EQUITABLE PCI BANK V NG AUTHOR:

SHEUNG SOR
NOTES: (if applicable)
TOPIC:
NATURE OF THE CASE: Certiorari
FACTS:
1. On October 7, 2001, respondents Ngor and Go filed an action for amendment
and/or reformation of documents and contracts against Equitable and its
employees.
2. They claimed that they were induced by the bank to avail of its peso and dollar
credit facilities by offering low interests so they accepted and signed Equitables
proposal.
3. They alleged that they were unaware that the documents contained escalation
clauses granting Equitable authority to increase interest without their consent.
4. These were rebutted by the bank.
5. RTC ordered the use of the 1996 dollar exchange rate in computing respondents
dollar-denominated loans. CA granted the Banks application for injunction but the
properties were sold to public auction.
ISSUE(S): Whether or not there was an extraordinary deflation
What was the relationship between the depositor and the bank
HELD: No extraordinary inflation.
Creditor and debtor relationship
RATIO:
Extraordinary inflation exists when there is an unusual decrease in the purchasing
power of currency and such decrease could not be reasonably foreseen or was beyond
the contemplation of the parties at the time of the obligation. Deflation is an inverse
situation.
Despite the devaluation of the peso, BSP never declared a situation of extraordinary
inflation. Respondents should pay their dollar denominated loans at the exchange rate
fixed by the BSP on the date of maturity.
Therelationshipbetweenthebankanditsdepostiroisthatofacreditoranddebtor.Therefore,a
bankhasarighttosetoffthedepositinitshandsforthepaymentofadepositorsindebtedness.
Respondentdefaultedinitsobligation.
RTCmistakenlyconcludedthatEquitableactedinbadfaithofitsobligationswithoutproof.No

basisofmoraldamages
CASE LAW/ DOCTRINE:
DISSENTING/CONCURRING OPINION(S): (if applicable)