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New Sampaguita Builders Construction, et al. vs. Philippine National Bank (PNB)

NEW SAMPAGUITA BUILDERS CONSTRUCTION, INC. (NSBCI) and Spouses EDUARDO R. DEE and ARCELITA M. DEE, Petitioners, versus PHILIPPINE NATIONAL BANK, Respondent.

G.R. No. 148753 | 2004-07-30

DECISION
 
PANGANIBAN, J.:
 
Courts have the authority to strike down or to modify provisions in promissory notes that grant the lenders unrestrained power to increase interest rates, penalties and other charges at the latter's sole discretion and without giving prior notice to and securing the consent of the borrowers. This unilateral authority is anathema to the mutuality of contracts and enable lenders to take undue advantage of borrowers. Although the Usury Law has been effectively repealed, courts may still reduce iniquitous or unconscionable rates charged for the use of money. Furthermore, excessive interests,...