Part Two: Usury Law

Act No. 2655, as amended

BSP Circular No. 799 Series of 2013

Cases:
Investors Finance Corp. v. Autoworld Sales Corp.,340 SCRA 735 (2000)
Solangon v. Salazar, 360 SCRA 379 (2001)
Spouses Pascual v. Ramos, 384 SCRA 105 (2002)
Reformina v. Tomol, 139 SCRA 260 (1985)
Lara’s Gifts & Decors v. Midtown Industrial Sales, G.R. No. 225433, 2019
Eastern Shipping v. CA, 234 SCRA 78 (1994)
Eastern Assurance v. CA, 322 SCRA 73 (2000)
Nacar v. Gallery Frames, 703 SCRA 439 (2013)
PNB v. CA, 263 SCRA 766 (1996)
Plantilla v. Baliwag, 358 SCRA 396 (2001)
RCBC v. Alfa, 368 SCRA 611 (2001)
Rodzssen Supply v. Far East, 357 SCRA 618 (2001)
Mendoza v. CA, 359 SCRA 438 (2001)
Goldwell Properties Tagaytay v. Metropolitan Bank and Trust Company, G.R. No.
209837 (2021)
Investors Finance Corp. v. Autoworld Sales Corp.,340 SCRA 735 (2000)
**Facts:**
Investors Finance Corporation (formerly known as FNCB Finance, now Citytrust Finance
Corporation) entered into a financial transaction with Autoworld Sales Corporation
(AUTOWORLD) in 1980. Initially denied a direct loan due to usury law restrictions,
Autoworld explored alternative financing options. Eventually, the parties agreed to an
Installment Paper Purchase (IPP) transaction, where Autoworld would sell receivables to
another entity (Pio Barretto Realty Corporation, BARRETTO), which would then be bought
by Investors Finance Corporation (FNCB) at a discounted rate. This transaction involved
the sale of a parcel of land from BARRETTO to AUTOWORLD, with subsequent agreements
including a Deed of Assignment and Real Estate Mortgage.
Subsequently, Autoworld entered into a direct loan agreement with FNCB in 1982, which
carried an interest rate of 28% per annum.
After making payments on both transactions, Autoworld sought to preterminate the
agreements and requested a computation of the remaining balances. Disputes arose
regarding the amounts owed, leading to legal action by Autoworld to annul the contracts
and seek reimbursement for allegedly usurious interest payments.

**Issues:**
1. Whether the contracts executed between FNCB and Autoworld were legitimate
Installment Paper Purchase transactions or disguised usurious loans.
2. Whether Autoworld is entitled to reimbursement of excess interest payments.
3. Whether FNCB can be held liable for the alleged usurious transactions.
4. Whether Autoworld is entitled to attorney’s fees and costs.

**Decisions:**
1. The Court ruled that the contracts were executed to disguise usurious loans rather than
legitimate Installment Paper Purchase transactions. Evidence suggested that FNCB actively
participated in structuring the transactions to circumvent usury laws, indicating a corrupt
intention. Therefore, the contracts were declared void.
2. Autoworld was deemed entitled to recover the entire amount of usurious interest paid,
not just the portion exceeding the legal limit. The Court calculated the total usurious
interest paid by Autoworld and ordered FNCB to reimburse this amount.
3. FNCB was held liable for the usurious transactions and ordered to pay Autoworld the
total amount of usurious interest paid, along with attorney’s fees and costs.
4. Despite Autoworld’s participation in the transactions, the Court ruled that the pari
delicto rule did not apply in usury cases, allowing Autoworld to recover the full amount of
usurious interest paid.

