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    Sps Mariano Florendo Vs CA, G.R. 101771, December 17, 1996

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    The Supreme Court ruled that the Land Bank of the Philippines did not have a valid basis to increase the interest rate on Mariano and Rosario Florendo's housing loan from 9% to 17%. When the parties signed the loan agreement in 1983, Central Bank issuances already allowed variable interest rates. However, the specific agreement set the rate at 9% annually unless the Central Bank authorized an increase, which did not occur. By only stipulating Central Bank action as grounds for raising the rate, the bank waived its ability to increase the rate due to other factors like the borrowers resigning from their jobs. Therefore, the Florendos were only required to pay interest at the original 9% rate as outlined in the agreement.

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    Sps Mariano Florendo Vs CA, G.R. 101771, December 17, 1996

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    The Supreme Court ruled that the Land Bank of the Philippines did not have a valid basis to increase the interest rate on Mariano and Rosario Florendo's housing loan from 9% to 17%. When the parties signed the loan agreement in 1983, Central Bank issuances already allowed variable interest rates. However, the specific agreement set the rate at 9% annually unless the Central Bank authorized an increase, which did not occur. By only stipulating Central Bank action as grounds for raising the rate, the bank waived its ability to increase the rate due to other factors like the borrowers resigning from their jobs. Therefore, the Florendos were only required to pay interest at the original 9% rate as outlined in the agreement.

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    (100) Sps Mariano Florendo vs CA, G.R. 101771, December 17, 1996

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    The Supreme Court ruled that the Land Bank of the Philippines did not have a valid basis to increase the interest rate on Mariano and Rosario Florendo's housing loan from 9% to 17%. When the parties signed the loan agreement in 1983, Central Bank issuances already allowed variable interest rates. However, the specific agreement set the rate at 9% annually unless the Central Bank authorized an increase, which did not occur. By only stipulating Central Bank action as grounds for raising the rate, the bank waived its ability to increase the rate due to other factors like the borrowers resigning from their jobs. Therefore, the Florendos were only required to pay interest at the original 9% rate as outlined in the agreement.

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

    Sps Mariano Florendo Vs CA, G.R. 101771, December 17, 1996

    Uploaded by

    Thoughts and More Thoughts
    The Supreme Court ruled that the Land Bank of the Philippines did not have a valid basis to increase the interest rate on Mariano and Rosario Florendo's housing loan from 9% to 17%. When the parties signed the loan agreement in 1983, Central Bank issuances already allowed variable interest rates. However, the specific agreement set the rate at 9% annually unless the Central Bank authorized an increase, which did not occur. By only stipulating Central Bank action as grounds for raising the rate, the bank waived its ability to increase the rate due to other factors like the borrowers resigning from their jobs. Therefore, the Florendos were only required to pay interest at the original 9% rate as outlined in the agreement.

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    © All Rights Reserved
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    SPS. MARIANO FLORENDO VS CA, LAND BANK OF THE PHILS.

    G.R. 101771, December 17, 1996

    FACTS:
     Mrs. Florendo was an employee of the Landbank of the Philippines (LBP) from May 1976 to
    August 1984.

     In July 20, 1983, before she resigned, she applied for a housing loan of P148,000, payable in 25
    years with 9% per annum interest rate from the bank’s Provident Fund.

     The parties executed a Housing Loan Agreement, Real Estate Mortgage and Promissory Note.

     In March 1985, the bank increased the interest rate from 9 to 17% pursuant to the (Landbank's)
    ManCom Resolution No. 85-08 and in a PF (Provident Fund) Memorandum Circular.

     The Spouses questioned the increase but the bank still kept demanding them to pay the new
    monthly amortization of P2,064.75 The spouses continued paying the rate under the original
    contract which is P1,248.72.

    ISSUE:
     Did the respondent bank have a valid and legal basis to impose an increased interest rate on the
    petitioners' housing loan?

    RULING:

    January 29, 1973 PD No. 116 became effective
    July 29, 1974 CB Circular No. 416 was issued
    February 6, 1976 CB Circ. 504 was issued
    December 1, 1979 CB Circ. 706 was issued
    1982 CB Circ. 905, lifting any interest rate ceiling prescribed
    under or pursuant to the Usury Law, as amended, was
    promulgated
    July 20, 1983 loan was perfected
    1985 ManCom Resolution No. 85-08, which was the basis of
    LBP’s claim for the increase in the interest rate

    The law and Central Bank issuances had already come into existence prior to the perfection of
    the housing loan agreement and mortgage contract, and thus it may be said that these
    regulations had been taken into consideration by the contracting parties when they first entered
    into their loan contract.

     In light of the CB issuances in force at that time, respondent bank was fully aware that it could
    have imposed an interest rate higher than 9%  per annum rate for the housing loans of its
    employees, but it did not.

     In the subject loan, the respondent bank knowingly agreed that the interest rate on petitioners'
    loan shall remain at 9% p.a. unless a CB issuance is passed authorizing an increase (or
    decrease) in the rate on such employee loans and the Provident Fund Board of Trustees acts
    accordingly. Thus, as far as the parties were concerned, all other onerous factors, such as
    employee resignations, which could have been used to trigger an application of the escalation
    clause were considered barred or waived. If the intention were otherwise, they — especially
    respondent bank — should have included such factors in their loan agreement.

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