Banco Filipino vs CA Credit Digest

Banco Filipino vs CA

GR No. 129227, 30 May 2000

332 SCRA 241

FACTS

            Elsa and Calvin Arcilla secured, on 3 occassions, loan from petitioner as evidenced by promissory note. REM was also executed. Under said deeds, Banco Filipino may increase rate of interest on said loans, within the limits allowed by law. at that time, under Usury Law, the maximum rate of interest for loans secured by REM was 12% pa. later, the Central bank issued Circular No. 494 provinding for the maximum interest of 19%pa. meanwhile, Skyli Builders, thru President Calvin Arcilla secured loans from BPI with FGU Insurance as surety. Banco Filipino issued an account statement with 17% pa as interest. The Arcillas filed for annulment of the loan contracts because the rate of interests charged were usurious.

ISSUE

            Whether or not respondents are entitled to refund of the alleged interest overpayments.

HELD

            Yes. Private respondents aver that they are entitled to the refund inasmuch as the escalation clause incorporated in the loan contracts do not have a corresponding de-escalation clause and is therefore, illegal.

            In Banco Filipino Savings & Mortgage Bank vs Navarro, the Court ruled that Central Bank Circular 494, although it has the force and effect of law, is not a law and is not the law contemplated by the parties which authorizes the petitioner to unilaterally raise the interest rate of loan. The reliance on the circular was without any legal basis.