In summary, the Court affirmed the decision that the transactions were usurious loans
disguised as legitimate transactions, and ordered FNCB to reimburse Autoworld for the
entire amount of usurious interest paid, along with attorney’s fees and costs.
Solangon v. Salazar, 360 SCRA 379 (2001)
**Facts:**
1. Spouses Danilo and Ursula Solangon executed three separate deeds of real estate
mortgage in favor of Jose Avelino Salazar.
2. The first mortgage was for P60,000.00 with an interest rate of 6% per month.
3. The second mortgage was for P136,512.00 with interest at the legal rate.
4. The third mortgage was for P230,000.00 with interest at the legal rate.
5. The Solangons initiated legal action to prevent the foreclosure of the mortgaged
property, alleging that they obtained only one loan and subsequent mortgages were
continuations of the first one, which they deemed null and void due to an unconscionable
interest rate.
6. Salazar claimed that three separate loans were obtained, and while the first two were
paid, the third one was not.
7. The trial court ruled in favor of Salazar, dismissing the complaint and ordering the
Solangons to pay attorney's fees.
8. The Court of Appeals affirmed the trial court's decision.

**Issues:**
1. Whether three separate mortgage contracts were executed or just one.
2. Whether the interest rate of 72% per annum (6% per month) is unconscionable.
3. Whether the loan of P136,512.00 was paid by the Solangons.
4. Whether the Court of Appeals failed to resolve specific issues raised by the appellants.

**Decisions:**
1. The Supreme Court affirms the decision of the Court of Appeals.
2. The interest rate of 72% per annum is deemed unconscionable and reduced to 12% per
annum.
3. The Court finds that the Solangons are raising issues of fact which are not allowed in a
petition for review on certiorari.
4. The Court upholds the findings of fact by the lower courts, stating that none of the
exceptions for reviewing findings of fact are present in this case.

In summary, the Supreme Court affirmed the lower courts' decision, reduced the interest
rate on the mortgage, and dismissed the petition, emphasizing that only questions of law,
not fact, can be raised in a petition for review on certiorari.
Spouses Pascual v. Ramos, 384 SCRA 105 (2002)
**Facts:**
Rodrigo V. Ramos filed a petition for consolidation of title or ownership against Spouses
Silvestre and Celia Pascual. RAMOS alleged that the PASCUALs executed a Deed of Absolute
Sale with Right to Repurchase over two parcels of land and improvements located in
Bulacan, Bulacan, covered by Transfer Certificate of Title (TCT) No. 305626. The PASCUALs
failed to repurchase the property within the stipulated period, hence RAMOS sought
consolidation of title in his favor.
The PASCUALs admitted signing the Deed but claimed it was a mortgage, not a sale. They
argued that there was no agreement limiting the repurchase period and that they overpaid
RAMOS. They also raised procedural and substantive defenses.
The trial court identified the issues as whether the document was a sale or mortgage,
whether the PASCUALs overpaid, whether ownership should be consolidated in RAMOS's
favor, and whether damages should be awarded.
During the trial, RAMOS presented a document signed by both parties, denominated as
"Sinumpaang Salaysay," specifying the terms of the transaction.
The trial court found the transaction to be a loan secured by a mortgage. It determined that
the PASCUALs overpaid and awarded them damages.
RAMOS moved for reconsideration, arguing that the interest rate should be 7% per month.
The trial court modified its decision, reducing the interest rate to 5% per month.
The PASCUALs filed a motion to reconsider the modified decision, arguing, among other
things, that the interest rate was excessive.
The Court of Appeals affirmed the trial court's decision. The PASCUALs appealed to the
Supreme Court, challenging the interest rate.

**Issues:**
1. Whether the interest rate of 5% per month is excessive, iniquitous, unconscionable, and
exorbitant.
2. Whether RAMOS should be allowed to collect more than 1% per month interest due to
the alleged concealment of the real transaction.

