Case Summary (G.R. No. 24322)

Case Overview

This case concerns the validity of a clause in a promissory note, specifically regarding the collection of attorney's fees and whether it contravenes the Usury Law.

Background of the Case

• Parties Involved:
  • Plaintiff/Appellee: H. R. Andreas, Administrator of the Estate of Harry Bridge
  • Defendant/Appellant: B. A. Green
• Date of Decision: December 16, 1925
• Amount in Question: P15,000.00

Promissory Note Clause

• Key Provision: The promissory note includes a clause stating an additional charge of 10% of the total amount due as expenses for collection and attorney's fees, regardless of whether such fees were actually incurred.
• Legal Challenge: The appellant questions the legality of this clause under the Usury Law.

Legal Principle on Attorney's Fees

• Validity of Stipulations: The court affirms that stipulations in negotiable instruments for the payment of collection and attorney's fees are permissible under Philippine law.
• Purpose: Such provisions are intended to safeguard the lender from future losses associated with debt collection.

Description of Clause

• Nature of Clause: The inclusion of "whether actually incurred or not" is deemed descriptive and considered surplusage.
• Implication: The clause serves as a penalty for collection expenses, which is enforceable regardless of actual costs incurred in the case.

Court's Findings

• The court ruled that:
  • The clause does not violate the Usury Law.
  • The case's progression to the appellate court indicates that collection expenses were indeed incurred.
  • Enforcement of the penalty for attorney's fees is valid, even if actual expenses are not substantiated in this case.

Judgment

• Trial Court Decision: Affirmed in favor of the plaintiff.
  • Defendant ordered to pay:
    • Principal: P15,000
    • Interest: 12% per annum from May 19, 1923
    • Additional 10% of P15,000 for attorney's fees
• Sale of Mortgaged Property: In case of non-payment within three months from the final judgment, the land described in the mortgage may be sold.

Costs

• Costs of the legal instance are to be borne by the appellant.

Key Takeaways

• The court upheld the legality of the clause allowing for attorney's fees in a promissory note.
• The inclusion of fees regardless of actual costs is not deemed a viol

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Case Syllabus (G.R. No. 24322)

Case Background

• The case concerns a promissory note in the amount of ₱15,000.00 executed by the defendant, B. A. Green, on August 19, 1921.
• The note stipulates a 12% annual interest rate, with additional terms concerning collection expenses and attorney's fees.
• The specific clause in contention states: "and a further sum equal to 10 percent of the total amount due as and for expenses of collection for attorney's fees whether actually incurred or not."

Legal Issue

• The primary legal question raised by the defendant is whether the clause regarding attorney's fees contravenes the Usury Law.
• The defendant challenges the legitimacy of including attorney's fees in the promissory note, particularly the phrase "whether actually incurred or not."

Ruling of the Court

• The court ruled in favor of the plaintiff, affirming the trial court's judgment that ordered the defendant to pay the amount due under the promissory note.
• The court upheld the validity of the clause regarding attorney&#

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