Case Digest (G.R. No. 193381)
Facts:
The case of Spouses Ponciano Almeda and Eufemia Almeda v. Court of Appeals and Philippine National Bank arose from loan accommodations granted by the Philippine National Bank in 1981, totaling P18 million, secured by a real estate mortgage over Marvin Plaza, a 3,500-square-meter parcel in Pasong Tamo, Makati. The credit agreement stipulated a 21% per annum interest rate, semi-annual payments, a 3% penalty on overdue balances, and an escalation clause (Section III-c(1)) permitting the bank to adjust the rate “within the limits allowed by law” with corresponding decreases when maximum rates were lowered. Between 1981 and 1984, petitioners paid P7,735,004.66, largely covering accrued interest. On March 31, 1984, the bank unilaterally raised the interest rate to 28%, ultimately reaching 68% by September 1986, despite the spouses’ protests. On February 6, 1988, they filed for declaratory relief and a writ of preliminary injunction with the Regional Trial Court (RTC) of Makati, whichCase Digest (G.R. No. 193381)
Facts:
- Credit Facility and Security
- In 1981, the Philippine National Bank (PNB) granted spouses Ponciano L. Almeda and Eufemia P. Almeda several loan/credit accommodations totaling ₱18,000,000, payable over six years at 21% per annum.
- The loans were secured by a real estate mortgage over a 3,500 sqm parcel with the Marvin Plaza building in Makati.
- Credit Agreement Terms
- Principal interest rate: 21% per annum, payable semi-annually in arrears; service charge and a 3% per annum penalty on unpaid balances.
- Escalation clause (Sec. III-c(1)): PNB “reserves the right to increase the interest rate within the limits allowed by law at any time depending on whatever policy it may adopt in the future,” with corresponding de-escalation if the legal ceiling is reduced.
- Payment History and Dispute
- Between 1981 and 1984, petitioners made partial payments totaling ₱7,735,004.66, largely applied to accrued interest.
- On March 31, 1984, PNB unilaterally raised the rate to 28%, later escalating it to as high as 68% by September 1986 under its so-called escalation policy. Petitioners’ protests were ignored.
- Judicial Proceedings
- February 6, 1988: Petitioners filed for declaratory relief and preliminary injunction in RTC Makati (Civil Case No. 18872), questioning PNB’s unilateral rate hikes and invoking Central Bank Circular No. 905. March 3, 1988: RTC issued injunction enjoining enforcement of rates above 21%.
- PNB ordered extrajudicial foreclosure; supplemental injunction stayed the March 14, 1989 sale but was dissolved on January 15, 1990. PNB scheduled a new sale for March 12, 1990.
- Prior to sale, petitioners tendered ₱40,142,518 (principal ₱18 M + interest at 21%); PNB refused. On March 8, 1990, petitioners consigned that amount with RTC (Civil Case No. 90-663) and obtained another injunction.
- PNB sought dismissal; on March 30, 1990, RTC enjoined the foreclosure. Subsequent motions to lift injunctions were denied.
- August 27, 1993: The Court of Appeals set aside the injunctions and upheld PNB’s right to foreclose under the mandatory foreclosure provisions of P.D. 385. RTC and CA resolutions denying petitioners’ motions for reconsideration were affirmed.
Issues:
- Whether PNB was authorized under the credit agreement to unilaterally raise interest rates from 21% to as high as 68%.
- Whether PNB could validly foreclose the mortgaged property under the mandatory foreclosure provisions of Presidential Decree No. 385 despite the unresolved dispute over the correct loan balance.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)