BACHRACH V. GOLINGCO  

39 PHIL 139

FACTS:

Bachrach sold a truck to Golingco, which was secured by a promissory note and a chattel mortgage on the truck.   The promissory note provided that there would be payment of 25% attorney’s fees.

HELD:

It may lawfully be stipulated in favor of the creditor that in the event that it becomes necessary, by reason of the delinquency of the debtor, to employ counsel to enforce payment of the obligation, a reasonable attorney’s fee shall  be  paid  by  the  debtor,  in  addition  to  amount  due  of  principal  and
interest.    The  legality  of  this  stipulation,  when  annexed  to  the  negotiable instrument, is recognized by the NIL.  
 
The courts have the power to limit the amount recoverable under a special provision in a promissory note, whereby the debtor obligates himself to pay a  specified  amount,  or  a  certain  per  centum  of  the  principal  debt,  in satisfaction of attorney’s fees for which the creditor would become liable in suing upon the note.
 
*Normally, if there is absence of any agreement as to attorney’s fees, then the court would only grant nominal amounts.