Case Digest (G.R. No. 172776)
Facts:
In Spouses Mariano and Gilda Florendo vs. Court of Appeals and Land Bank of the Philippines (G.R. No. 101771, December 17, 1996), petitioners Gilda and Mariano Florendo sought injunctive relief and damages against Land Bank after the bank unilaterally increased the interest rate on Gilda’s housing loan following her voluntary resignation. Gilda, an employee of Land Bank from May 17, 1976 until August 16, 1984, obtained a ₱148,000 housing loan on July 20, 1983, payable over 25 years at 9% per annum. The parties executed a Housing Loan Agreement containing Section I-F of Article VI, which generally required compliance with lender and Central Bank rules, and a Real Estate Mortgage featuring paragraph (f), an explicit escalation clause linking interest adjustments to “prevailing rules, regulations and circulars of the Central Bank … as the Provident Fund Board of Trustees … may prescribe.” On March 19, 1985, Land Bank’s Management Committee (ManCom) Resolution No. 85-08 and Providen...Case Digest (G.R. No. 172776)
Facts:
- Parties and Loan Application
- Petitioners: Spouses Mariano and Gilda Florendo.
- Respondents: Court of Appeals and Land Bank of the Philippines (Landbank).
- Gilda was employed by Landbank from May 17, 1976 until her voluntary resignation on August 16, 1984.
- On July 20, 1983, she applied for a Provident Fund housing loan of ₱148,000, payable over 25 years.
- Execution of Contracts
- Petitioners and Landbank executed:
- A Housing Loan Agreement (HLA).
- A Real Estate Mortgage.
- A Promissory Note.
- The loan proceeds were released to Gilda in her capacity as a bank employee.
- Stipulated Interest Escalation and Correspondence
- On March 19, 1985, Landbank increased the interest rate from 9% to 17% per annum via ManCom Resolution No. 85-08 and Provident Fund Memorandum Circular No. 85-08.
- Petitioners were notified by letter dated June 7, 1985, and they protested the increase on June 11, 1985; Landbank replied on July 1, 1985.
- Despite their protest, petitioners continued to pay the original monthly installment of ₱1,248.72 and remained current on payments.
- Contractual Provisions Cited for Escalation
- Section I-F, Article VI of the HLA: requires the borrower to comply with Lender rules and Central Bank regulations on fringe-benefit financing programs.
- Paragraph (f) of the Real Estate Mortgage: provides that the interest rate “shall be subject … to such an increase/decrease in accordance with prevailing rules, regulations and circulars of the Central Bank of the Philippines as the Provident Fund Board of Trustees of the Mortgagee may prescribe …”
- ManCom Resolution No. 85-08 and PF Memorandum Circular No. 85-08: escalated rates for employees who voluntarily “secede” (resign) from Landbank, applying to past and future resignations.
- Procedural History
- The Regional Trial Court denied injunctive relief, upheld the 17% rate effective March 19, 1985, and set monthly amortization at ₱2,064.75.
- The Court of Appeals affirmed with modification: 17% interest to be computed from July 1, 1985.
- Petitioners filed a petition for review on certiorari before the Supreme Court, challenging the unilateral rate increase as lacking contractual basis, violative of the Usury Law, and contrary to public policy.
Issues:
- Central Issue
- Whether Landbank had a valid legal basis under the loan contracts and applicable law to increase the interest rate on petitioners’ housing loan from 9% to 17% due solely to Gilda Florendo’s voluntary resignation.
- Subsidiary questions:
- Validity and clarity of the HLA and mortgage escalation provisions.
- Applicability of ManCom Resolution No. 85-08 absent a Central Bank issuance.
- Compliance with Section 7-A of the Usury Law.
- Adherence to the principle of mutuality of contracts and protection against contracts of adhesion.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)