Geniza v. Henry Sy And Asia Mercantile Corporation

LABRADOR, J.:

The original decision rendered by Us in the above entitled case refers to a first decision rendered by the Court of First Instance of Quezon City, Hon. Nicasio Yatco, presiding, dated March 30, 1960. It so happened, however, that the above decision was amended by said court on May 18, 1960, but upon our study of the record of the case the amended decision was overlooked. The original decision of the court of first instance refers to the mortgage contract, Exhibit "A", while the amended decision refers to both contracts of mortgage, Exhibits "A"

and "E", executed on the same date. The appeal was made against the amended decision and involves identical questions on the foreclosure of the two mortgages above mentioned. In view of the fact that We overlooked the amended decision, especially as regards the second contract of mortgage, it has become necessary to render this amended decision on both of the contracts of mortgage, already referred to.

On July 8, 1959, Catalina Carreon, with the consent of her husband Zacarias Rivera, mortgaged to the defendant Asia Mercantile Corporation Lot No. 551 of the Piedad estate subdivision for P50,000.00, payable within a period of thirty days with interest at the rate of 12% per annum. Paragraph 4 of the contract provides that upon failure of the mortgagor to pay the indebtedness and the interest when due, the mortgage shall become due and demandable and without necessity of demand the mortgagee may immediately foreclose the mortgage, judicially or extrajudicially, and for this purpose the mortgagor appoints the mortgagee as his attorney-in-fact to sell the property and to sign all documents and perform any act requisite and necessary to accomplish said purpose. It was further expressly agreed that in case of foreclosure the mortgagor binds himself to pay the mortgagee 30% of the sum owing and unpaid as attorney's fees and liquidated damages, exclusive of costs and expenses of the sale.

On the same date another mortgage was executed by plaintiffs Emma R. Geniza, Aurelio Geniza and Lorenzo Rivera over two parcels of registered land for the sum of P50,000.00, and with the same conditions as the mortgage executed by the spouses Catalina Carreon and Zacarias Rivera. Copies of the contracts of mortgage are annexed to the complaint in this case as Annex "A" an Annex "B".

The mortgagors in both mortgage contract defaulted in the payment of their respective obligations. The mortgage executed by Catalina Carreon Rivera an Zacarias Rivera was foreclosed extra-judicially and the proceeds of the sale of the land amounting to P68,567.57 was disposed of by the mortgagee as follows: 1. P50,000.00 - as mortgage loan 2.

P12,500.00 - as the 12% interest on the loan as December 7, 1957 plus daily interest thereafter until the obligation is legally terminated. 3. P15,000.00 - as Attorney's fees and liquidated damages.1awphîl.nèt 4.

The fees and expense of foreclosure and sale. Plaintiffs brought this action to obtain a judicial declaration that the stipulation in the deeds of mortgage fixing the amount of 30% as attorney's fees and liquidated damages is excessive, unconscionable and iniquitous and that the same should be reduced to P200.00. The complainants also asked for P5,000.00 as attorney's fees for bringing this action.

The defendants set up the defense that the complaint states no cause of action; that the mortgage executed by Emma R. Geniza and Aurelio Geniza has not yet been foreclosed; that the mortgagors are estopped from alleging that the stipulation regarding liquidated damages and attorney's fees is excessive and unreasonable. The case having been tried in the Court of First Instance of Quezon City, Hon. Nicasio Yatco, presiding, rendered judgment dismissing the action of plaintiffs Emma Geniza and Aurelio Geniza as premature, and ordering the defendant Asia Mercantile Corporation to return to plaintiff Catalina C. Rivera the sum of P13,567.57 which represents the excess of the total obligations of the mortgagor based on the following computation: Proceeds of Sale (TCT No. 7464) P68,567.57 Less: Amount of Loan P50,000.00 12% Interest 2,000.00 5% Attorney's fees and liquidated damages 2,500.00