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PHILIPPINE NATIONAL BANK, Petitioner, v. THE HON. COURT OF APPEALS and AMBROSIO
PADILLA, Respondents.
G.R. No. 88880, FIRST DIVISION, April 30, 1991, Grino-Aquino, J.
Removal of Usury Law Ceiling on interest rates does not authorize banks to unilaterally and
successively increase interest rates.
FACTS:
Ambrosio Padilla, private respondents, was granted by petitioner Philippine National Bank, a credit
line, secured by a real estate mortgage, for a term of 2 years, with 18% interest per annum. Private
respondent executed in favor of the PNB a Credit Agreement, 2 promissory notes in the amount of
P900,000.00 each, and a Real Estate Mortgage Contract. Stipulations in the PN authorizes PNB to
increase the stipulated 18% interest per annum "within the limits allowed by law at any time
depending on whatever policy it [PNB] may adopt in the future; Provided, that, the interest rate on
this note shall be correspondingly decreased in the event that the applicable maximum interest rate
is reduced by law or by the Monetary Board." Padilla requested to the increase in the rate of
interest from 18% be fixed at 21% or 24% but was denied by PNB.
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ISSUE:
Whether PNB, within the term of the loan which it granted to the private respondent, may
unilaterally change or increase the interest rate stipulated therein at will and as often as it pleased.
RULING:
No. Central Bank Circular No. 905, Series of 1982 removed the Usury law ceiling on interest rates,
however, it did not authorize the PNB, or any bank for that matter, to unilaterally and successively
increase the agreed interest rates from 18% to 48% within a span of four (4) months, in violation of
P.D. 116 which limits such changes to "once every twelve months”.

SPOUSES MARIANO and GILDA FLORENDO, petitioners, vs. COURT OF APPEALS and LAND
BANK OF THE PHILIPPINES, respondents.
G.R. No. 101771, THIRD DIVISION, December 17, 1996, Panganiban, J.
Without such CB issuance, any proposed increased rate will never become effective.
FACTS:
Gilda Florendo was an employee of Land Bank from May 17, 1976 until August 16, 1984 when she
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voluntarily resigned. However, before her resignation, she applied for a housing loan payable
within 25 years from Land Bank’s Provident Fund on July 20, 1983; On March 19, 1985, Lankd Bank
increased the interest rate on Florendo’s loan from 9% per annum to 17%, the said increase to take
effect on March 19, 1985 The details of the increase are embodied in Landbank's ManCom
Resolution No. 85-08 and in a Provident Fund Memorandum Circular. Land Bank kept on
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demanding that Florendo pay the increased interest or the new monthly installments based on the
increased interest rate, but Florendo just as vehemently maintained that the said increase is
unlawful and unjustifiable.
ISSUE:
Whether or not Land Bank has a valid and legal basis to impose an increased interest rate on the
petitioners' housing loan?
RULING:
No. The court held that the retroactive enforcement of the ManCom Resolution as against
petitioner-employee is invalid since in the case at bar, there is in fact no Central Bank rule,
regulation or other issuance which would have triggered an application of the escalation clause as
to petitioner’s factual situation. The loan was perfected on July 20, 1983. PD No. 116 became
effective on January 29, 1973. CB Circular No. 416 was issued on July 29, 1974. CB Circ. 504 was
issued February 6, 1976. CB Circ. 706 was issued December 1, 1979. CB Circ. 905, lifting any
interest rate ceiling prescribed under or pursuant to the Usury Law, as amended, was promulgated
in 1982. These and other relevant CB issuances had already come into existence prior to the
perfection of the housing loan agreement and mortgage contract, and thus it may be said that these
regulations had been taken into consideration by the contracting parties when they first entered
into their loan contract. ManCom Resolution No. 85-08, which is neither a rule nor a resolution of
the Monetary Board, cannot be used as basis for the escalation in lieu of CB issuances, since
paragraph (f) of the mortgage contract very categorically specifies that any interest rate increase be
in accordance with “prevailing rules, regulations and circulars of the Central Bank . . . as the
Provident Fund Board . . . may prescribe.”

TEOFISTO GUINGONA, JR., ANTONIO I. MARTIN, and TERESITA SANTOS, petitioners, vs.
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THE CITY FISCAL OF MANILA, HON. JOSE B. FLAMINIANO, ASST. CITY FISCAL FELIZARDO N.
LOTA and CLEMENT DAVID, respondents.
G.R. No. L-60033, SECOND DIVISION, April 4, 1984, MAKASIAR, Actg. C.J.
[W]hile it is true that novation does not extinguish criminal liability, it may however, prevent the rise
of criminal liability as long as it occurs prior to the filing of the criminal information in court. xxx
In the case at bar, there is no dispute that petitioners Guingona and Martin executed a promissory
note on June 17, 1981 assuming the obligation of the bank to private respondent David; while the
criminal complaint for estafa was filed on December 23, 1981 with the Office of the City Fiscal. Hence,
it is clear that novation occurred long before the filing of the criminal complaint with the Office of the
City Fiscal.
Consequently, as aforestated, any incipient criminal liability would be avoided but there will still be a
civil liability on the part of petitioners Guingona and Martin to pay the assumed obligation.
FACTS:
The instant petition seeks to prohibit public respondents from proceeding with the preliminary
investigation of I.S. No. 81-31938, in which petitioners were charged by private respondent
Clement David, with estafa and violation of Central Bank Circular No. 364 and related regulations
regarding foreign exchange transactions principally, on the ground of lack of jurisdiction in that the
allegations of the charged, as well as the testimony of private respondent's principal witness and
the evidence through said witness, showed that petitioners' obligation is civil in nature.
ISSUE:
Whether public respondents acted without jurisdiction when they investigated the charges of estafa
and violation of CB Circular No. 364 and related regulations regarding foreign exchange
transactions. (YES)
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RULING:
[W]hile it is true that novation does not extinguish criminal liability, it may however, prevent the
rise of criminal liability as long as it occurs prior to the filing of the criminal information in
court. xxx
In the case at bar, there is no dispute that petitioners Guingona and Martin executed a promissory
note on June 17, 1981 assuming the obligation of the bank to private respondent David; while the
criminal complaint for estafa was filed on December 23, 1981 with the Office of the City Fiscal.
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Hence, it is clear that novation occurred long before the filing of the criminal complaint with the
Office of the City Fiscal.
Consequently, as aforestated, any incipient criminal liability would be avoided but there will still be
a civil liability on the part of petitioners Guingona and Martin to pay the assumed obligation.
Petitioners herein were likewise charged with violation of Section 3 of Central Bank Circular No.
364 and other related regulations regarding foreign exchange transactions by accepting foreign
currency deposit in the amount of US$75,000.00 without authority from the Central Bank. They
contend however, that the US dollars intended by respondent David for deposit were all converted
into Philippine currency before acceptance and deposit into Nation Savings and Loan Association.
In conclusion, considering that the liability of the petitioners is purely civil in nature and that there
is no clear showing that they engaged in foreign exchange transactions, We hold that the public
respondents acted without jurisdiction when they investigated the charges against the petitioners.
Consequently, public respondents should be restrained from further proceeding with the criminal
case for to allow the case to continue, even if the petitioners could have appealed to the Ministry of
Justice, would work great injustice to petitioners and would render meaningless the proper
administration of justice.
While as a rule, the prosecution in a criminal offense cannot be the subject of prohibition and
injunction, this court has recognized the resort to the extraordinary writs of prohibition and
injunction in extreme cases.