid 2hich in no case shall be less than P ''.e2ise stand as securit+ therefor.ed propert+ at once.e contract.e char.e does not provide for attorne+:s fees in case the same is e. as amended. to ta. the Mort. And the ambi.ed propert+ or from the proceeds reali>ed from the sale of the said propert+ and this mort.a.e.ation of the Mort. Ce find the above stipulation to pa+ attorne+:s fees clear enou. staff of the PNB.a. Audiciall+ or e.ed propert+ before the sale.reement. that all that the branch attorne+ of the said ban. .ee his attorne+-in-fact to sell the propert+ has neither paid nor incurred an+ obli.a. that even if the above stipulation to pa+ attorne+:s fees 2ere applicable to the e.t sentence. 6he ver+ same authorit+ first cited su. ho2ever.s is an officer of the corporation /mort.tra-Audicial foreclosure. for there is authorit+ to the contrar+. . the Mort.icall+ refers to e. cannot be favorabl+ considered.ested b+ the appellant. the latter to sell the same in accordance 2ith the provisions of Act 1 1&. be paid to the Mort.e of the mort.t of the stipulation 2ould readil+ sho2 that it lo.penses of the receivership8 the Mort.'' e. and to hold possession of the same and the rents. the foreclosure proceedin. Chile the phrase )in all cases) appears to be part of the second sentence.e appear to have stipulated under para. But the claim of the appellant that the real estate or an+ of its emplo+ees as receiver.h to cover both cases of foreclosure sale mentioned thereunder. therefore. and the e. As to the fact that the foreclosure proceedin. 2e are reluctant to e.. did in connection 2ith the foreclosure sale of the real propert+ 2as to file a petition 2ith the provincial sheriff of Camarines Norte re9uestin. $or the purpose of e.ee0 2ho receives a salar+ for all the le. the e.1& in favor of the PNB as attorne+:s fees is unconscionable and unreasonable. .a.a. the a2ard of P&.tra-Audiciall+ foreclosed. a readin.uit+ in the stipulation su.ation to pa+ an attorne+ in connection 2ith the foreclosure sale.a. less the costs and e.a. the circumstance that the PNB did not actuall+ spend an+thin.a.preparation of the necessar+ notices of Austification.

the fees should be subAect to Audicial control.a. 6his is a ver+ different rule from that announced in section '! of the Civil Code 2ith reference to the obli.or. &. this Court has e.nored that sound public polic+ demands that courts disre. the follo2in. -ad the plaintiff herein made an e. as in other contracts.plained5 But the principle that it ma+ be la2full+ stipulated that the le.reed fee is '3 of the total indebtedness. that it is contrar+ to moralit+ or public polic+ /Art. the note here in suit to Aud. involved and is therefore unreasonable. it must necessaril+ have the ri. and all that the attorne+ did 2as to file a petition for foreclosure 2ith the sheriff concerned. a reco.eneral. %t should not be permitted for him to convert such a stipulation into a source of speculative profit at the e.a. because a la2+er is primaril+ a court officer char. Civil Code0. as in this case. the compensation of an attorne+.h.penses caused b+ the delin9uenc+ of the debtor. the fee as bet2een attorne+ and contract to recover more than a reasonable compensation for his services8 and even 2hen an e.ed 2ith the dut+ of assistin.reater than is necessar+ to remunerate the attorne+ for the 2or. %t is enou. 2here it is said that such obli. or involved in the emplo+ment8 the s. surel+.ainst him had he seen fit to oppose it. it is not necessar+ to sho2. # @ince then this Court has invariabl+ fi. 6he a. it bein.e a much lar. Contracts for attorne+:s services in this Aurisdiction stands upon an entirel+ different footin. and hence.nore an e. circumstances should be considered5 the amount and character of the services rendered8 the responsibilit+ imposed8 the amount of mone+ or the value of the propert+ affected b+ the controvers+. As court have po2er to fi. irrespective of the manner the foreclosure of the mort.e 2as foreclosed e. and not bet2een attorne+ and client. from contracts for the pa+ment of compensation for an+ other services.pense of the debtor.2& for the services to be rendered in reducin. as such a fee is obviousl+ far .al contract for an attorne+:s fees. is valid.cessive. inserted in a contract to pa+ his attorne+ an uncontin. B+ e.ent fee of P2.ment. impartial Austice bet2een the parties. is no2 deepl+ rooted in this Aurisdiction to entertain an+ serious obAection to fee 2hen it is to be contin.ed counsel fees on a quantum meruit basis 2henever the fees stipulated appear e. %t is to be assumed thou. the court in administerin. 