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    BancoFil v. Ybanez-1

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    Kylie Gavinne
    The respondents obtained multiple loans from the petitioner bank totaling 1,225,000 pesos at 21% annual interest to construct a commercial building. While the respondents made payments for several years, they stopped paying in 1989. The petitioner argued the 21% interest was agreed upon voluntarily while the respondents claimed it was usurious under the Usury Law in effect when the first loan was incurred in 1982. The court held the 21% interest was legal as the Monetary Board had set the maximum rate at 21% per annum for loans over 730 days, such as the 15-year loan in question, prior to the repeal of the Usury Law on January 1, 1983.

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    BancoFil v. Ybanez-1

    Uploaded by

    Kylie Gavinne
    9 views1 page
    The respondents obtained multiple loans from the petitioner bank totaling 1,225,000 pesos at 21% annual interest to construct a commercial building. While the respondents made payments for several years, they stopped paying in 1989. The petitioner argued the 21% interest was agreed upon voluntarily while the respondents claimed it was usurious under the Usury Law in effect when the first loan was incurred in 1982. The court held the 21% interest was legal as the Monetary Board had set the maximum rate at 21% per annum for loans over 730 days, such as the 15-year loan in question, prior to the repeal of the Usury Law on January 1, 1983.

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    The respondents obtained multiple loans from the petitioner bank totaling 1,225,000 pesos at 21% annual interest to construct a commercial building. While the respondents made payments for several years, they stopped paying in 1989. The petitioner argued the 21% interest was agreed upon voluntarily while the respondents claimed it was usurious under the Usury Law in effect when the first loan was incurred in 1982. The court held the 21% interest was legal as the Monetary Board had set the maximum rate at 21% per annum for loans over 730 days, such as the 15-year loan in question, prior to the repeal of the Usury Law on January 1, 1983.

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    © All Rights Reserved
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    9 views1 page

    BancoFil v. Ybanez-1

    Uploaded by

    Kylie Gavinne
    The respondents obtained multiple loans from the petitioner bank totaling 1,225,000 pesos at 21% annual interest to construct a commercial building. While the respondents made payments for several years, they stopped paying in 1989. The petitioner argued the 21% interest was agreed upon voluntarily while the respondents claimed it was usurious under the Usury Law in effect when the first loan was incurred in 1982. The court held the 21% interest was legal as the Monetary Board had set the maximum rate at 21% per annum for loans over 730 days, such as the 15-year loan in question, prior to the repeal of the Usury Law on January 1, 1983.

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    © All Rights Reserved
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    of 1

    Legal Rate of Interest

    BANCO FILIPINO SAVINGS AND MORTGAGE BANK, vs. YBAÑEZ

    FACTS:

    Respondents obtained a loan to be used for the construction of a commercial building in Cebu
    City, and secured it by a Deed of Real Estate Mortgage over (TCT) No. 69836 from petitioner
    bank. The respondents later on obtained two more additional loans from the petitioner thus
    increasing their obligation P1,225,000 payable in fifteen years, with a stipulated interest of 21%
    per annum. The payments were due every 24 of each month.

    Respondents’ total payment from 1983 to 1988 amounted to P1,455,385.07. From 1989 onwards,
    respondents did not pay a single centavo. Petitioner contends that the 21% annual interest was
    freely and voluntarily agreed upon by the parties, and that it was neither excessive nor violative
    of the Usury Law.

    On the other hand, respondents state that the rate of 21% was usurious because the loan was
    incurred on December 24, 1982, before the de facto repeal of the Usury Law on January 1, 1983. 

    ISSUE:

    Is the rate of interest set at 21% per annum legal?

    HELD:

    Yes. We note that at the time the parties entered into the said loan agreement, the pertinent law,
    Act No. 2655, already provided that the rate of interest for the forbearance of money when
    secured by a mortgage upon real estate should not be more than 12% per annum or the maximum
    rate prescribed by the Monetary Board and in force at the time the loan was granted. On
    December 1, 1979, the Monetary Board of the Central Bank of the Philippines had issued CBP
    Circular No. 705-79. On loan transactions with maturities of more than 730 days, it fixed the
    effective rate of interest at 21% per annum for both secured and unsecured loans. Since the loan
    in question has fixed 15 years for its maturity, it fell within the coverage of said CBP Circular.

    Thus, we agree that the 21% interest is not violative of the Usury Law as it stood at the time of
    the loan transaction.

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