Philippine Savings Bank v. CastilloG.R.No.193178,May30,2011Nachura, J.FACTS Spouses Castillo and Spouses Capati are lot owners in Tondo, Manila Obtained a loan secured by mortgage from Phil Savings Bank (2.5M) Solidarily bound 17% p.a. interest Rate subject to adjustment every 90 days 1997-1999 interest was adjusted from 15.5-29% Notices were given in writing. Respondents did not confirm or formally question. However, Castillo sent numerous letters requesting for reduction of interest rates, which were denied 2000- extrajudicial foreclosure sale, and winner and only bidder was PSB petitionernolongerpaidthesaidamountbutrather creditedittotheloanamortizationsandarrears,pastdueinterest,penalty charges,attorney'sfees,alllegalfeesandexpense Failed to redeem in the 1-year period Respondents filed case for ReformationofInstruments, DeclarationofNullityofNotarialForeclosureProceedingsandCertificateof Sale,CancellationofAnnotations RTC: The increases are unreasonable, and arbitrary Refund plaintiffs amount in excess of 17% p.a. Foreclosure void ab initio Damages to PSB In MR, increased rate to 24% CA: The increases are unreasonable, and arbitrary Refund plaintiffs amount in excess of 17% p.a Foreclosure valid Reduced damages to PSBRATIO1. Theunilateraldeterminationandimpositionoftheincreasedratesisviolativeof theprincipleofmutualityofcontractsunderArticle1308oftheCivilCode, Aperusal ofthePromissoryNotewillreadilyshowthattheincreaseordecreaseof interestrateshingessolelyonthediscretionofpetitioner. Itdoesnotrequire theconformityofthemakerbeforeanewinterestratecouldbeenforced. Any contractwhichappearstobeheavilyweighedinfavorofoneofthepartiesso astoleadtoanunconscionableresult,thuspartakingofthenatureofa contractofadhesion,isvoid.Anystipulationregardingthevalidityor complianceofthecontractleftsolelytothewillofoneofthepartiesislikewise invalid2. Petitionercontendsthatrespondentsacquiescedtotheimpositionofthe modifiedinterestratesthus,therewasnoviolationoftheprincipleof mutualityofcontracts. Conformitylettersignedbythemdoesnotpertaintothe modificationoftheinterestrates,butratheronlytotheamendmentofthe interestratereviewperiodfrom90daysto30days. Moreover,respondents'assenttothemodificationsintheinterestratescannot beimpliedfromtheirlackofresponsetothememossentbypetitioner, informingthemoftheamendments. Thesaidmemoswereinthenatureofa proposaltochangethecontractwithrespecttooneofitssignificant components,i.e.,theinterestrates. Aswehaveheld,noonereceivinga proposaltochangeacontractisobligedtoanswertheproposal Welikewisedisagreewithpetitioner'sassertionthatrespondentsrecognized thelegalityoftheimposedinterestratesthroughthelettersrequestingforthe reductionoftherates. Therequestforreductionoftheinterestdoesnot translatetoconsentthereto. Basicistherulethattherecanbenocontractinitstruesensewithoutthe mutualassentoftheparties.Ifthisconsentisabsentonthepartofonewho contracts,theacthasnomoreefficacythanifithadbeendoneunderduressor byapersonofunsoundmind. Similarly,contractchangesmustbemadewith theconsentofthecontractingparties.Themindsofallthepartiesmustmeet astotheproposedmodification,especiallywhenitaffectsanimportantaspect oftheagreement. Inthecaseofloancontracts,theinterestrateisundeniably alwaysavitalcomponent Anychangemustbemutuallyagreedupon,otherwise,itproducesnobinding effect.HELD:AffirmedDamages deleted