Professional Documents
Culture Documents
181045
July 2, 2014
Factual Antecedents
Spouses Eduardo and Lydia Silos (petitioners) have
been in business for about two decades of operating
a department store and buying and selling of readyto-wear apparel. Respondent Philippine National
Bank (PNB) is a banking corporation organized and
existing under Philippine laws.
To secure a one-year revolving credit line
of P150,000.00 obtained from PNB, petitioners
constituted in August 1987 a Real Estate
Mortgage over a 370-square meter lot in Kalibo,
Aklan covered by Transfer Certificate of Title No.
(TCT) T-14250. In July 1988,the credit line was
increased to P1.8 million and the mortgage was
correspondingly increased to P1.8 million.
5
Principal
P 2,500,000.00
Interest
538,874.94
Penalties
581,666.66
Total
P 3,620,541.60
It ruled that:
1. While the Credit Agreement allows PNB to
unilaterally increase its spread over the floating
interest rate at any time depending on whatever
policy it may adopt in the future, it likewise
allows for the decrease at any time of the same.
Thus, such stipulation authorizing both the
increase and decrease of interest rates as may
be applicable is valid, as was held in
Consolidated Bank and Trust Corporation
(SOLIDBANK) v. Court of Appeals;
31
32
35
6. By the admission of petitioners during pretrial, all payments made to PNB were properly
applied to the principal, interest and penalties.
37
38
40
41
46
Issues
The following issues are raised in this Petition:
I
A. THE COURT OF APPEALS AS WELL AS
THE LOWER COURT ERRED IN NOT
NULLIFYING THE INTEREST RATE
PROVISION IN THE CREDIT AGREEMENT
DATED JULY 24, 1989 X X X AND IN THE
AMENDMENT TO CREDIT AGREEMENT
DATEDAUGUST 21, 1991 X X X WHICH
LEFT TO THE SOLE UNILATERAL
DETERMINATION OF THE RESPONDENT
PNB THE ORIGINAL FIXING OF
INTEREST RATE AND ITS INCREASE,
WHICH AGREEMENT IS CONTRARY TO
LAW, ART. 1308 OF THE [NEW CIVIL
CODE], AS ENUNCIATED IN PONCIANO
ALMEIDA V. COURT OF APPEALS,G.R.
[NO.] 113412, APRIL 17, 1996, AND
CONTRARY TO PUBLIC POLICY AND
PUBLIC INTEREST, AND IN APPLYING
THE PRINCIPLE OF ESTOPPEL ARISING
FROM THE ALLEGED DELAYED
COMPLAINT OF PETITIONER[S], AND
[THEIR] PAYMENT OF THE INTEREST
CHARGED.
Petitioners Arguments
Petitioners insist that the interest rate provision in
the Credit Agreement and the Amendment to Credit
Agreement should be declared null and void, for
they relegated to PNB the sole power to fix interest
rates based on arbitrary criteria or factors such as
bank policy, profitability, cost of money, foreign
currency values, and bank administrative costs;
spaces for interest rates in the two Credit
Agreements and the promissory notes were left
blank for PNB to unilaterally fill, and their consent or
agreement to the interest rates imposed thereafter
was not obtained; the interest rate, which consists of
the prime rate plus the bank spread, is determined
not by agreement of the parties but by PNBs
52
53
55
58
65
66
78
90
98
99
105
JOSE PORTUGAL
PEREZ
Associate Justice
ESTELA M. PERLAS-BERNABE
Associate Justice
ATT E S TAT I O N
I attest that the conclusions in the above Decision
had been reached in consultation before the case
was assigned to the writer of the opinion of the
Court's Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson
C E R T I F I C AT I O N
Pursuant to Section 13, Article VIII of the
Constitution and the Division Chairperson's
Attestation, I certify that the conclusions in the above
Decision had been reached in consultation before
the case was assigned to the writer of the opinion of
the Court's Division.
MARIA LOURDES P. A. SERENO
Chief Justice
Footnotes
* Per Raffle dated June 9, 2014.
1
Records, p. 94.
Id. at 10-11.
Rollo, p. 148.
10
Id. at 47.
11
Id. at 192.
12
13
Id. at 192-199.
14
Id. at 55-58.
15
Id. at 56.
16
Id. at 174-191.
17
Id. at 191.
18
Id. at 174.
19
Id.
20
Id. at 12.
21
Id. at 13.
22
Id. at 68-70.
23
Id. at 71.
24
Id. at 37-43.
25
Id. at 165.
26
Id. at 149.
27
28
Id. at 52.
29
Id. at 52-53.
31
Id. at 365-366.
Records, p. 365.
34
Id. at 366.
35
Id.
36
Id.
37
Id. at 367.
38
Id.
39
40
Id. at 73
41
Id. at 63-64.
42
Id. at 55.
43
Records, p. 74.
44
Rollo, p. 61.
45
Id. at 61-62.
46
Id. at 62.
47
Id. at 63.
48
Id. at 23-24.
51
52
Records, p. 74.
56
57
Id. at 103.
59
60
Id. at 104-105.
61
Id. at 106-107.
64
67
Id. at 22-26.
68
69
70
71
73
Id. at 486.
74
75
Id. at 382-383.
76
Records, p. 74.
77
Id. at 192.
78
79
Id. at 192-199.
80
Id. at 56.
81
Id. at 174-191.
82
Id. at 191.
83
Id. at 174.
86
Records, p. 47.
87
Id. at 56.
89
Section 2 thereof.
91
93
Id. at 358.
95
Id.
99
102
103
104
105
Id.
106
Rollo, p. 63.