Mendoza vs CA Credit Digest

Mendoza vs CA

GR No. 116710, 25 June 2001

359 SCRA 438

FACTS

            Petitioner was granted by respondent PNB a credit line for 500H and 1M for LoC/TR line. As security, the former mortgaged properties. The REM provided for an escalation clause that rate of interest charged on the obligation secured shall be subject to such increase, during the life of the contract, within the rates allowed by law. Two PNs were executed for the credit line and stipulated therein : with interest thereon at the rate of 12% pa, until paid, with interest rate the Bank may, at any tie, without notice, raise within the limits allowed by law xxx.” Thereafter, PNB advised Mendoza that the bank raised its interest rates to 14% pa, in ine with CBMB Reso No 2126. Petitioner failed to payand requested for restructuring of loans. Two promissory notes were signed by Mendoza and his wife. Petitioner testified that respondent allegedly inserted in first promissory note No. 127/82 an interest rate of 21% instead of 18% covering the principal amount,and on the second promissory note 128/82 the interest of 18% instead of 12% representing accrued interest.

ISSUE

            Whether or not the interests provided by respondent is proper.

HELD

            No. it appears that respondent bank increased the interest rates on the 2 promissory notes without prior consent of the petitioner. The petitioner did not agree to the increase in the stipulated interest. As held in several cases, the unilateral determination and imposition of increased interest rates by respondent bank is violative of the principle of mutuality of contracts ordained in Art. 1308 of the CC.