**Decisions:**
1. The Supreme Court held that the interest rate of 5% per month, agreed upon by the
parties, was binding. Absent evidence of fraud or undue influence, parties are bound by
their contractual stipulations. The Court emphasized that it cannot impose different terms
on the parties.
2. The Court rejected the argument that RAMOS should be limited to 1% per month interest
due to alleged concealment. It found that the true agreement of the parties was reflected in
the Sinumpaang Salaysay, and the PASCUALs could not claim ignorance of the transaction.
3. RAMOS's claim for legal interest on the due interest was not granted because he did not
appeal the trial court's order. The Court affirmed the Court of Appeals' decision in its
entirety.
4. The Court warned RAMOS's counsel for plagiarism for reproducing a court ruling
without proper citation.
Reformina v. Tomol, 139 SCRA 260 (1985)

**Facts:**
- The case involves a petition for review on certiorari of a resolution issued by Judge
Valeriano P. Tomol, Jr. of the then Court of First Instance of Cebu-Branch XI, in Civil Case
No. R-11279, which is an action for Recovery of Damages for injury to Person and Loss of
Property.
- The resolution determined the legal interest to be applied to a judgment in favor of the
petitioners, the Reforminas, against the defendants, Shell and Michael, Incorporated.
- The original judgment rendered on June 7, 1972, ordered the defendants to pay various
sums of money to the plaintiffs, including the Reforminas, with legal interest from the filing
of the complaint until paid.
- On appeal, the judgment was modified, and the defendants were ordered to pay certain
amounts with legal interest from the filing of the complaint until paid.
- The case became final on October 24, 1980, and was remanded to the lower court for
execution, prompting the dispute over the applicable legal interest rate.
- The petitioners argued for a 12% legal interest rate per annum, citing Central Bank
Circular No. 416, while the respondents argued for a 6% legal interest rate per annum,
based on Article 2209 of the Civil Code.

**Issues:**
- The main issue is the determination of the appropriate legal interest rate to be applied to
the judgment in favor of the petitioners.
- Specifically, the question is whether the legal interest rate should be 12% per annum
(petitioners' position) as per Central Bank Circular No. 416 or 6% per annum
(respondents' position) as per Article 2209 of the Civil Code.

**Decisions:**
- The court dismissed the petition, affirming the lower court's resolution that the legal
interest rate should be 6% per annum.
- The court reasoned that Central Bank Circular No. 416, which authorized a 12% legal
interest rate, applies only to judgments involving loans or forbearances of money, goods, or
credits.
- Since the case at hand involves an action for damages and does not relate to loans or
forbearances, Article 2209 of the Civil Code governs, which sets the legal interest rate at
6% per annum.
- The court further held that Central Bank Circular No. 416's authority to change the legal
interest rate is constitutionally defective, as it represents an improper delegation of
legislative power.
- Thus, the court concluded that the appropriate legal interest rate for the judgment in this
case is 6% per annum, in accordance with Article 2209 of the Civil Code.
Lara’s Gifts & Decors v. Midtown Industrial Sales, G.R. No. 225433, 2019
The case involves a dispute between Lara's Gifts & Decors, Inc. (petitioner) and Midtown
Industrial Sales, Inc. (respondent) regarding the application of interest rates on
outstanding obligations arising from a credit agreement. Lara's Gifts & Decors, Inc. was
granted a 60-day credit term on its purchases from Midtown Industrial Sales, Inc., with a
condition that a 24% interest per annum would be charged on all overdue accounts.
Before filing the complaint, Midtown Industrial Sales, Inc. made an extrajudicial demand for
payment of the outstanding obligations. This demand triggered the commencement of
interest accrual according to the terms of their agreement.
The key fact here is the existence of a credit agreement between the two parties, where
Lara's Gifts & Decors, Inc. had a credit term but failed to fulfill its payment obligations
within the agreed timeframe. This failure led to Midtown Industrial Sales, Inc. demanding
payment, prompting the dispute over the application of interest rates on the overdue
accounts.

Overall, the facts revolve around the contractual relationship between the parties, the
credit agreement terms, the demand for payment, and the subsequent dispute over interest
rates, forming the basis of the legal issues addressed in the case.

Issues:
Whether the stipulated interest rate of 24% per annum should apply from the date of
extrajudicial demand until full payment.
How legal interest should be calculated on the stipulated interest due on the principal
amount.
Whether attorney's fees should be awarded to Midtown Industrial Sales, Inc., and if so, at
what rate of interest and from what date it should be calculated.
The proper interpretation and application of relevant laws and jurisprudence governing
interest rates in obligations arising from contracts.

