G.R. No. L-157; March 24, 1949
FELICIDAD LEGASPI, plaintiff-appellee, vs. EL AHORRO INSULAR, defendant-appellant.

FACTS

In September 1929, Felicidad Legaspi executed a real estate mortgage in favor of El Ahorro Insular for P30,000, authorizing extrajudicial foreclosure. Due to her default, the property was extrajudicially foreclosed and sold at auction in May 1930. Legaspi was only notified to pay the indebtedness. In 1939, she discovered that from the proceeds of the sale, the bank had deducted P3,000 as attorney’s fees. In August 1941, she filed an action to recover this amount, contending the bank had no right to charge such fees.

ISSUE

Whether the bank was entitled to charge attorney’s fees for the extrajudicial foreclosure and whether Legaspi’s cause of action had prescribed.

RULING

The Supreme Court affirmed the decision of the Court of Appeals ordering the bank to return the P3,000 with interest. First, the Court of Appeals’ factual finding that no attorney intervened in the extrajudicial foreclosure was binding; thus, the charge for attorney’s fees was unjustified. Second, the cause of action had not prescribed because prescription began to run only from 1939 when Legaspi discovered the unauthorized deduction, and she filed the suit in 1941, well within the prescriptive period.

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