This case has been cited 5 times or more.
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2014-07-02 |
DEL CASTILLO, J. |
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| It appears that respondent's practice, more than once proscribed by the Court, has been carried over once more to the petitioners. In a number of decided cases, the Court struck down provisions in credit documents issued by PNB to, or required of, its borrowers which allow the bank to increase or decrease interest rates "within the limits allowed by law at any time depending on whatever policy it may adopt in the future." Thus, in Philippine National Bank v. Court of Appeals,[64] such stipulation and similar ones were declared in violation of Article 1308[65] of the Civil Code. In a second case, Philippine National Bank v. Court of Appeals,[66] the very same stipulations found in the credit agreement and the promissory notes prepared and issued by the respondent were again invalidated. The Court therein said:The Credit Agreement provided inter alia, that | |||||
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2014-02-24 |
BERSAMIN, J. |
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| PNB could not also justify the increases it had effected on the interest rates by citing the fact that the Spouses Manalo had paid the interests without protest, and had renewed the loan several times. We rule that the CA, citing Philippine National Bank v. Court of Appeals,[36] rightly concluded that "a borrower is not estopped from assailing the unilateral increase in the interest made by the lender since no one who receives a proposal to change a contract, to which he is a party, is obliged to answer the same and said party's silence cannot be construed as an acceptance thereof."[37] | |||||
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2013-01-15 |
REYES, J. |
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| In PNB v. Court of Appeals,[44] an escalation clause in a loan agreement authorized the PNB to unilaterally increase the rate of interest to 25% per annum, plus a penalty of 6% per annum on past dues, then to 30% on October 15, 1984, and to 42% on October 25, 1984. The Supreme Court invalidated the rate increases made by the PNB and upheld the 12% interest imposed by the CA, in this wise: P.D. No. 1684 and C.B. Circular No. 905 no more than allow contracting parties to stipulate freely regarding any subsequent adjustment in the interest rate that shall accrue on a loan or forbearance of money, goods or credits. In fine, they can agree to adjust, upward or downward, the interest previously stipulated. x x x.[45] | |||||
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2009-09-18 |
BRION, J. |
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| We repeated this rule in the 1994 case of PNB v. CA and Jayme-Fernandez[24] and the 1996 case of PNB v. CA and Spouses Basco. [25] Taking no heed of these rulings, the escalation clause PNB used in the present case to justify the increased interest rates is no different from the escalation clause assailed in the 1996 PNB case;[26] in both, the interest rates were increased from the agreed 12% per annum rate to 42%. We held: PNB successively increased the stipulated interest so that what was originally 12% per annum became, after only two years, 42%. In declaring the increases invalid, we held: | |||||
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2007-09-03 |
SANDOVAL-GUTIERREZ, J. |
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| In Philippine National Bank v. Court of Appeals,[6] and in later cases,[7] we held:In order that obligations arising from contracts may have the force of law between the parties, there must be mutuality between the parties based on their essential equality. A contract containing a condition which makes its fulfillment dependent exclusively upon the uncontrolled will of one of the contracting parties, is void (Garcia v. Rita Legarda, Inc., 21 SCRA 555). Hence, even assuming that the P1.8 million loan agreement between the PNB and the private respondent gave the PNB a license (although in fact there was none) to increase the interest rate at will during the term of the loan, that license would have been null and void for being violative of the principle of mutuality essential in contracts. It would have invested the loan agreement with the character of a contract of adhesion, where the parties do not bargain on equal footing, the weaker party's (the debtor) participation being reduced to the alternative "to take it or leave it" (Qua v. Law Union & Rock Insurance Co., 95 Phil. 85). Such a contract is a veritable trap for the weaker party whom the courts of justice must protect against abuse and imposition. In New Sampaguita Builders Construction, Inc. (NSBCI) v. Philippine National Bank,[8] we ruled that while it is true that escalation clauses are valid in maintaining fiscal stability and retaining the value of money on long term contracts, however, giving respondent an unbridled right to adjust the interest independently and upwardly would completely take away from petitioner the right to assent to an important modification in their agreement, hence, would negate the element of mutuality in their contracts. Such escalation clause would make the fulfillment of the contracts dependent exclusively upon the uncontrolled will of respondent bank and is therefore void. In the present case, 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.[9] While the Usury Law ceiling on interest rate was lifted by Central Bank Circular No. 905, nothing therein could possibly be read as granting respondent bank carte blanche authority to raise interest rate to levels which would either enslave its borrower (petitioner herein) or lead to hemorrhaging of his assets.[10] | |||||