G.R. No. 88880, April 30, 1991.
DOCTRINE:
Removal of Usury Law Ceiling on interest rates does not authorize banks to unilaterally and successively increase interest rates.
FACTS:
Ambrosio Padilla was granted by the Philippine National Bank, a credit line, secured by a real estate mortgage, for a term of 2-years, with 18% interest per annum. Padilla 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.”