G.R. No. 31884 - Manila Building and Loan Association vs. B. A. Green

The cases involving the Manila Building & Loan Association, defendant B. A. Green, and S. W. O’Brien et al. were consolidated and tried as one proceeding.
The consolidated cases arose from foreclosure actions based on mortgages covering real properties situated in two different provinces – the City of Manila and the Province of Rizal.

The mortgage in favor of the Manila Building & Loan Association contained an express stipulation for an attorney’s fee of 10 percent of the amount due upon the initiation of a foreclosure suit.
In a related mortgage involving O’Brien et al., there was an express stipulation that provided for a fixed attorney’s fee of P2,500 in the event of foreclosure.

In the Court of First Instance of the Province of Rizal, the judgment amounted to P102,597.38.
In the Court of First Instance of the City of Manila, the judgment amounted to P103,297.38, with the difference attributed to accumulated interest.

The lower courts allowed a total of P7,500 as attorney’s fees for the foreclosure action based on the Building & Loan Association’s mortgage, which was lower than the 10 percent stipulated fee (approximately P10,330).

Defendant Green admitted to the execution of the note and the mortgage; he made no challenge on the merits or on the amount due under the note.
Despite his admissions, defendant Green contended that the Association was entitled to only one attorney’s fee, and not separate fees in both courts for the foreclosure of the same mortgage.
The court noted that since the mortgage covers properties in two provinces, foreclosing it required obtaining and perfecting decrees in both courts, which warranted a higher overall attorney’s fee due to the additional work involved.

After thorough discussion, the court agreed that P7,000 should be allowed as the total attorney’s fee for the foreclosure of the mortgage covering the properties in both provinces, with interest at 6 percent per annum from the date of filing of the second complaint.
Regarding the mortgage involving O’Brien et al., the court ruled that the stipulated attorney’s fee of P2,500 was binding, and that the total fees allowed in both courts should be confined to this amount, with interest at 6 percent per annum from the date of filing the answer in the first case.

It was determined that both the Manila Building & Loan Association and O’Brien et al. were entitled to one complete satisfaction of the attorney’s fees respective to their judgments.
The fulfillment of the second judgment in the Court of First Instance of Manila was intended to operate as a full and complete satisfaction of both judgments by each party, including principal amounts, attorney’s fees, interest, and costs.

Whether the foreclosure of a single mortgage covering properties in two provinces justified the recovery of separate attorney’s fees in two different courts rather than a single fee.

Whether the reduced total attorney’s fee of P7,500 (and eventually P7,000 by the court’s decision) for the Building & Loan Association is reasonable and consistent with the contractual stipulation of 10 percent.
Whether it is correct to apply the stipulated fixed fee of P2,500 in the foreclosure case involving O’Brien et al.

Whether the complete satisfaction of the second judgment (rendered in Manila) indeed constitutes and binds the full satisfaction of all aspects of both lower court judgments regarding foreclosure and attorney’s fees.

Whether the express stipulations for attorney’s fees in both mortgages should be strictly enforced as binding on the parties.