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    Bautista V Pilar Devt Authority

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    Em Alayza
    The document discusses two promissory notes executed by petitioner spouses Florante and Laarni Bautista to partially finance their purchase of a house and lot. The first note from 1978 had an interest rate of 12% as authorized by law at the time. Subsequent central bank circulars increased the maximum interest rate to 21%, which was reflected in the second note the petitioners executed in 1982. The court ruled that the 21% interest rate in the second note was valid and authorized under the central bank circulars in effect at that time.

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    Bautista V Pilar Devt Authority

    Uploaded by

    Em Alayza
    27 views2 pages
    The document discusses two promissory notes executed by petitioner spouses Florante and Laarni Bautista to partially finance their purchase of a house and lot. The first note from 1978 had an interest rate of 12% as authorized by law at the time. Subsequent central bank circulars increased the maximum interest rate to 21%, which was reflected in the second note the petitioners executed in 1982. The court ruled that the 21% interest rate in the second note was valid and authorized under the central bank circulars in effect at that time.

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    Bautista v Pilar Devt Authority

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    The document discusses two promissory notes executed by petitioner spouses Florante and Laarni Bautista to partially finance their purchase of a house and lot. The first note from 1978 had an interest rate of 12% as authorized by law at the time. Subsequent central bank circulars increased the maximum interest rate to 21%, which was reflected in the second note the petitioners executed in 1982. The court ruled that the 21% interest rate in the second note was valid and authorized under the central bank circulars in effect at that time.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    27 views2 pages

    Bautista V Pilar Devt Authority

    Uploaded by

    Em Alayza
    The document discusses two promissory notes executed by petitioner spouses Florante and Laarni Bautista to partially finance their purchase of a house and lot. The first note from 1978 had an interest rate of 12% as authorized by law at the time. Subsequent central bank circulars increased the maximum interest rate to 21%, which was reflected in the second note the petitioners executed in 1982. The court ruled that the 21% interest rate in the second note was valid and authorized under the central bank circulars in effect at that time.

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    © All Rights Reserved
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    of 2

    70.

    G.R. No. 135046  August 17, 1999

    SPOUSES FLORANTE and LAARNI BAUTISTA, petitioners, 


    vs.
    PILAR DEVELOPMENT CORPORATION, respondent.

    Doctrine: The rate of interest on any loan or forbearance of any money, goods or
    credit, regardless of maturity and whether secured or unsecured, "shall not be subject
    to any ceiling prescribed under or pursuant to the Usury Law, as amended." In short,
    Circular No 905 removed the ceiling on interest rate for secured and unsecured loans,
    regardless of majority.

    Facts:

    In 1978, petitioner spouses Florante and Laarni Bautista purchased a house and lot in
    Pilar Village, Las Piñas, Metro Manila. To partially finance the purchase, they
    obtained from the Apex Mortgage & Loan Corporation (Apex) a loan in the amount
    of P100,180.00. They executed a promissory note on December 22, 1978 obligating
    themselves, jointly and severally, to pay the “principal sum of P100,180.00 with
    interest rate of 12% and service charge of 3%– for a period of 240 months, or twenty
    years, from date, in monthly installments of P1,378.83.3 Late payments were to be
    charged a penalty of one and one-half per cent (1 1/2%) of the amount due. In the
    same promissory note, petitioners authorized Apex to “increase the rate of interest
    and/or service charges– without notice to them in the event that a law, Presidential
    Decree or any Central Bank regulation should be enacted increasing the lawful rate of
    interest and service charges on the loan. Payment of the promissory note was secured
    by a second mortgage on the house and lot purchased by petitioners. Petitioner
    spouses failed to pay several installments. On September 20, 1982, they executed
    another promissory note in favor of Apex. This note was in the amount of
    P142,326.43 at the increased interest rate of twenty-one per cent (21%) per annum
    with no provision for service charge but with penalty charge of 1 1/2% for late
    payments. Payment was to be made for a period of 196 months or 16.33 years in
    monthly installments of P2,576.68, inclusive of principal and interest. Petitioner
    spouses also authorized Apex to “increase/decrease the rate of interest and/or service
    charges– on the note in the event any law or Central Bank regulation shall be passed
    increasing or decreasing the same.

    In November 1983, petitioner spouses again failed to pay the installments. On June 6,
    1984, Apex assigned the second promissory note to respondent Pilar Development
    Corporation without notice to petitioners. CA reversed the trial court by applying 21%
    per annum amounting to 142,346.42php. However, it was reversed to 140,515.11,
    initial decision of RTC, after the denial for motion to reconsider.
    Issue:

    Whether it be 12% under the promissory note of December 22, 1978 or 21% under the
    promissory note of September 20, 1982.

    Ruling:

    The court ruled that at the time the parties executed the first promissory note in 1978,
    the interest of 12% was the maximum rate fixed by the Usury Law for loans secured
    by a mortgage upon registered estate.

    On December 1, 1979, the Monetary Board of the Central Bank of the Philippines
    issued Circular No 705 which fixed the effective rate of interest on loan transactions
    with maturities of more than 730 days to 21% per annum for both secured and
    unsecured loans. On January 28, 1980, the Monetary Board issued Circular No. 712
    reiterating the effective rate of 21% on said transactions. On January 1, 1983, CB
    Circular No 905 series of 1982, took effect. The circular declared that the rate of
    interest on any loan or forbearance of any money, goods or credit, regardless of
    maturity and whether secured or unsecured, "shall not be subject to any ceiling
    prescribed under or pursuant to the Usury Law, as amended." In short, Circular No
    905 removed the ceiling on interest rate for secured and unsecured loans, regardless of
    majority.

    When the second promissory note was executed on September 20, 1982, Central Bank
    Circulars Nos 705 and 712 were already in effect. These circulars fixed the effective
    interest rate for secured loans transactions with maturities of more than 730 days, i.e.,
    2years at 21% per annum. The interest rate of 21% provided in the second promissory
    note was therefore authorized under these Circulars.

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