2&&.ill and to sa+ 2hether a stipulation li.ard stipulations for counsel fees.tra-Audiciall+. 7 $rom the stipulation in the mort.e is to be effected. it 2ould not have been enforced a. that the said branch attorne+ of .press provision of section 2! of the Code of Civil Procedure. Nor should it be i. 6he la2ful purpose to be accomplished b+ such a stipulation is to permit the creditor to receive the amount due him under his contract 2ithout a deduction of the e.pense of the debtor or mort.nore it and limit the recover+ to reasonable compensation if the amount of the stipulated fee is found b+ the court to be contract is made the court can i.a.ent or absolute.a.a. 2henever the+ appear to be a source of speculative profit at the e. parties.ation has the force of la2 bet2een the contractin. it appears that the a.6he principle that courts should reduce stipulated attorne+:s fees 2henever it is found under the circumstances of the case that the same is unreasonable. no matter ho2 inAurious or oppressive the+ ma+ be.ation of contracts in . 6hus.reement is perhaps fair enou.perience called for in the performance of the service8 the professional standin.e contract. %n order to enable the court to i. an attorne+ is not entitled in the absence of e.ent than 2hen it is not. of the attorne+8 the results secured8 and 2hether or not the fee is contin. the mort.h that it is unreasonable or unconscionable. " %n determinin.h in case the foreclosure proceedin.s is prosecuted Audiciall+ but.penses involved in the collection of a debt shall be defra+ed b+ the debtor does not impl+ that such stipulations must be enforced in accordance 2ith the terms. or unreasonable.e contract earlier 9uoted. unconscionable.e>ed rule that an attorne+ ma+ properl+ char. it is unreasonable 2hen. & And it is not material that the present action is bet2een the debtor and the creditor.

it is our considered opinion that the amount of P .&! P&7. !" 8 and on this .ation to herein appellee ban.'' 2ould be more than sufficient to compensate the 2or.&''.7( P &. (..a. illustration or computation.ation of herein appellant to the PNB as of November 2 .a.'' 71(. discussion of the first t2o errors assi. @heriff:s fees Efor t2o /20 da+:s 2or. .&! P&7. %. !. 2 .!'(. 2 .cess Pa+ment to the PNB P&". !&" to Nov.cessive a fee for such services.F P27. and for purposes of determinin. Principal *oan /a0 Promissor+ note dated Au. %.a.ation as of Nov.e of herein appellant:s chattels on 4ecember 2 .e on Nov.rounds.'''. But 2e ta. !&" to Nov. aforementioned.71#. Proceeds of the foreclosure sale of the real estate mort.the PNB made a stud+ of the case before decidin.'' . insisted that the proceeds of the sale of appellant:s real propert+ 2as deficient to li9uidate the latter:s total indebtedness.#!&.'''. !" 6otal amount of Pa+ment made to PNB as of 4ec.oin.(" %%%.ether 2ith the amount it remitted to the PNB later 2as more than sufficient to li9uidate its total obli. %%. Be that as it ma+.. illustration in support of this conclusion5 1ä ph!1. 2e have the follo2in.ain. A. !" %%. ho2ever. !&" / 0 %nterest at "3 per annum from Au. !" /b0 Promissor+ note dated <ctober !. 2.ust 2.&''. 2 .(2 . (.e 2as le. herein appellee ban. !" B. the above circumstances mentioned.oin. ille.e 2as foreclosed."#t A.(" P &'.ation to the PNB E. !" 2hen the real estate mort.1& is far too e. 2e still find the subse9uent sale of herein appellant:s chattels ille. $rom the fore.round alone. 6he ne.71 GGGGGGGG P&7. 2 .'' (.e into consideration the fact that the PNB must have been led to believe that the stipulated '3 of the unpaid loan for attorne+:s fees in the real estate and obAectionable on other . !&" / 0 %nterest at "3 per annum from <ct.'' #.7& .all+ maintainable. and in accordance 2ith such belief. !" 4educt5 6otal obli.'( '. 2e find merit in this claim. the total obli.t issue raised deals 2ith the claim that the proceeds of the sale of the real properties alone to. Considerin. !" Additional amount remitted to the PNB on and void.#!&.'' 6otal obli. 2e ma+ declare the sale of appellant:s chattels on the said date. Attorne+:s fee $rom the fore."#".a. to file the petition for foreclosure8 but even 2ith this in mind. 2e believe the amount of P&. it is clear that there 2as no further necessit+ to foreclose the mort.

