Case Digest (G.R. No. 171545)
Facts:
Equitable PCI Bank, Aimee Yu and Bejan Lionel Apas v. Ng Sheung Ngor doing business under the name and style "Ken Marketing," Ken Appliance Division, Inc. and Benjamin E. Go, G.R. No. 171545, December 19, 2007, Supreme Court First Division, Corona, J., writing for the Court.Petitioners Equitable PCI Bank (with two employee respondents-petitioners, Aimee Yu and Bejan Lionel Apas) appealed the Court of Appeals decision in CA‑G.R. SP No. 83112 that dismissed their petition for certiorari; respondents in the underlying suit were Ng Sheung Ngor (doing business as Ken Marketing), Ken Appliance Division, Inc., and Benjamin E. Go.
In October 2001 respondents filed a complaint for annulment and/or reformation of documents against Equitable and its employees in the Regional Trial Court (RTC), Branch 16, Cebu City (Civil Case No. CEB‑26983). They alleged they were induced to accept Equitable’s peso and dollar credit facilities and signed preprinted promissory notes without knowledge of identical escalation clauses that authorized the bank to increase interest rates without their consent. Equitable answered that respondents knowingly accepted the loan terms and had benefited from the credit facilities for about five years.
After trial the RTC (Judge Agapito L. Hontanosas, Jr.) upheld the validity of the promissory notes but declared the escalation clause void for violating mutuality; it took judicial notice of the peso’s steep depreciation and applied the 1996 exchange rate to respondents’ dollar‑denominated obligations. The RTC also found respondents’ business reputation was allegedly damaged when Equitable froze accounts and awarded sizable moral (P12 million) and exemplary (P10 million) damages, plus attorney’s fees, while directing respondents to pay the unpaid loan principals and specified interest rates. Both sides filed notices of appeal.
On March 1, 2004 the RTC denied due course to both parties’ notices of appeal for failure to show proof of payment of appeal fees and declared the February 5, 2004 decision final and executory as to Equitable. Equitable moved for reconsideration attaching proof of payment; respondents moved for a writ of execution. On March 24, 2004 the RTC denied reconsideration and ordered issuance of a writ of execution, after which three Equitable properties were levied and later sold at public auction on July 1, 2004 (respondents were highest bidders).
Equitable initially filed a petition for relief in the RTC under Rule 38 but withdrew it on March 30, 2004 and filed a petition for certiorari with an application for injunction in the Court of Appeals (CA). The CA granted a preliminary injunction on June 16, 2004, but nonetheless the auction had already occurred. On October 28, 2005 the CA dismissed Equitable’s petition for certiorari (CA‑G.R. SP No. 83112), finding forum shopping because Equitable filed the certiorari petition in the CA hours before withdrawing its petition for relief in the RTC and failed to disclose that prior filing; a subsequent motion for reconsideration was denied on February 3, 2006. Equitable sought review in this Court by a petition for review on certiorari under Rule 45, which the Supreme Court resolved on December 19, 2007.
Issues:
- Was Equitable PCI Bank guilty of forum shopping for filing a petition for certiorari in the Court of Appeals while a petition for relief in the RTC was pending?
- Did the RTC commit grave abuse of discretion in issuing the March 1, 2004 and March 24, 2004 orders that denied due course to the notices of appeal and ordered execution?
- Did Equitable present pure questions of law enabling this Court’s Rule 45 jurisdiction?
- Were the promissory notes contracts of adhesion invalid?
- Was the escalation clause valid, and what interest rate régime applies?
- Did extraordinary inflation/deflation under Article 1250 of the Civil Code apply to justify using the 1996 exchange rate?
- Were the awards of moral and exemplary damages and attorney’s fees justified?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)