MUTUALITY OF CONTRACTS
In Philippine National Bank v. Court of Appeals, et al., 196 SCRA 536, 544-545 (1991) we held —
In Philippine National Bank v. Court of Appeals, et al., 196 SCRA 536, 544-545 (1991) we held —
. .
. 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 or 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 .
. . . Hence, even assuming that
the . . . 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" . . . . Such a contract is a veritable trap for the weaker party whom the courts of justice must protect against abuse and imposition. (Citation omitted.)
the . . . 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" . . . . Such a contract is a veritable trap for the weaker party whom the courts of justice must protect against abuse and imposition. (Citation omitted.)
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