Decisions:
The stipulated interest rate of 24% per annum applies from the date of extrajudicial
demand until full payment, as agreed upon by the parties.
Legal interest on the stipulated interest due on the principal amount accrues as of the
judicial demand, with a rate of 12% per annum from the date of judicial demand until 30
June 2013, and 6% per annum thereafter until full payment.
Attorney's fees of ₱50,000.00 are awarded to Midtown Industrial Sales, Inc., with legal
interest at a rate of 6% per annum from the finality of the decision until full payment.
The decision of the Court of Appeals affirming the Regional Trial Court's decision is
affirmed with modifications as stated above.
Eastern Shipping v. CA, 234 SCRA 78 (1994)
**Facts:**
- On December 4, 1981, two fiber drums of riboflavin were shipped from Yokohama, Japan,
for delivery via the vessel "SS EASTERN COMET" owned by defendant Eastern Shipping
Lines.
- The shipment was insured under plaintiff's Marine Insurance Policy No. 81/01177 for
P36,382,466.38.
- Upon arrival in Manila on December 12, 1981, the shipment was discharged to the
custody of defendant Metro Port Service, Inc., which excepted to one drum in bad order.
- Defendant Allied Brokerage Corporation received the shipment from Metro Port Service,
Inc., and made deliveries to the consignee's warehouse, where one drum was found with
spillages and adulterated contents.
- The consignee suffered losses totaling P19,032.95, allegedly due to the fault and
negligence of the defendants.

**Issues:**
1. Whether the shipment sustained losses/damages.
2. Whether the losses/damages were sustained while in the custody of the defendants.
3. Whether the defendants should be held liable for the losses/damages.

**Decisions:**
1. The court found that the shipment indeed sustained losses/damages, as evidenced by the
Bill of Lading and Commercial Invoice.
2. It was determined that the losses/damages occurred while the shipment was under the
successive custody of the defendants.
3. The defendants were held jointly and severally liable to pay the plaintiff, including legal
interest of 12% per annum from the date of filing of the complaint until fully paid.

**Discussion:**
The case involved a claim for damages sustained during the shipment of goods, with the
plaintiff, as insurer-subrogee, seeking recovery from the common carrier (Eastern Shipping
Lines), arrastre operator (Metro Port Service, Inc.), and customs broker (Allied Brokerage
Corporation). The court found that the shipment indeed suffered losses while under the
custody of the defendants and held them jointly and severally liable for the damages.

One of the key issues addressed by the court was the computation of legal interest on the
awarded damages. The court ruled that the legal interest should be imposed at a rate of
12% per annum from the date of filing of the complaint until fully paid. This decision was
based on previous rulings and legal principles governing the imposition of interest on
damages, particularly distinguishing between obligations involving loans or forbearance
and those involving indemnity for damages.

Overall, the court affirmed the judgment of the lower court and held the defendants liable
for the damages sustained during the shipment, with legal interest computed as specified.
Eastern Assurance v. CA, 322 SCRA 73 (2000)
**Facts:**

1. Private respondent Vicente Tan insured his building in Dumaguete City for P250,000.00
against fire with petitioner Eastern Assurance and Surety Corporation (EASCO) on April 9,
1981.
2. The insured building was destroyed by fire on June 26, 1981.
3. As EASCO refused to indemnify Tan's claim, Tan filed a complaint for breach of contract
with damages against EASCO.
4. The Regional Trial Court (RTC) ruled in favor of Tan, ordering EASCO to pay Tan the
insurance claim of P250,000.00 plus legal interest, attorney’s fees, and other damages.
5. EASCO appealed to the Court of Appeals, which affirmed the RTC's decision with
modifications, disallowing the award of moral and exemplary damages, attorney’s fees, and
litigation expenses.
6. The decision of the Court of Appeals became final and executory on August 25, 1993.
7. EASCO tendered payment of the money judgment but Tan refused to accept, insisting on
a higher applicable legal rate of interest.
8. The parties agreed to compute interest from June 26, 1981, to September 30, 1994.
9. EASCO filed a motion in court to fix the legal rate of interest, attaching a manager’s check
for partial satisfaction of the judgment.
10. The trial court fixed the legal rate of interest at 12% per annum from June 26, 1981, to
September 30, 1994.
11. EASCO appealed the trial court's decision to the Court of Appeals, arguing that the legal
interest should be 6% per annum.
12. The Court of Appeals affirmed the trial court's decision, applying the rules stated in
Eastern Shipping Lines, Inc. v. Court of Appeals.

