BANCO FILIPINO SAVINGS AND MORTGAGE BANK, petitioner, vs. HON.

MIGUEL
NAVARRO, Presiding Judge, Court of First Instance of Manila, Branch XXXI and FLORANTE
DEL VALLE, respondents.

G.R. No. 129227. May 30, 2000

GONZAGA_REYES, J.:

DOCTRINE: CIRCULAR No. 494, although it has the effect of law, is not a law.

FACTS: Florante del Valle obtained a loan secured by a real estate mortgage Banco Filipino in
the sum of P41,300.00 Pesos, payable and to be amortized within 15 years at 12% per cent
interest annually. Hence, the loan still had more than 730 days to run by January 2, 1976, the date
when CIRCULAR No. 494 was issued by the Central Bank. Stamped on the PN evidencing the
loan is an Escalation Clause, authorizing Banco Filipino to correspondingly increase the interest
rate stipulated in this contract in the event law should be enacted increasing the lawful rates of
interest that may be charged on this particular kind of loan. The Escalation Clause is based upon
Central Bank CIRCULAR No. 494 issued making the maximum rate of interest on loans with
maturity of more than 730 days, by banking institutions, shall be 19% per annum. Except as
provided in this Circular and Circular No. 493, loans or renewals thereof shall continue to be
governed by the Usury Law, as amended.

ISSUE: Whether or not the BANCO FILIPINO can increase the interest rate on the loan from
12% to 17% per annum under the Escalation Clause.

HELD: No It is clear from the stipulation between the parties that the Escalation Clause was
dependent on an increase of rate made by law alone. CIRCULAR No. 494, although it has the
effect of law, is not a law. Escalation clauses to be valid should specifically provide: (1) that
there can be an increase in interest if increased by law or by the Monetary Board; and (2) in
order for such stipulation to be valid, it must include a provision for reduction of the stipulated
interest "in the event that the applicable maximum rate of interest is reduced by law or by the
Monetary Board."
PHILIPPINE NATIONAL BANK, Petitioner, v. THE HON. COURT OF APPEALS and
AMBROSIO PADILLA, Respondents.

G.R. No. 88880. April 30, 1991.

GRIÑO-AQUINO, J.:

DOCTRINE: Removal of Usury Law Ceiling on interest rates does not authorize banks to
unilaterally and successively increase interest rates.

FACTS: Ambrosio Padilla, private respondents, was granted by petitioner Philippine National
Bank, a credit line, secured by a real estate mortgage, for a term of 2 years, with 18% interest per
annum. Private respondent executed in favor of the PNB a Credit Agreement, 2 promissory notes
in the amount of P900,000.00 each, and a Real Estate Mortgage Contract. Stipulations in the PN
authorizes PNB to increase the stipulated 18% interest per annum "within the limits allowed by
law at any time depending on whatever policy it [PNB] may adopt in the future; Provided, that,
the interest rate on this note shall be correspondingly decreased in the event that the applicable
maximum interest rate is reduced by law or by the Monetary Board." Padilla requested to the
increase in the rate of interest from 18% be fixed at 21% or 24% but was denied by PNB.

ISSUE: Whether PNB, within the term of the loan which it granted to the private respondent,
may unilaterally change or increase the interest rate stipulated therein at will and as often as it
pleased.

HELD: No. Central Bank Circular No. 905, Series of 1982 removed the Usury law ceiling on
interest rates, however, it did not authorize the PNB, or any bank for that matter, to unilaterally
and successively increase the agreed interest rates from 18% to 48% within a span of four (4)
months, in violation of P.D. 116 which limits such changes to "once every twelve months."
SAURA IMPORT & EXPORT CO., INC., plaintiff-appellee, vs. DEVELOPMENT BANK OF
THE PHILIPPINES, defendant-appellant.

G.R. No. L-24968 April 27, 1972

MAKALINTAL, J.:

DOCTRINE: An accepted promise to deliver something, by way of commodatum or simple loan

is binding upon the parties, but the commodatum or simple loan itself shall not be perfected until
the delivery of the object of the contract.

FACTS: Saura, Inc. applied to the RFC, for an industrial loan of P500,000.00 which approved by
the latter and to be secured by a mortgage. Loan documents were executed: the promissory note
and the corresponding deed of mortgage, which was duly registered. Subsequently in a meeting
of RFC board to which the President of Saura, Inc. was present, the loan was reduced to 300,000.
Saura Inc. however that the loan of 500,000 be approved. RFC accepted and approved the loan
application subject to some conditions which Saura admitted it could not comply with.
Correspondence and negotiations came to a halt and Saura, Inc. did not pursue further and
instead requested the cancellation of mortgage and was delivered to the President of Saura, Inc.
Almost nine years after the mortgage in favor of RFC was cancelled at the request of Saura, Inc.,
the latter commenced the present suit for damages, alleging failure of RFC (DBP) to comply
with its obligation to release the proceeds of the loan applied for and approved, thereby
preventing the plaintiff from completing or paying contractual commitments it had entered into,
in connection with its jute mill project.

ISSUE: Whether there was there a perfected consensual contract?

HELD: Yes. There was indeed a perfected consensual contract, as recognized in Article 1934 of
the Civil Code, which provides: An accepted promise to deliver something, by way of
commodatum or simple loan is binding upon the parties, but the commodatum or simple loan
itself shall not be perfected until the delivery of the object of the contract. There was
undoubtedly offer and acceptance in this case: the application of Saura, Inc. for a loan of
P500,000.00 was approved by resolution of the defendant, and the corresponding mortgage was
executed and registered. But this fact alone falls short of resolving the basic claim that the
defendant failed to fulfill its obligation and the plaintiff is therefore entitled to recover damages.