UCPB V. E. Ganzon Inc.

- Ganzon obtained 5 loans from UCPB, they started to default in paying its
amortizations, but both parties agreed to restructure the loan by permitting
Ganzon to obtain a short-term loan to pay the maturing loan obligations. A year
later, Ganzon was still unable to pay, which lead to entering a MOA to convey
parcels of land owned by Ganzon to pay for its obligations to UCPB. After
foreclosure of the properties and deducting interest, charges and expenses;
Ganzon still had unpaid indebtedness, leading to UCPB to demand additional
properties to liquidate the remaining unpaid balance. Ganzon, feeling doubtful,
asserted that it had already overpaid its loan obligations and claimed that UCPB
was “padding” its account. Ganzon filed suit against UCPB, claiming that it was a
victim of fraud by UCPB in the collection of its loans, the RTC ruled in favor of
Ganzon, claiming that it has fully paid its obligations. Upon appeal to the CA, it
only modified the ruling of the RTC but still ruled in favor of Ganzon, with the
modification being costs for excessive proceeds from the foreclosure sale it held
for the properties of Ganzon. Upon review of the SC,
Premier Dev Bank V. Central Surety
- Central Surety obtained a loan from Premiere Bank, which was secured by a
deed of assignment with pledge covering the membership share in a gold and
country club. Sometime later, Central Surety obtained another loan with Premiere
Bank which was secured by a real estate mortgage of a condominium.
Thereafter, Premiere Bank sent a letter to Central Surety demanding payment of
the first loan that Central Surety obtained. To which, Central Surety issued a
check for the first loan. However, Premiere Bank returned the check and
demanded not only for the payment of the 1st loan but also the 2nd loan, with them
threatening to foreclose the securities of the loan should they fail to pay within
the stipulated date. On the same day, a separate check was tendered to
Premiere Bank as payment for the clients of Central Surety for a personal loan
secured by membership shares to the Manila Polo Club. Premiere Bank. They
accepted the check and applied it not to the loan of Central Surety but under
another loan under the
Espina V. CA
- Espina executed a provisional deed of sale, selling a condominium unit to Diaz.
With the contract stipulating that Diaz would pay an initial amount upon execution
of the contract and the balance through postdated checks. However, after initial
down payment, the checks issued by Diaz bounced and were dishonored due to
a closed bank account. Espina cancelled the provisional deed of sale through a
notarial notice of cancellation, despite this, Diaz continued to occupy the
premises but failed to pay the rentals due. However, Espina received the initial
down payment from Diaz, but still demanded and gave notice to Diaz to vacate
 the premises and pay back the rentals, which Diaz failed to do. Espina filed an
action for unlawful detainer against Diaz to which the MTC ruled in favor of Diaz

