Scribd Logo
Upload

Welcome to Scribd!

  • Floreindo v. Metrobank

    Uploaded by

    Sarah Jane Usop
    38 views1 page
    Floreindo claimed the increasing interest rates imposed by Metrobank were illegal and unconscionable, and the contract terms reduced him to accepting "take it or leave it". The court agreed the promissory note gave Metrobank unrestrained freedom to set rates, not just those agreed upon.

    Original Description:

    Original Title

    FLOREINDO V. METROBANK

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    Floreindo claimed the increasing interest rates imposed by Metrobank were illegal and unconscionable, and the contract terms reduced him to accepting "take it or leave it". The court agreed the promissory note gave Metrobank unrestrained freedom to set rates, not just those agreed upon.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    38 views1 page

    Floreindo v. Metrobank

    Uploaded by

    Sarah Jane Usop
    Floreindo claimed the increasing interest rates imposed by Metrobank were illegal and unconscionable, and the contract terms reduced him to accepting "take it or leave it". The court agreed the promissory note gave Metrobank unrestrained freedom to set rates, not just those agreed upon.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    of 1

    FLOREINDO V.

    METROBANK 532 SCRA 43 (2007)


    1308 – Mutuality of Contracts

    FACTS: On March 20, 1996 Floirendo, Jr. obtained a loan from Metrobank to infuse additional working capital for his company. As
    security he executed a REM over his four parcels of land in CDO. The loan was renewed for another year secured by the same REM. It
    fixed the interest at 15.4% per annum for the first 30 days and subject to upward/downward adjustment every 30 days thereafter based on
    any unpaid principal.

    On 1997, Metrobank started imposing higher interest rates on loan as high as 30.244% on October 1997. As a result petitioner could no
    longer pay the high interest rate charged by Metrobank.

    Metrobank agreed to the proposal of Floreindo to renew his loan provided that he would pay the arrears in interest amounting to the total
    sum of P163,138.33. Despite payment by petitioner, respondent bank, instead of renewing the loan, foreclosed the mortgaged property.
    On August 17, 1998, the auction sale was set.

    Prior on auction sale, Floirendo complaint for reformation of real estate mortgage contract and PN referring to them as Contracts of
    Adhesion alleging that Metrobank’s increased interest rates unilaterally imposed by respondent bank are scandalous, immoral, illegal
    and unconscionable. He also alleged that the terms and conditions of the real estate mortgage and the promissory note are such that they
    could be interpreted by respondent bank in whatever manner it wants, leaving petitioner at its mercy

    ISSUE: WON the mortgage contract and the promissory note express the true agreement between the parties therein.

    RULING: The provision in the promissory note authorizing respondent bank to increase, decrease or otherwise change from time to
    time the rate of interest and/or bank charges “without advance notice” to petitioner, “in the event of change in the interest rate prescribed
    by law or the Monetary Board of the Central Bank of the Philippines,” does not give respondent bank unrestrained freedom to charge
    any rate other than that which was agreed upon.

    Here, the monthly upward/downward adjustment of interest rate is left to the will of respondent bank alone. It violates the essence of
    mutuality of the contract.

    The promissory note gives respondent bank authority to increase the interest rate at will during the term of the loan. This stipulation
    violates the principle of mutuality between the parties. It would be converting the loan agreement into a contract of adhesion where the
    parties do not bargain on equal footing, the weaker party’s (petitioner’s) participation being reduced to the alternative “to take it or leave
    it.”

    There has been meeting of minds of the parties upon these documents. However, these documents do not express the parties’ true
    agreement on interest rates. And the failure of these documents to express their agreement on interest rates was due to respondent bank’s
    inequitable conduct.

    You might also like