Title
Andreas vs. Green
Case
G.R. No. 24322
Decision Date
Dec 16, 1925
Defendant challenged a 10% attorney's fee clause in a promissory note, claiming it violated the Usury Law. Court upheld the clause, ruling it valid as protection for collection costs.
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Case Digest (G.R. No. 24322)

Facts:

  1. Parties Involved:

    • Plaintiff and Appellee: H. R. Andreas, Administrator with the Will Annexed of the Estate of Harry Bridge.
    • Defendant and Appellant: B. A. Green.
  2. Promissory Note:

    • Date: August 19, 1921.
    • Amount: P15,000.
    • Interest: 12% per annum.
    • Additional Clause: "A further sum equal to 10 per cent of the total amount due as and for expenses of collection for attorney's fees whether actually incurred or not."
    • Security: Real-estate mortgage of even date.
  3. Dispute:

    • The defendant challenged the clause in the promissory note providing for a 10% attorney's fee, arguing that it contravened the Usury Law.
  4. Judicial Proceedings:

    • The trial court ruled in favor of the plaintiff, ordering the defendant to pay the principal amount, interest, and the 10% attorney's fee.
    • The defendant appealed the decision.

Issue:

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Ruling:

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Ratio:

  1. Legal Basis:

    • Stipulations for attorney's fees in promissory notes are valid and do not violate the Usury Law.
    • Such provisions are intended to protect the lender from the costs of collection.
  2. Precedents:

    • The Court cited several cases, including Bachrach vs. Golingco and Laureano vs. Kilayco, which upheld similar stipulations.
  3. Interpretation of the Clause:

    • The phrase "whether actually incurred or not" is surplusage and does not affect the validity of the stipulation.
    • The clause is enforceable as long as the purpose is to cover collection expenses.
  4. Application to the Case:

    • Since the case reached the appellate court, it was evident that collection expenses were incurred, making the stipulation enforceable.


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