e chattel could be sold in addition to those specified in the Chattel Mort. 6heir ri. namel+5 / 0 the place of residence of the arisin. complaint for foreclosure or the petition for sale should $e filed ith the courts or the sheriff of the %it& of 'anila .reed upon. the la2 clearl+ contemplated benefits not onl+ to the mort. as in this and the mort.a. as sho2n not onl+ b+ its letter to the PNB on November !.a. ho2ever.nated in their a. !" .or and mort.a. !" . the places provided for in the la2 and the place desi. it cannot be ri. on 4ecember #.ed chattel ma+ be made in a place other than that 2here it is found.aniban. in no uncertain terms. as the case ma+ be8 and that the as 2ell.or or the place 2here it is situated.a. !" at =ose to the PNB b+ the sale of the real estate and its subse9uent remittance of the amount of P71(. e. Camarines Norte and not in the Cit+ of Manila as a. Camarines Norte.tra-Audicial foreclosure thereof should be filed 2ith the @heriff of the Cit+ of Manila.a. 2as le. the parties hereto a. Austified said action of the PNB in the decision appealed from in the follo2in. !" .e contract that a petition for the e.aniban 2ould violate their a. but also in its letter to the provincial sheriff of Camarines Norte on the same date.e on November 2 .a. reiterated its obAection to the scheduled sale of its chattels on 4ecember 2 .reement over the obAection of the mort.ed chattels 2ere situated8 and /10 the place stipulated in the contract.a.e 2hich provides as follo2s5 /i0 %n case of both Audicial and e.or shall pa+ attorne+:s fees hereb+ fi. rationale5 Chile it is true that it 2as stipulated in the chattel mort.6hat appellant and valid. ( this Court has held that the sale of a mort. that the mort.l+.ate much less impliedl+ repeal a specific provision of the statute. @o. accordin. an+ 2a+.e after the foreclosure of its real estate mort. and in utter disre.aniban. ! But 2hen.oin. as amended.a. 2herein herein appellant.orousl+ obAected to the foreclosure of its chattel mort.rants po2er and authorit+ to the mort.reement embodied under para. the parties a.a..a.aniban. the effect thereof 2as merel+ to provide another place 2here the mort. 6he PNB selected the second and.or resides or 2here the propert+ is situated.hts of third persons.ard of the obAection of herein appellant to the sale of its chattels at =ose Pan. is the residence of the mort. %n providin. Ce disa.or but to the mort. 6hese letters 2ere follo2ed b+ another letter to the appellee ban. the PNB proceeded 2ith the foreclosure sale of said chattels.a.a. thereunder.a. the foreclosure sale held in =ose Pan.''.a.a.a. Chile the la2 .ee a.or8 /20 the place of the mort.&!8 and /20 that the contemplated sale at =ose Pan. the above9uoted a.reement in the chattel mort. 2hich. the PNB had three places from 2hich to the choice 2here the foreclosure sale should be still retained the po2er and authorit+ to select from amon.a. EEmphasis suppliedF Not2ithstandin.ree that the correspondin.a. Camarines Norte for the reasons therein stated that5 / 0 it had settled in full its total obli.ed chattel ma+ be sold at the place of residence of the mort.reed in the mort.a.a.ree. 6he trial court.tra-Audicial foreclosure under Act &'(. that @ection # of Act No. can not be doubted. provided that the o2ner thereof consents thereto8 or that there is an a. nevertheless.a.e contract that in cases of $oth (udicial and e)tra-(udicial foreclosure under Act 1*+.a.e contract.or.ed at ten per cent / '30 of the total indebtedness then unpaid but in no case shall it be less than P ''. 6he+ ma+ validl+ be 2aived. conclusion. hence.a.a. %ndeed.reement to this effect bet2een the mort. in the case under amended.reed to have the sale of the mort. 6o the fore.the corresponding .a.a. ho2ever. a stipulation in a contract cannot abro.or.a.htl+ said that mort.penses incurred in connection 2ith the said foreclosure. at the option of the mort. &'( vests in the mort.e *a2.ed propert+ at a public place in the municipalit+ 2here the mort. are personal to them8 the+ do not affect either public polic+ or the ri.ed chattels in the Cit+ of Manila. to sell the mort. 2hen herein mort.clusive of all costs and fees allo2ed b+ la2 and of other e.raph /i0 in the Chattel Mort.