**Issues:**
1. Whether the legal rate of interest should be 6% or 12% per annum.
2. Whether the decision of the Court of Appeals in Eastern Shipping Lines, Inc. can be
applied retroactively.
3. Whether there was a valid agreement between the parties regarding the "cut-off date"
for the payment of legal interest.

**Decisions:**
1. The Court affirmed the decision of the Court of Appeals, ruling that the legal rate of
interest should be 12% per annum from August 25, 1993, to September 30, 1994.
2. The Court held that the rules stated in Eastern Shipping Lines, Inc. were not new rules
but a summary of existing rules, and thus, there was no retroactive application.
3. The Court found that there was an agreement between the parties regarding the "cut-off
date" for the payment of legal interest, and thus, the payment of 12% legal interest per
annum should commence from August 25, 1993, to September 30, 1994.

Overall, the petition was denied, and the decision of the Court of Appeals was affirmed with
the modification of the legal interest rate.
Nacar v. Gallery Frames, 703 SCRA 439 (2013)
**Facts:**

- Petitioner Dario Nacar filed a complaint for constructive dismissal against respondents
Gallery Frames (GF) and/or Felipe Bordey, Jr.
- On October 15, 1998, the Labor Arbiter ruled in favor of petitioner, awarding him
backwages and separation pay in lieu of reinstatement.
- Respondents appealed to the NLRC, but it was dismissed for lack of merit. They further
appealed to the CA and then to the Supreme Court, but both appeals were denied.
- An Entry of Judgment was issued certifying that the resolution became final and executory
on May 27, 2002.
- After several attempts at execution, including a motion for correct computation by
petitioner, an amount was awarded and partially paid to petitioner.
- Petitioner sought further recomputation of the monetary award to include appropriate
interests.

**Issues:**

1. Whether a recomputation of the monetary award is permissible after a decision has

become final and executory.
2. Whether legal interest should be applied to the monetary award, and if so, at what rate
and from what date.

**Decisions:**

1. The Court reversed and set aside the decision of the Court of Appeals. It ruled that a
recomputation of the monetary award is permissible even after a decision has become final
and executory, especially when the original decision provided for a computation of the
payable amounts without specifying a final date.
2. Legal interest should be applied to the monetary award. The Court held that, in the
absence of an express stipulation, the rate of interest for loans or forbearance of any
money, goods, or credits shall be six percent (6%) per annum, effective July 1, 2013.
However, for judgments that became final and executory prior to July 1, 2013, the previous
rate of twelve percent (12%) per annum shall apply until June 30, 2013. From July 1, 2013,
onwards, the rate shall be six percent (6%) per annum. Interest shall be computed from the
finality of the decision until its full satisfaction.

The Labor Arbiter is ordered to make another recomputation of the total monetary benefits
awarded to petitioner in accordance with the decision.
PNB v. CA, 263 SCRA 766 (1996)
**Facts:**
- The Province of Isabela issued several checks to purchase medicines from Lyndon
Pharmaceuticals Laboratories, operated by private respondent Ibarrola.
- The checks were delivered to the seller's agents, who appropriated 23 of them totaling
P98,691.90 after negotiating them with PNB.
- Ibarrola filed a civil case against the Province of Isabela, its Treasurer, the two agents, and
PNB for the failure to receive the full payment for the medicines.
- The trial court ordered the defendants, except the deceased Treasurer, to jointly and
solidarily pay Ibarrola, including the amount of P98,691.90 with interest.

