PNB vs Court of Appeals, GR. No. 8880, April 30, 1991
Subject: Obligations and Contracts
Facts
In July 1982, Ambrosio Padilla applied for, and was
granted by Philippine National Bank (PNB), a credit line of 321.8 million,
secured by a real estate mortgage, for a term of 2 years, with 18% interest per
annum. Private respondent executed in favour of the PNB a credit Agreement, 2
promissory notes in the amount of P900,000.00 each, and a Real Estate Mortgage
Contract. The PNB over the objection of debtor, and without authority from the
Monetary Board, within a period of only four months, increased the 18% interest
rate on the borrower's loan obligation three times (a) to 32% in July, 1984;
(b) to 41% in October; and (c) to 48% in November, 1984.
Issue
Whether or not PNB may unilaterally change or increase
the interest rate per annum.
Ruling
No.
Under the law (Art 1308,
NCC), the contract must bind both contracting parties; its validity or
compliance cannot be left to the will of one of them.
In this case, the increases were null and void. The
Monetary Board was not authorised to make changes more often than once a year.
While the debtor did agree in the Deed of Real Estate Mortgage that the
interest rate may be increased during the life of the contract “to such
increase within the rate allowed by law,” no law was ever passed in July to
November 1984 increasing the interest rates on loans or renewals thereof to
32%, 41% and 48% (per annum), and no documents were executed and delivered by
the debtor to effectuate the increase.” PNB also violated the mutuality of
contracts ordained in Article 1308 0f the Civil Code which provides “the
contract must bind both contracting parties; its validity or compliance cannot
be left to the will of one of them.” Hence, a contract containing a condition
which makes its fulfilment dependent exclusively upon the uncontrolled will of
one of the contracting parties is VOID.
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