REMEDIAL LAW>Civil Procedure> Appellate Court Docket and Other Lawful Fees

SPOUSES EDUARDO and LYDIA SILOS, Petitioners

vs.
PHILIPPINE NATIONAL BANK, Respondent
G.R. No. 181045. July 2, 2014
Second Division

FACTS: Petitioners constituted a Real Estate Mortgage yo secure a one-year revolving credit line from PNB. Petitioners
issued eight Promissory Notes and signed a Credit Agreement. The eight Promissory Notes contained a stipulation
granting PNB the right to increase or reduce interest rates "within the limits allowed by law or by the Monetary Board."
petitioners filed Civil Case seeking annulment of the foreclosure sale and an accounting of the PNB credit. Petitioners
theorized that after the first promissory note where they agreed to pay 19.5% interest, the succeeding stipulations for the
payment of interest in their loan agreements with PNB - which allegedly left to the latter the sole will to determine the
interest rate - became null and void. The CA noted that the petitioners did not complain nor object to the imposition of
interest; they in fact paid the same religiously and without fail for seven years. The appellate court ruled that petitioners
are thus estopped from questioning the same.

ISSUE: Whether or not the interest rate provision in the credit agreement and the amendment to the same is null and
void for leaving the interest at the sole and unilateral determination of PNB.

HELD: YES.

The unilateral action of the PNB in increasing the interest rate on the private respondent’s loan violated the mutuality of
contracts ordained in Article 1308 of the Civil Code, Art. 1308. The contract must bind both contracting parties; its validity
or compliance cannot be left to the will of one of them. 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 fulfilment dependent exclusively upon the uncontrolled will of one of the
contracting parties, is void. 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 fulfilment dependent exclusively upon the uncontrolled will of one of the contracting parties, is void