11. Banco Filipino vs Navarro

Case 11: BANCO FILIPINO SAVINGS VS NAVARRO FACTS: Navarro’s loan secured wi! a "or#a#e $ro" Banco Fili%ino !ad an escalaion clause BAS&' ON CIRC(LAR )*) OF T+& C&NTRAL C&NTRAL BAN, %rovidin# as $ollows: I-.e !ere/0 au!orie Banco Fili%ino o corres%ondin#l0 corres%ondin#l0 increase !e ineres rae si%ulaed in !is conrac wi!ou advance noice o "e-us in !e even even law s!ould s!ould /e enac enaced ed incre increasi asin# n# !e law$ul law$ul raes o$ ineres !a "a0 /e c!ar#ed on !is %aricular 2ind o$ loan3

On !e sren#! o$ CIRC(LAR No3 )*) BANCO FILIPINO #ave noice o !e BORRO.&R on 4une 567 1*89 o$ !e increase o$ ineres rae on !e LOAN $ro" 1; o 18; %er annu" e
Conen Conendin din# # !a !a CIRC(LA CIRC(LAR R No3 No3 )*) is no !e law con cone" e"%l %la aed ed in !e !e &sca &scala laio ion n Clau Clause se o$ !e !e %ro"i %ro"isso ssor0 r0 noe7 noe7 !e BORRO BORRO.&R .&R >led >led sui sui a#ains a#ains BANCO FILIPINO $or ?'eclaraor0 Relie$? and %ra0 !a !e escalaion clause /e null and void3

BANCO FILIPINO "ainained !a !e &scalaion Clause si#ned /0 !e BORRO.&R au!oried au!oried i o increase !e

ineres rae once a law was %assed increasin# !e rae o$ iner ineres es and !a !a is au!or au!ori0 i0 o incre increase ase was was %rovided $or /0 CIRC(LAR No3 )*)3 In is is @ud# @ud#"e "en n77 res% res%on onde den n Cour Cour nulli nulli>e >ed d !e !e &scala &scalaio ion n Clause Clause and and order ordered ed BANCO BANCO FILIPI FILIPINO NO o desis $ro" en$orcin# !e increased rae o$ ineres on !e BORRO.&Rs BORRO.&Rs loan3 I reasone reasoned d ou !a P3'3 No3 119 119 does does no no e%r e%res essl sl0 0 #ran #ran !e !e Cen Cenra rall Ban2 Ban2 au!ori0 au!ori0 o "ai"ie "ai"ie ineres ineres raes raes wi! reroa reroacive cive e
 T+(S7 T+IS CAS& ISS(& .!a s!ould /e resolved is w!e!er BANCO FILIPINO can increase !e ineres rae on !e LOAN $ro" 1; o 18; %er annu" under !e &scalaion Clause33

R(LINGE !e cour "a0 no increase !e ineres rae on !e loan3 loan3 Al!ou#! !e si%ulaion o$ !e %aries is ver0 clear !a !e ineres rae "a0 /e increased in !e even even a law s!ould s!ould /e enaced enaced incre increas asin# in# !e law$ul rae !a "a0/e c!ar#ed on !is loan Circular

)*) is no sricl0 a saue or law /u ad"inisraive order !a !as !e e
an

 T!e dicall0 %rovide as $ollowsE

13 T!ere can /e an increase in ineres IF INCR&AS&' /0 law or /0 !e =ON&TARH BOAR' 3 For !e si%ulaion o /e valid7 i "us include a %rovision $or reducion o$ !e si%ulaed ineres in !e even !a !e a%%lica/le "ai"u" rae o$ ineres is reduced /0 law or /0 !e =onear0 Board3 .!ile P' no 19) is no o /e #iven reroacive e
Clause in Juesion %rovides ano!er reason w!0 i s!ould no /e #iven ecall0 si%ulaed !a !e increase in ineres was o /e  on !is %aricular 2ind o$ loan’ "eanin# one secured /0 re#isered real esae "or#a#e CO(RT R(L&S T+AT .+IL& AN &SCALATION CLA(S& LI,& T+& ON& IN T+IS CAS& CAN OR'INARILH B& +&L' VALI'7 N&V&RT+&L&SS P&TITION&R BANCO FILIPINO CANNOT R&LH T+&R&ON TO RAIS& T+& INT&R&ST ON  T+& BORRO.&RS LOAN FRO= 1; TO 18; P&R ANN(= B&CA(S& CIRC(LAR NO3 )*) OF T+& =ON&TARH BOAR' .AS NOT T+& LA. CONT&=PLAT&' BH T+& PARTI&S7 NOR S+O(L' SAI' CIRC(LAR B& +&L' AS APPLICABL& TO LOANS S&&C(R&' BH R&GIST&R&' R&AL &STAT& IN T+& ABS&NC& OF ANH S(C+ SP&CIFIC IN'ICATION AN' IN CONTRAV&NTION OF T+& POLICH B&+IN' T+& (S(RH LA.