Philippine Savings Bank v · G.R. 193178

Petitioner: Philippine Savings Bank
Respondent: Spouses Alfredo M. Castillo
Citation: G.R. No. 193178
Court: Supreme Court
Division: Second Division
Ponente: Nachura, J.
Decided: May 30, 2011

Summary

This case involves a challenge to unilateral interest rate modifications in a bank loan agreement. Spouses Castillo and Capati obtained a P2.5 million loan from Philippine Savings Bank with real estate mortgage, containing a clause allowing the bank to unilaterally adjust interest rates. When borrowers defaulted in 1999, the bank foreclosed the properties. The borrowers sued, challenging both the interest rate modifications and foreclosure validity. The Supreme Court ruled that unilateral interest rate changes violated the Civil Code's principle of mutuality of contracts, requiring mutual consent for contract modifications affecting vital components. While ordering refund of excess interest payments above the original 17% rate, the Court upheld the foreclosure as valid and removed damage awards, finding no fraud or bad faith by the bank, only poor business judgment.

Statutes applied

Civil Code, Art. 1308

Related cases

Other Philippine cases on the same provisions and issues.

Gf Equity v. Arturo Valenzona G.R. No. 156841
United Coconut Planters Bank v. Editha F. Ang G.R. No. 222448
Philippine National Bank v. Spouses Enrique Manalo & Rosalinda Jacinto G.R. No. 174433
Spouses Bayani H. Andal v. Philippine National Bank G.R. No. 194201
Fedman Development Corporation v. Federico Agcaoili G.R. No. 165025
Spouses Ponciano Almeda v. The Court of Appeals G.R. No. 113412
Philippine National Bank v. The Hon. Court of Appeals G.R. No. 88880
Philippine Development & Industrial Corporation v. Equitable Pci Bank (Now Known As Banco de Oro-Epci G.R. No. 207242

By the Intellegal Editorial Board · May 30, 2011

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