**Issues:**
1. Whether in an action for damages, the legal rate of interest is 6% as provided by Article
2209 of the New Civil Code or 12% as provided by CB Circular 416 series of 1974.
2. Whether such rate shall be computed from the filing of the complaint until fully paid.

**Decisions:**
- The Supreme Court reversed the decision and clarified the rate of interest.
- The proper rate of interest is 6% per annum from the filing of the complaint until its full
payment before the finality of judgment.
- After the judgment becomes final and executory, if the amount adjudged remains unpaid,
the interest rate shall be 12% per annum computed from the time the judgment became
final and executory until fully satisfied.

**Key Points:**
- The case did not involve a loan or forbearance of money but arose from a contract of sale.
- The applicable rate of interest is 6% per annum as provided in Article 2209 of the New
Civil Code, not the 12% per annum as provided in CB Circular 416, which applies to loans
or forbearance of money.
- The interest is to be computed from the time of the filing of the complaint until its full
payment before the finality of judgment, and thereafter, if the amount remains unpaid, at
the rate of 12% per annum from the time the judgment became final and executory until
fully satisfied.
Plantilla v. Baliwag, 358 SCRA 396 (2001)
**Facts:**
- Retired Colonel Paterno R. Plantilla filed an Administrative Complaint against Rodrigo G.
Baliwag, a Sheriff IV at the Regional Trial Court of San Pablo City, Branch 30.
- The complaint stems from alleged serious irregularities in the implementation of a Writ of
Execution dated January 16, 1998.
- The Writ of Execution commanded Baliwag to enforce and execute the dispositive portion
of a court decision, which involved declaring a tenancy relationship over a parcel of land
and ordering certain payments.
- Baliwag allegedly failed to serve the Writ of Execution to the defendants, Mariano L. Orga
and Eva R. Plantilla, at their known address, instead serving it on Colonel Plantilla.
- Baliwag computed interest and imposed fees not specified in the court decision, leading to
discrepancies and alleged overcharging.
- The complainant also alleged that Baliwag did not give the defendants or their
administrator (Colonel Plantilla) the opportunity to choose which property to levy upon to
satisfy the judgment.
- Baliwag set a public auction of the subject land without proper notice to the defendants.
- The Office of the Court Administrator (OCA) recommended a fine of P5,000 for Baliwag's
actions.

**Issues:**
1. Did Baliwag commit serious irregularities in implementing the Writ of Execution?
2. Did Baliwag improperly compute interest and impose fees not specified in the court
decision?
3. Did Baliwag fail to provide the defendants with the opportunity to choose which
property to levy upon?
4. Did Baliwag provide proper notice of the public auction of the subject land?

**Decisions:**
- Baliwag was found guilty of malfeasance and fined P5,000 for assuming the task of
determining the amount due under the Writ of Execution, a duty that pertained to the
judge. He acted arbitrarily and without authority, prejudicing the complainant.
- The other charges against Baliwag were found to be devoid of merit by the OCA and were
not sustained.
- Baliwag's actions were deemed to be in accordance with the Rules of Court regarding the
execution of judgment, except for the improper computation of interest.
- Baliwag was instructed that the computation of the amount due under the Writ properly
pertained to the judge, and he should have pointed out any deficiencies in the Writ to the
court rather than assuming that task himself.
RCBC v. Alfa, 368 SCRA 611 (2001)
**Facts:**

1. Rizal Banking Corporation (RCBC) filed a civil case against Alfa RTW Manufacturing
Corporation and others for a sum of money.
2. North Atlantic Garments Corporation and BA Finance Corporation intervened in the case,
claiming superior rights over the property involved.
3. The trial court rendered a judgment in favor of RCBC, ordering the defendants to pay a
specific amount.
4. On appeal, the Court of Appeals affirmed the decision with modification, reducing the
amount awarded to RCBC.
5. RCBC appealed to the Supreme Court, arguing that the Court of Appeals erred in
decreasing the award.

