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 the
attorney 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 for
a 25percent attorneys fee.

Held

We are of the opinion that it may law fully be stipulated in favor of the creditor, whether the
obligation 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 of
the obligation, a reasonable attorney' s fee shall be paid by the debtor, in addition to the amount
due for principal and interest. The legality of such a stipulation, when annexed to a negotiate
instrument is expressly recognized by the Negotiable Instruments Law.

The Negotiable Instruments Law expressly recognizes a stipulation for attorneys fees in case of
nonpayment at maturity in a negotiable instrument. Such stipulation however is subject to the court
deciding whether its unconscionable or not