Equitable PCI V. Ng Sheung

- Ng Sheung Inc. filed an action for annulment and/or reformation of documents
and contracts against Equitable PCI Bank (EPB). They claimed that EPB induced
them to avail of its peso and dollar credit facilities by offering low interest rates,
they accepted the proposal and signed promissory notes on various dates.
However, they were unaware that the documents contained identical escalation
clauses granting EPB authority to increase interest rates without their consent.
EPB averred that Ng Sheung Inc knowingly accepted all terms and conditions
contained, and that in fact, they continuously availed of and benefited from their
credit facilities for 5 years. The RTC ruled in favor of EPB but invalidated the
escalation clauses contained in the promissory notes executed by Ng Sheung,
deciding that it violated the principle of mutuality of contracts and ordered the use
of the 1996 dollar exchange rate instead of the current exchange rate in
computing Ng Sheung’s dollar-denominated loans. Upon review of the SC, it
ruled that escalation clauses are not void per se. However, one "which grants the
creditor an unbridled right to adjust the interest independently and upwardly,
completely depriving the debtor of the right to assent to an important modification
in the agreement" is void. Clauses of that nature violate the principle of mutuality
of contracts. Article 130867 of the Civil Code holds that a contract must bind both
contracting parties; its validity or compliance cannot be left to the will of one of
them. Thus, the escalation clause was void. In regard to the extraordinary
deflation of the currency, the SC applied article 1250 of the Civil Code by
providing the requisites that for extraordinary deflation or inflation, the following
must be proven: 1. that there was an official declaration of extraordinary
inflation or deflation from the Bangko Sentral ng Pilipinas (BSP);2. that the
obligation was contractual in nature; 3. that the parties expressly agreed to
consider the effects of the extraordinary inflation or deflation. Despite the
devaluation of the peso, the BSP never declared a situation of extraordinary
inflation. Moreover, although the obligation in this instance arose out of a
contract, the parties did not agree to recognize the effects of extraordinary
inflation (or deflation). Hence, the claim of EPB that the exchange rate should be
adjusted is void.
Almeda V. Bathala Marketing
- Almeda’s husband, Ponciano, renewed its contract of lease with Bathala
Marketing Industries Inc. (BMI). The contract stipulated that Ponciano leased a
portion of their family’s compound for a term of 4 years unless sooner terminated.
Parts of the contract contained a stipulation that says the rental rate is based
upon the present rate of assessment on the property, and that in case the
assessment should be increased by any new tax, charge or burden, BMI shall
pay when the rental becomes due, and that if the tax, charge or burden shall be
reduced, BMI shall be entitled to reduction in the rental. Finally, that in case an
extraordinary inflation or deflation of the currency should supervene, the value of
the Philippine peso at the time of the establishment of the obligation shall be the
basis of payment. During effectivity of the contract, Ponciano died, and was
succeeded by his wife, Eufemia and son, Romel. During this time, the VAT law
has just been signed and has been effective for about 3 to 4 years, which lead to
the Almedas demanding payment of the VAT and various rental adjustments, to
which BMI refused and countered that the VAT may not be imposed as the
rentals fixed in the contract were supposed to include the VAT therein. They
therefore continued to only pay the stipulated amount in the contract. The
Almedas filed an action for ejectment for the failure of BMI to vacate the
premises and pay the corresponding VAT and rental adjustment, to which the
RTC ruled in favor of BMI, declaring that DMI is not liable for the payment of VAT
and rental adjustments. Upon appeal, the CA sustained the decision of the RTC
albeit with some modifications to return the balance of rental deposits only. Upon
review of the SC, it ruled in favor of BMI. The court rationed that the application
of article 1250 in this instance is not applicable as the person primarily liable for
the payment of VAT is the lessor who may choose to pass it on the lessee or
absorb the same. The stipulation on the condition of the contract that was
executed between Ponciano and BMI is unavailing. It clearly states that the
respondent can only be held liable for new taxes after the effectivity of the
contract of lease. The factual circumstances obtaining in the present case do not
make out a case of extraordinary inflation or devaluation as would justify the
application of Article 1250 of the Civil Code. We would like to stress that the
erosion of the value of the Philippine peso in the past three or four decades,
starting in the mid-sixties, is characteristic of most currencies. And while the
Court may take judicial notice of the decline in the purchasing power of the
Philippine currency in that span of time, such downward trend of the peso cannot
be considered as the extraordinary phenomenon contemplated by Article 1250 of
the Civil Code. Furthermore, absent an official pronouncement or declaration by
competent authorities of the existence of extraordinary inflation during a given
period, the effects of extraordinary inflation are not to be applied.
 Filipino Pipe V. NAWASA
- NAWASA entered into a contract with Filipino Pipe (FP) to supply cast iron
pressure pipes for contraction of waterworks. NAWASA paid in installments on
various dates leaving a balance, excluding the interests therein. Having
completed the delivery of the pipes, FP demanded payment from NAWASA for
the unpaid balance along with interests, but NAWASA failed to pay the balance.