**Issues:**

1. Whether the Court of Appeals can deviate from the provisions of the contract between
the parties, which contract is the law between them.
2. Whether the computation of the amount awarded to RCBC by the Court of Appeals was
correct.

**Decisions:**

1. The Supreme Court held that the Court of Appeals erred in deviating from the provisions
of the contract between the parties. Contracts have the force of law between the parties,
and the court cannot vary the terms and conditions stipulated unless contrary to law,
morals, good customs, public order, or public policy.
2. The Supreme Court set aside the award made by the Court of Appeals and ordered the
trial court to compute the amount owed to RCBC based on the stipulated formula, which
includes interest, service charges, penalty, and attorney’s fees, in accordance with the rules
laid down by the Supreme Court in a previous case.

In summary, the Supreme Court ruled in favor of RCBC, emphasizing the importance of
adhering to the terms of the contract between the parties and ordered the trial court to
recalculate the amount owed to RCBC based on the specified formula.
Rodzssen Supply v. Far East, 357 SCRA 618 (2001)
**Facts:**

The case revolves around a dispute arising from a transaction involving a letter of credit
issued by Far East Bank and Trust Company Inc. (respondent) in favor of Ekman and
Company Inc. (Ekman) for the purchase of five units of hydraulic loaders by Rodzssen
Supply Inc. (petitioner). The letter of credit, initially set to expire on February 15, 1979,
was extended until October 16, 1979. Rodzssen received three hydraulic loaders and made
the necessary payment, but a disagreement arose regarding the last two loaders, which
were delivered after the expiration of the letter of credit.

Despite the expiration of the letter of credit, respondent bank paid Ekman P76,000 for the
two hydraulic loaders on March 14, 1980. Rodzssen was informed of the cancellation of the
letter of credit on December 27, 1979, and a portion of the amount was credited back to its
account.

**Issues:**

1. Whether respondent bank was negligent in paying for the two hydraulic loaders after the
expiration and cancellation of the letter of credit.
2. Whether Rodzssen was liable to respondent bank for the amount expended for the
belatedly delivered equipment.
3. Whether the interest rate and attorney's fees awarded by the lower courts were proper.

**Decisions:**

1. The Court affirmed the Court of Appeals' ruling that respondent bank was negligent in
paying Ekman for the hydraulic loaders after the expiration of the letter of credit. The letter
of credit had become invalid upon its expiration, and respondent bank was not obligated to
make the payment.
2. However, the Court agreed with the lower courts that Rodzssen should reimburse
respondent bank for the amount expended for the belatedly delivered equipment. This was
based on equitable principles, as Rodzssen voluntarily received and kept the loaders since
October 1979, despite the expired letter of credit.
3. The Court modified the interest rate to 6 percent per annum, computed from April 7,
1983, the time when respondent bank demanded payment from Rodzssen. After the
judgment becomes final, the interest rate shall be 12 percent per annum until its
satisfaction. The award of attorney's fees in favor of respondent bank was deleted, and each
party was ordered to bear their respective costs of the suit.

Overall, the petition was denied, and the decision of the Court of Appeals was affirmed with
the stated modifications.
Mendoza v. CA, 359 SCRA 438 (2001)
**Facts:**
1. Petitioner, Mr. Danilo Mendoza, proposed to restructure his accounts with the Philippine
National Bank (PNB) into a five-year plan.
2. Correspondence between Mendoza and PNB officials discussed the restructuring
proposal.
3. Mendoza claimed that PNB had approved his five-year restructuring plan based on their
interactions and his compliance with their conditions.
4. However, PNB did not explicitly approve the proposed plan.
5. Legal proceedings ensued with Mendoza invoking the doctrine of promissory estoppel.
6. PNB argued that there was no clear promise to approve the restructuring plan.
7. The trial court ruled in favor of Mendoza, but the decision was appealed.

