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 dama.es and attorne+:s fees. 6he antecedent facts of the case, as found b+ the trial court, are as follo2s5

<n Ma+ &, !&" the plaintiff applied for an industrial loan of P &&,''' 2ith the Na.a Branch of defendant PNB and the former offered real estate, machiner+, lo..in. and transportation e9uipments as collaterals. 6he application, ho2ever, 2as approved for a loan of P '',''' onl+. 6o secure the pa+ment of the loan, the plaintiff mort.a.ed to defendant PNB a parcel of land, to.ether 2ith the buildin.s and improvements e;istin. thereon, situated in the poblacion of =ose Pan.aniban /formerl+ Mambulao0, province of Camarines Norte, and covered b+ 6ransfer Certificate of 6itle No. 1( of the land records of said province, as 2ell as various sa2mill e9uipment, rollin. unit and other fi;ed assets of the plaintiff, all situated in its compound in the aforementioned municipalit+. <n Au.ust 2, !&", the PNB released from the approved loan the sum of P27,&'', for 2hich the plaintiff si.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",&2(.#' be.innin. =ul+ 1 , !&7, and ever+ +ear thereafter, the last of 2hich 2ould be on =ul+ 1 , !" . <n <ctober !, !&", the PNB made another release of P &,&'' as part of the approved loan .ranted to the plaintiff and so on the said date, the latter e;ecuted another promissor+ note 2herein it a.reed to pa+ to the former the said sum in five e9ual +earl+ installments at the rate of P1,"7!."# be.innin. =ul+ 1 , !&7, and endin. on =ul+ 1 , !" . 6he plaintiff failed to pa+ the amorti>ation on the amounts released to and received b+ it. Repeated demands 2ere made upon the plaintiff to pa+ its obli.ation but it failed or other2ise refused to do so. ?pon inspection and verification made b+ emplo+ees of the PNB, it 2as found that the plaintiff had alread+ stopped operation about the end of !&7 or earl+ part of !&(. <n @eptember 27, !" , the PNB sent a letter to the Provincial @heriff of Camarines Norte re9uestin. him to ta,e possession of the parcel of land, to.ether 2ith the improvements e;istin. thereon, covered b+ 6ransfer Certificate of 6itle No. 1( of the land records of Camarines Norte, and to sell it at public auction in accordance 2ith the provisions of Act No. 1 1&, as amended, for the satisfaction of the unpaid obli.ation of the plaintiff, 2hich as of @eptember 22, !" , amounted to P&7,"#".&!, e;cludin. attorne+:s fees. %n compliance 2ith the re9uest, on <ctober ", !" , the Provincial @heriff of Camarines Norte issued the correspondin. notice of e;tra-Audicial sale and sent a cop+ thereof to the plaintiff. Accordin. to the notice, the mort.a.ed propert+ 2ould be sold at public auction at '5'' a.m. on November 2 , !" , at the .round floor of the Court -ouse in 4aet, Camarines Norte. <n November ", !" , the PNB sent a letter to the Provincial @heriff of Camarines Norte re9uestin. him to ta,e possession of the chattels mort.a.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,"#".&!, plus "3 annual interest therefore from @eptember 21, !" , attorne+:s fees e9uivalent to '3 of the amount due and the costs and e;penses of the sale. <n the same da+, the PNB sent notice to the plaintiff that the former 2as foreclosin. e;traAudiciall+ the chattels mort.a.ed b+ the latter and that the auction sale thereof 2ould be held on November 2 , !" , bet2een !5'' and 25'' a.m., in Mambulao, Camarines Norte, 2here the mort.a.ed chattels 2ere situated. <n November (, !" , 4eput+ Provincial @heriff Anacleto -eraldo too, possession of the chattels mort.a.ed b+ the plaintiff and made an inventor+ thereof in the presence of a PC @er.eant and a policeman of the municipalit+ of =ose Pan.aniban. <n November !, !" , the said 4eput+ @heriff issued the correspondin. notice of public auction sale of the

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

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

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

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

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

the PNB made a stud+ of the case before decidin. to file the petition for foreclosure8 but even 2ith this in mind, 2e believe the amount of P&,(2 .1& is far too e;cessive a fee for such services. Considerin. the above circumstances mentioned, it is our considered opinion that the amount of P ,'''.'' 2ould be more than sufficient to compensate the 2or, aforementioned. 6he ne;t issue raised deals 2ith the claim that the proceeds of the sale of the real properties alone to.ether 2ith the amount it remitted to the PNB later 2as more than sufficient to li9uidate its total obli.ation to herein appellee ban,. A.ain, 2e find merit in this claim. $rom the fore.oin. discussion of the first t2o errors assi.ned, and for purposes of determinin. the total obli.ation of herein appellant to the PNB as of November 2 , !" 2hen the real estate mort.a.e 2as foreclosed, 2e have the follo2in. illustration in support of this conclusion5
1 ph!1."#t

A. %. Principal *oan /a0 Promissor+ note dated Au.ust 2, !&" / 0 %nterest at "3 per annum from Au.. 2, !&" to Nov. 2 , !" /b0 Promissor+ note dated <ctober !, !&" / 0 %nterest at "3 per annum from <ct. !, !&" to Nov. 2 , !" %%. @heriff:s fees Efor t2o /20 da+:s 2or,F P27,&''.'' (,7& .7( P &,&''.'' #,71#.'( '.'' ,'''.'' 6otal obli.ation as of Nov. 2 , !" B. %. %%. Proceeds of the foreclosure sale of the real estate mort.a.e on Nov. 2 , !" Additional amount remitted to the PNB on 4ec. (, !" 6otal amount of Pa+ment made to PNB as of 4ec. (, !" 4educt5 6otal obli.ation to the PNB E;cess Pa+ment to the PNB P&",!'(.'' 71(.&! P&7,"#".&! P&7,#!&.(" P &'.71 GGGGGGGG P&7,#!&.("

%%%. Attorne+:s fee

$rom the fore.oin. illustration or computation, it is clear that there 2as no further necessit+ to foreclose the mort.a.e of herein appellant:s chattels on 4ecember 2 , !" 8 and on this .round alone, 2e ma+ declare the sale of appellant:s chattels on the said date, ille.al and void. But 2e ta,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 mort.a.e 2as le.all+ maintainable, and in accordance 2ith such belief, herein appellee ban, insisted that the proceeds of the sale of appellant:s real propert+ 2as deficient to li9uidate the latter:s total indebtedness. Be that as it ma+, ho2ever, 2e still find the subse9uent sale of herein appellant:s chattels ille.al and obAectionable on other .rounds.

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

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

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

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