<n the other hand. lar.all+ effective. # 6his rule applies s9uarel+ to the facts of this case 2here.ation to ta.a. and @a2mill e9uipment consistin.ard of the valid obAection of the mort. the chattels from appellant compound b+ 2hich shall particularl+ describe the articles sold and the amount received from each article. other2ise.hts under the la2. " truc. 2ho is not a part+ to this case.or thereto for the reason that it is not the place of sale a. as earlier sho2n.reement the parties 2aived the le. improve its position. in utter disre. 2ith its interest in the propert+.e is invalid.ful acts of the PNB and the 4eput+ @heriff of Camarines Norte. or 2here the proceedin. the sale should ma. Aointl+ and severall+. herein appellee ban.aniban 2ho placed the chief securit+ officer of the premises in Aail to deprive herein appellant of its possession thereof. because it. of this Court in a similar situation.e alon. 6o this effect 2as the is .aniban. the case ma& $ 2hich the la2 . a sale is properl+ conducted in that place. Neither 2ould its claim that it after2ards .it 2ith caterpillar venue. for the mort. & As a conse9uence of the said 2ron. the same should be set the sale of the chattels manifestl+ still the PNB cannot escape liabilit+ for the conversion of the mort.ed chattels b+ partin.le lot in violation of the re9uirement of the la2 to sell the same article b+ article. " .0 as a conferred is of such nature that its renunciation 2ould be a.uilt+ of conversion 2hen he sells under the mort.s.reed upon in the mort.a.a. plainer. of a &' -P Murph+ En.eneral principle that a person ma+ renounce an+ ri.e and statutor+ re9uirements in re.reed or consented to such sale in . 2hich 2ere a s.or is not under obli. 2 Moreover.ainst public polic+.a.ave a chance to herein appellant to repurchase or redeem the chattels. it 2ould be impossible for him to state the amount received for each item. a sale conducted at a place other than that stipulated for in the mort.e circular sa2s etc.ross. 2hich is not contrar+. 2as merel+ a personal privile. in the absence of a statute to the contrar+.onerate itself of an+ liabilit+ for the breach of peace thus committed. Ce have to declare that herein appellant is entitled to collect from them.ed chattels at =ose Pan. %t is said that the mort. insisted. the PNB 2ould 2ant us to believe that it 2as the subse9uent bu+er alone. a -errin.or consents to such sale. @ection # of Act &'(.s as to the sale of foreclosure do not compl+ 2ith the statute.ine.heriff of 'anila. PC soldiers and municipal policemen of =ose Pan. 6his re9uirement 2as totall+ disre. ' B+ said a.ation arisin.. unless the mort. ri.ard thereto are complied 2ith. three BMC " .arded b+ the 4eput+ @heriff of Camarines Norte 2hen he sold the chattels in 9uestion in bul. the+ 2aived their correspondin.e a return of his doin.a. that 2as responsible for the forcible ta. possession of and removin. of the propert+8 but assumin. as sho2n b+ the circumstance that the+ had to ta.a. from that a.a. and the appellee deput+ sheriff of Camarines Norte proceeded 2ith the sale of the mort. 1 6his ma.reement have the force of la2 bet2een them and should be complied 2ith in .e but not in accordance 2ith its Camarines Norte.a. 6o e.ives unless such renunciation is e. 6he PNB has resold the chattels to another bu+er 2ith 2hom it appears to have activel+ cooperated in subse9uentl+ ta. %ndeed.a. %t is a .e the+ 2aived. it is clear that the la2 re9uires that sale be made article b+ article.ine.pressl+ prohibited or the ri. And in the absence of an+ evidence to sho2 that the mort.complaint for foreclosure or the petition for sale should $e filed ith the courts or the . if a place of sale is