**Issues:**
1. Whether PNB had implicitly approved Mendoza's proposed five-year restructuring plan.
2. The validity of the increase in interest rates on the promissory notes.
3. Ownership and retention of movables by PNB.
4. Alleged unconscionable bid prices for foreclosed properties.

**Decisions:**
1. The Court held that there was no clear promise from PNB to approve the restructuring
plan, thus rejecting Mendoza's claim based on promissory estoppel.
2. The increase in interest rates on the promissory notes was declared null and void
because Mendoza did not consent to them.
3. PNB was entitled to retain the movables based on the terms of the promissory notes and
the Civil Code's provisions regarding mortgages.
4. The Court found the bid prices for foreclosed properties to be reasonable, considering
Mendoza's overdue loan obligations and the market conditions at the time.

**Conclusion:**
The Court denied Mendoza's petition and affirmed the decision of the Court of Appeals,
with modifications regarding the nullification of the interest rate increases.
Goldwell Properties Tagaytay v. Metropolitan Bank and Trust Company, G.R. No.
209837 (2021)
**Facts:**
1. **Loan Agreements and Defaults:**
- Nova Northstar Realty Corporation and Goldwell Properties Tagaytay, Inc. entered into loan
agreements with Metropolitan Bank and Trust Company (Metrobank). These agreements
specified terms regarding interest rates, repayment schedules, and collateral.
2. **Default and Dispute:**
- The petitioners defaulted on their loan payments, leading to a legal dispute with Metrobank.
The crux of the disagreement centered on the fairness of the contractual terms, particularly
regarding interest rates and collateral valuation.
3. **Contractual Terms:**
- The loan agreements contained provisions stipulating interest rates and repayment
obligations. There were disagreements over the interpretation and fairness of these terms, with
the petitioners alleging that Metrobank's terms were burdensome and unjust.
4. **Interest Rate Disputes:**
- The petitioners contested the interest rates imposed by Metrobank, arguing that they were
excessive and unreasonable. They sought adjustments to ensure fairness in accordance with legal
standards.
5. **Property Valuation Controversy:**
- Another point of contention was the valuation of the mortgaged properties by Metrobank. The
petitioners disputed the accuracy and fairness of Metrobank's valuation, claiming it
disadvantaged them unfairly.
6. **Legal Proceedings:**
- Legal proceedings ensued, with both parties presenting their arguments and evidence before
the court. The petitioners raised issues related to the validity of the contractual terms, the fairness
of interest rates, and the accuracy of property valuation.

**Issues:**
1. **Validity of Contractual Terms:**
- The main issue was whether the contractual terms, including interest rates and repayment
obligations, were valid and enforceable under the law.
2. **Fairness of Interest Rates:**
- Another key issue was the fairness of the interest rates imposed by Metrobank. The court had
to determine whether these rates were reasonable and conscionable or if they imposed an undue
burden on the petitioners.
3. **Dispute Over Property Valuation:**
- The dispute over property valuation raised questions about the accuracy and fairness of
Metrobank's valuation methods. The court needed to assess the evidence and make a
determination based on fairness and accuracy.
4. **Claims for Damages and Attorney's Fees:**
- Both parties made claims for damages and attorney's fees based on alleged breaches of
contract or unfair practices. The court had to decide whether either party was entitled to these
claims and if so, in what amount.
**Decisions:**
1. **Validity and Enforceability of Contractual Terms:**
- The court affirmed the validity and enforceability of the contractual terms, subject to
modifications to ensure fairness.
2. **Adjustment of Interest Rates:**
- The court modified the interest rates imposed by Metrobank to strike a balance between
upholding contractual obligations and fairness to the petitioners.
3. **Resolution of Property Valuation Dispute:**
- The court addressed the dispute over property valuation by examining the evidence and
rendering a decision based on fairness and accuracy.
4. **Denial of Claims for Damages and Attorney's Fees:**
- The court denied both parties' claims for damages and attorney's fees due to insufficient
evidence and failure to raise the issues during trial or appellate proceedings.