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PNB v. CA: Loan Interest Clause Dispute

Private respondents obtained a loan from petitioner PNB with an interest rate of 12% per annum. The contract allowed PNB to raise the interest rate based on future policies. PNB subsequently raised the rate several times from the original 12% up to 24%, also imposing a 6% penalty per annum. The issue is whether a creditor can unilaterally raise the interest rate solely based on a clause in the contract without the debtor's consent on the amount and rate of increase. The Court held that any contract changes must have the consent of both parties, especially regarding important aspects like interest rates, which are vital in loan contracts. Thus, any changes must be mutually agreed upon; otherwise it

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KathrynAkmad
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36 views1 page

PNB v. CA: Loan Interest Clause Dispute

Private respondents obtained a loan from petitioner PNB with an interest rate of 12% per annum. The contract allowed PNB to raise the interest rate based on future policies. PNB subsequently raised the rate several times from the original 12% up to 24%, also imposing a 6% penalty per annum. The issue is whether a creditor can unilaterally raise the interest rate solely based on a clause in the contract without the debtor's consent on the amount and rate of increase. The Court held that any contract changes must have the consent of both parties, especially regarding important aspects like interest rates, which are vital in loan contracts. Thus, any changes must be mutually agreed upon; otherwise it

Uploaded by

KathrynAkmad
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Kathryn P.

Akmad
Bulacan State University
College of Law
TITLE: PNB v. CA, GR No. 107569 November 8, 1994
FACTS: Private respondents, !o are oners o" a NAC#$A%re&istered enterprise, obtained
"rom petitioner PNB a 'oan initia''( pe&&ed at 1)* per ann+m interest. ,!e -ontra-t a&reement
in-'+des, amon& ot!ers, a -'a+se !i-! a''os PNB to raise t!e rate o" interest dependin& onn
t!e ban./s "+t+re po'i-ies. $+rin& t!e term o" t!e a&reement, PNB on severa' o--asions
imposed s+bse0+ent raises to t!e app'i-ab'e rate ran&in& "rom t!e ori&ina' 1)* +p to 4)*,
imposin& a'so a 6* pena't( per ann+m.
ISSUE: Can a -reditor raise t!e rate o" interest based so'e'( on a -ertain -'a+se in t!e -ontra-t
and it!o+t -onsent "rom t!e debtor as to t!e amo+nt and rate o" in-rease1
HELD: . #t is basi- t!at t!ere -an be no -ontra-t in t!e tr+e sense in t!e absen-e o" t!e e'ement
o" a&reement, or o" m+t+a' assent o" t!e parties. #" t!is assent is antin& on t!e part o" t!e one
!o -ontra-ts, !is a-t !as no more e""i-a-( t!an i" it !ad been done +nder d+ress or b( a person
o" +nso+nd mind.
2imi'ar'(, -ontra-t -!an&es m+st be made it! t!e -onsent o" t!e -ontra-tin& parties.
,!e minds o" a'' t!e parties m+st meet as to t!e proposed modi"i-ation, espe-ia''( !en it
a""e-ts an important aspe-t o" t!e a&reement. #n t!e -ase o" 'oan -ontra-ts, it -annot be &ainsaid
t!at t!e rate o" interest is a'a(s a vita' -omponent, "or it -an ma.e or brea. a -apita' vent+re.
,!+s, an( -!an&e m+st be m+t+a''(a &reed +pon, ot!erise, it is bere"t o" an( bindin& e""e-t.
,!e Co+rt -annot -o+ntenan-e petitioner ban./s post+rin& t!at t!e es-a'ation -'a+se at ben-!
&ives it +nbrid'ed ri&!t to+ni'atera''( +pard'( ad3+st t!e interest on private respondents/ 'oan.
,!at o+'d -omp'ete'( ta.e aa( "rom private respondents t!e ri&!t to assent to an important
modi"i-ation in t!eir a&reement, and o+'d ne&ate t!e e'ement o" m+t+a'it( in -ontra-ts.
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