Almeda vs CA

Almeda Vs.Court of Appeals, G.R. 113412, April17,1996 Doctrine: LIFI!G "F #$#R% C&ILI!G' ("&$ !" GRA! )A!*$ CARTE BLANCHE A#+"RI% " RAI$& I!&R&$' R#L& #!(&R C) CIRC#LAR 9-.  While the Usury Law ceiling on interest rates was lifted by C.B. Circular 905, nothing in the said circular could possibly be read as granting respondent bank carte blanche authority to raise interest rates to levels which would either enslave its borrowers or lead to a hemorrhaging hemorrhaging of their assets. Borrowing represents represents a transfusion of capital from lending institutions to industries and businesses in order to stimulate growth. his would not! obviously! be the e"ect of #$B%s unilateral and lopsided policy regarding the interest rates of petitioners% borrowings borrowings in the instant case. &acts: Between '()' and '()*! petitioners made several partial payments on the loan totaling totaling #+!+,#+!+,-! !*./ *.//! /! a substan substantia tiall portion portion of which which was applie applied d to accrue accrued d inter interest est.. 0n 1arch 1arch ,' ,'!! '( '()* )*!! respon responden dentt bank! bank! over over petitioners% protestations! raised the interest rate to 2)3! allegedly pursuant to 4ectio 4ection n 5556c 5556c 7'8 7'8 of its credi creditt agreem agreement ent.. 4aid 4aid inter interest est rate rate there thereupo upon n increased from an initial 2'3 to a high of /)3 between 1arch of '()* to 4eptember! '()/. #etitioners #etitioners protested the increase in interest rates! to no avail. Before the loan was to mature in 1arch! '())! the spouses 9led on &ebruary /! '()) a petition for declaratory relief with prayer for a writ of preliminary inunction and tempor temporary ary restr restrain aining ing order order with with the ;egiona egionall rial rial Court Court of 1akati 1akati!! docketed as Civil Case $o. '))+2. 5n said petition! which was ras a preliminary measure! the lowe lowerr cour court! t! on 1ar 1arch ,! '( '()) ))!! issu issued ed a writ writ of prel prelim imin inar ary y inu inunc ncti tion on enoining the #hilippine $ational Bank from enforcing an interest rate above the 2'3 stipulated in the credit agreement. By this time the spouses were already in default of their loan obligations. 5nvoking the Law on 1andatory &oreclosure 7>ct ,',-! as amended and #.D. ,)-8! ,)-8! the #$B countere countered d by ordering ordering the e?traud e?traudicial icial foreclosur foreclosure e of  petitioners% mortgaged properties and scheduled an auction sale for 1arch

'*! '()(. Upon motion by petitioners! however! the lower court! on >pril 5, '()(! granted a supplemental writ of preliminary inunction! staying the public auction of the mortgaged property.

5ssue@s: '8 Whether or not respondent bank was authoriAed to raise its interest rates from 2'3 to as high as /)3 under the credit agreement and 28 Whether or not respondent bank is granted the authority to foreclose the 1arvin #laAa under the mandatory foreclosure provisions of #.D. ,)-.

eld: We cannot! at this point! conclude that respondent DB# together with the Bancom people actually misappropriated and misspent the $5million loan in whole or in part although the trial court found that there is persuasive% evidence that such acts were committed by the respondent. his matter should rightfully be litigated below in the main action. #ending the outcome of such litigation! #.D. ,)- cannot automatically be applied for if it is really proven that respondent DB# is responsible for the misappropriation of the loan! even if only in part! then the foreclosure of the petitioner%s properties under the provisions of #.D. ,)- to satisfy the whole amount of the loan would be a gross mistake. 5t would unduly preudice the petitioner! its employees and their families. &urthermore! petitioners made a valid consignation of what they! in good faith and in compliance with the letter of the Credit >greement! honestly believed to be the real amount of their remaining obligations with the respondent bank. he latter could not therefore claim that there was no honest6to6goodness attempt on the part of the spouses to settle their obligations. ;espondent bank%s rush to ineEuitably invoke the foreclosure provisions of #.D. ,)- through its legal machinations in the courts below! in spite of the unsettled di"erences in interpretation of the credit agreement was obviously made in bad faith! to gain the upper hand over petitioners. 5n the face of the uneEuivocal interest rate provisions in the credit agreement and in the law reEuiring the parties to agree to changes in the interest rate in writing! we hold that the unilateral and progressive increases imposed by respondent #$B were null and void. heir e"ect was to increase the total obligation on an eighteen million peso loan to an amount way over three times that which was originally granted to the borrowers. hat these

increases! occasioned by crafty manipulations in the interest rates is unconscionable and neutraliAes the salutary policies of e?tending loans to spur business cannot be disputed.