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Negotiable Instruments Chapter 2

BACHRACH VS GOLINGCO

G.R. No. L-13660 November 13, 1918

This is a suit for the recovery of a sum of money claimed as a balance due to the plaintiff on

a promissory note.Facts

Plaintiff sold to defendant an automobile truck. Defendant gave the petitioner a promissory note and chattel mortgaged a truck. The promissory note states that that, in the event it becoming necessary to employ counsel to

enforce its collection, the maker is to pay an additional twenty-five per cent "as fees for theattorney collecting the same.

The note matured and the mortgaged was foreclosed. At the foreclosure sale, the plaintiff became the purchaser for the sum of p539 which amount was

credited to the indebtedness.

Issue

Whether or not the instrument is a negotiable instrument despite the stipulation in the promissory note fora 25percent attorneys fee.

Held

We are of the opinion that it may law fully be stipulated in favor of the creditor, whether theobligation be evidenced by promissory note or otherwise, that in the event that it becomes

necessary, by reason of the delinquency of the debtor, to employ counsel to enforce payment ofthe obligation, a reasonable attorney' s fee shall be paid by the debtor, in addition to the amountdue for principal and interest. The legality of such a stipulation, when annexed to a negotiateinstrument is expressly recognized by the Negotiable Instruments Law.

The Negotiable Instruments Law expressly recognizes a stipulation for attorneys fees in case ofnonpayment at maturity in a negotiable instrument. Such stipulation however is subject to the court

deciding whether its unconscionable or not

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