Philippine Trust Co. v. Policarpio
REITERATIONFacts
The Antecedents: On May 23, 1958, Iluminada R. Policarpio, as principal, and Simeon Policarpio and Modesta Reyes, as sureties, obtained a loan of P300,000.00 from Philippine Trust Company (plaintiff-appellee) through a credit in current account, with interest at 9% per annum. The loan was secured by a deed of mortgage over parcels of land and their improvements. On June 30, 1958, the overdraft line was increased to P320,000.00, with a corresponding amendment to the deed of mortgage and a chattel mortgage on specific chattels. Iluminada R. Policarpio also executed a deed of assignment and special power of attorney to reduce the overdraft line by monthly payments from rents. The defendants failed to pay the monthly amortizations and interest as agreed upon. Furthermore, they failed to pay realty taxes and insurance premiums on the mortgaged properties as stipulated in the deed of mortgage. The plaintiff, to protect its interest and pursuant to the mortgage deed, paid these taxes and premiums. Procedural History: The plaintiff filed a complaint for the foreclosure of the mortgage. The Court of First Instance of Manila rendered a decision, later amended, ordering the defendants to pay the plaintiff the total amount due, with interest, attorney's fees, and costs. Upon failure to pay, the mortgaged properties were to be sold at public auction. The defendants appealed the decision to the Court of Appeals, which forwarded the case to the Supreme Court due to the amount involved. The Petition: The defendants-appellants assigned two errors: (I) the lower court disregarded Section 2, Rule 68 of the New Rules of Court by not specifying a definite period for payment, and (II) the lower court erred in awarding 10% attorney's fees.
Issue(s)
Whether the lower court erred in not specifying a definite period for payment in its judgment, contrary to Section 2, Rule 68 of the New Rules of Court. Whether the award of 10% attorney's fees was proper.
Ruling
The Supreme Court modified the judgment of the lower court. It ordered the defendants to pay the plaintiff the adjudged amount within thirty (30) days after the decision becomes final and executory. The attorney's fees were reduced from 10% to 5% of the adjudged amount. The judgment was affirmed in all other respects, with treble costs against the appellants.
Ratio Decidendi
On the first issue regarding the period for payment: The Court acknowledged that the trial court's decision, stating payment should be made "within the period provided by law," was indeed incomplete as it did not specify a definite period as required by Section 2 of Rule 68 of the New Rules of Court. However, the Court noted that the proper recourse for the appellants was not to immediately appeal but to file a motion with the trial court to fix a definite period. Citing Rodriguez vs. Caoibes, the Court held that an omission in a judgment, especially one that is a necessary part of the ruling, can be corrected by amendment. The Court observed that the appellants had not made any attempt to settle their obligation or tender payment during the lengthy proceedings, suggesting their appeal might be dilatory. Therefore, to avoid further delay and expense, the Supreme Court itself fixed the period for payment to thirty (30) days after the decision becomes final and executory, rather than remanding the case to the lower court to set the period. On the second issue regarding attorney's fees: The Court found that the stipulation for attorney's fees was part of the original deed of mortgage, which was also the basis for the supplemental complaint. Since the existence of the stipulation was not denied and the supplemental complaint merely added to the principal amount due, the 10% attorney's fees were applicable to the total amount. However, the Court, considering the circumstances and without necessarily agreeing that the 10% was unconscionable, deemed it proper to reduce the attorney's fees to 5% of the total adjudged amount. This reduction was exercised as part of the Court's inherent power to temper stipulated fees when equitable, even if not explicitly challenged as unconscionable.
Main Doctrine
The Supreme Court modified the trial court's judgment by reducing the attorney's fees from 10% to 5% of the adjudged amount and ordered payment within thirty (30) days after the decision becomes final and executory, emphasizing that appeals should not be used for dilatory purposes.