Case Digest (G.R. No. 24322)
Facts:
The case involves H. R. Andreas, the administrator with the will annexed of the estate of Harry Bridge, as the plaintiff and appellee, and B. A. Green as the defendant and appellant. The events leading to the case began with a promissory note dated August 19, 1921, wherein B. A. Green promised to pay Harry Bridge the sum of fifteen thousand pesos (P15,000) on or before November 19, 1921, or upon a thirty-day written demand notice. The note stipulated an interest rate of twelve percent (12%) per annum and included a clause for a further sum equal to ten percent (10%) of the total amount due as expenses for collection and attorney's fees, whether actually incurred or not. The note was secured by a real estate mortgage.
When the payment was not made, the plaintiff filed a case in the lower court to collect the amount due. The trial court ruled in favor of the plaintiff, ordering the defendant to pay the principal amount, interest, and the stipulated attorney's fees. T...
Case Digest (G.R. No. 24322)
Facts:
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.
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.
Dispute:
- The defendant challenged the clause in the promissory note providing for a 10% attorney's fee, arguing that it contravened the Usury Law.
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:
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.
Precedents:
- The Court cited several cases, including Bachrach vs. Golingco and Laureano vs. Kilayco, which upheld similar stipulations.
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.
Application to the Case:
- Since the case reached the appellate court, it was evident that collection expenses were incurred, making the stipulation enforceable.