specified in the mort.a. not2ithstandin. the fact that the said chattels consisted of no less than t2ent+ different items as sho2n in the bill of sale. to public polic+ or to the preAudice of third persons.a.all+ sold b+ them. the full value of the chattels in 9uestion at the time the+ 2ere ille.e affirmative steps to repossess the chattels that 2ere converted b+ the mort. this to be so.ood faith. provides that the officer ma. 6he correlative obli.e contract8 and the said deput+ sheriff sold all the chattels /amon.or had a. -all @afe. as amended. and such 2aiver is valid and le. $rom this.a.

the facts that the appraised value of P#2. 6his brin.ivin.en to. in our opinion to ma. and bearin.ed as part of the securit+ therefore.ept in a proper place and not e. it difficult to ascertain the value of the dismantled chattels in such condition.a.ivin. ! 6he said official of the PNB 2ho made the fore. the+ 2ere .et value at P2&. it an appraised value of P#2.h from the evidence aforementioned. Ce have no doubt that the value of chattels 2as depreciated after all those +ears of inoperation.rossl+ unfair to the mort.posed to the elements. part of the chattels under consideration. in the reports.no2in.''. he found the chattels no lon.'''. in use at the time. the values appearin.'' 2hich.iven b+ the PNB official 2ere admittedl+ conservative8 that t2o " .e to 2hich he 2as thus subAected. 6he President of the appellant compan+. Note2orth+ is the fact. the value of the mort. he did not .''. on the value of the chattels in the decision appealed from and denied alto.ave the appraised value as P !.ether 2ith the heav+ e9uipments he mentioned.'''. ( Another re-inspection report in !&! . of course. he used a conservative method of appraisal 2hich.(&'. the same inspector of the PNB reported that the heav+ e9uipment of herein appellant 2ere )l+in. that althou. in the report of 2hich he . and that the value of its t2o truc.s us to the problem of determinin.cept for the appraised and mar.2''. -e li.a. An official of the PNB made an inspection of the chattels in the same +ear . 6he trial court did not ma.h evidence of record.(&'.. could safel+ be estimated at P 2'.oin.(&. in the inspection and re-inspection reports of the PNB official earlier mentioned.'' ori. Ce ma+ also safel+ conclude that the amount of P#.s subse9uentl+ bou.e2ise appraised the 2orth of its Murph+ en. idle and rust+) but 2ere )2ith a shed free from rains) 2' sho2in.ed at the ori.''. Ce find enou.a8 and findin.(&'.et values appearin.'''. althou. in mind the current cost of e9uipments these da+s 2hich he alle..ether the ri. herein appellant submitted a list of the chattels to. that in the last re-inspection report he made of the chattels in !" . . Considerin. accordin..ive them an+more an+ value in his reports.ine at P ". ho2ever.ave all the chattels an appraised value of P2".2''.6he effect of this value of P(&. ho2ever. 7 6he same chattels 2ith some additional e9uipment ac9uired b+ herein appellant 2ith part of the proceeds of the loan 2ere reappraised in a re-inspection conducted b+ the same official in !&(. that the e9uipments of herein appellant had been idle and unused since it stopped of the appellant to recover the same.inal appraised value of value of P(&.'''.ept in the bode.7''.ed chattels at the time of their sale in !" . the sa2mill itself and all other e9uipment formin.'' for 2hich the chattels 2ere sold in the foreclosure sale in 9uestion 2as . to him.ed increase in the cost of heav+ e9uipment in the mar. on the other hand.''.ed chattels 2ere 2orth no less than P #. at the time the plaintiff thus carried it off to be sold8 and of course. its sa2mill in !&( up to the time of the sale of the chattels in !" .(&'. stand uncontroverted in the record8 but Ce are not inclined to accept such testimon+ at its par in use 2ith some of the heavier e9uipments dismantled 2ith parts thereof .'' in the mar.s ac9uired b+ it 2ith part of the proceeds of the loan and included as additional items in the mort.h the+ 2ere no lon. 6he record sho2s that at the time herein appellant applied for its loan 2ith the PNB in !&".'' and a b+ the appellant compan+ had thereafter been added to the chattels8 and that the real value 2hich ma+ be used as a . it is our opinion that the mar.'' and a mar.''. 2hen ta.inall+ . . e.'' and the mar."''.e the plaintiff liable to the defendant for the full value of the truc. reports of inspection and re-inspections testified in court that in . " truc.pected of an official of the appellee value of the chattels at the time of the sale should be fi. . &.h depreciated after several +ears of inoperation.uide to ascertain their value.or. Aust a fe2 months before the foreclosure sale.'' and the mar.ularit+ 2as. 2as in a 2a+ maintained because the depreciation is off-set b+ the mar.ed to have increased b+ about five /&0 times.7''. testified that its caterpillar /tractor0 alone is 2orth P1&. for 2hich the chattels in 9uestion 2ere mort. 6his value of P#(. the burden is on the defendant to prove the dama.''.e an+ findin. is to be e.ether 2ith its application for the loan 2ith a stated value of P '7.a. And it appears that the values 2ere considerabl+ reduced in all the re-inspection reports for the reason that 2hen he 2ent to herein appellant:s premises at the time.a. althou.#''.

ho2ever.e contract. serious an. 2ounded feelin. herein appellant should be a2arded e.'' as attorne+:s fees for herein appellant. <bviousl+.round for the a2ard of moral dama.e contract.perience ph+sical sufferin. an artificial person li. Costs a. . and the 4eput+ @heriff of the province of Camarines Norte are ordered to pa+. or social humiliation 2hich are basis of moral dama.ood reputation 2hich. P '.ful acts of herein appellee ban.'''. mental an.'''. of the chattels in .ainst both appellees.'''. P#2.2'' in the sum of P '. 2ith the sale in utter disre.'''.71 overpaid b+ the latter to the PNB. Aointl+ and severall+. to Mambulao *umber Compan+ the total amount of P&".71.a.'' in e.en as follo2s5 P &'. 6he circumstances of the case also 2arrant the a2ard of P1.'' as attorne+:s fees. 2 A corporation ma+ have a .reed upon b+ the parties in the mort. until full+ paid. 2ould undoubtedl+ be the same 2hether the sale 2as conducted at =ose Pan. and P1. the decision appealed from should be. But for the 2ron.ard of the a.emplar+ dama. to 2hich their attentions 2ere timel+ called b+ herein appellant. or in Manila 2hich is the place a.''. 6he Philippine National Ban. ma+ also be a .'' the value of the chattels at the time of the sale 2ith interest at the rate of "3 per annum from 4ecember 2 . seems to have no moral or factual !" . not onl+ because it is admitted that herein appellant had alread+ ceased in its business operation at the time of the foreclosure sale of the chattels. if besmirched. as hereb+.iet+.(&'. and the deput+ sheriff of Camarines Norte in proceedin.emplar+ dama. it is set aside.e herein appellant corporation cannot e.''.'''. 6he same cannot be considered under the facts of this case. C-ERE$<RE AN4 C<N@%4ER%NB A** 6-E $<REB<%NB. and in disposin. bro.-erein appellant:s claim for moral dama. to have the chattels sold in Manila as provided for in the mort. but also for the reason that 2hatever adverse effects of the foreclosure sale of the chattels could have upon its reputation or business standin.ross for the miserable amount of P#. Camarines Norte.s.