EQUITABLE PCI BANK V.

NG SHEUNG NGOR (2007)

FACTS: Respondent Ng Sheung Ngor, Ken Appliance Division, Inc and Benjamin E.
Go iled an action or annulment and!or reormation o documents and contracts against
petitioner E"uita#le $%I Ban& 'E"uita#le( and its emplo)ees, Aimee *u and Bejan
+ionel Apas.
,. Respondents claimed that E"uita#le induced them to avail o its peso and dollar
credit acilities #) oering lo- interest rates so the) accepted the propodal and
signed the #an&.s printed promissor) notes on various dates #eginning ,//0. But
the) -ere una-are that the documents contain identical escalation clause granting
E"uita#le authorit) to increase interest rates -ithout their consent
1. E"uita#le asserted that respondents &no-ingl) accepted all the terms and
conditions contained in the promissor) notes, also the) continuousl) availed o
and #eneited rom E"uita#le.s credit acilities or ive )ears.
2. 3he trial court upheld the validit) o the promissor) notes ho-ever it invalidated
the escalation clause or it violated the principle o mutualit) o contracts. It also
too& judicial notice o the steep depreciation o the peso during the intervening
period and declared the e4istence o e4traordinar) delation
5. R3% ordered the use o the ,//0 dollar e4change rate in computing respondent.s
dollar denominated loans and a-arded moral and e4emplar) damages.
6. E"uita#le iled an 7R, -hile respondents pra)ed or the issuance o a -rit o
e4ecution.
0. R3% issued an omni#us order den)ing 7R and ordered the issuance o the motion
o a -rit o e4ecution in avor o respondents.
8. 3hree real properties o E"uita#le -ere levied upon and -ere sold in a pu#lic
auction. Respondents -ere the highest #idder and certiicates o sale -ere issued.
9. E"uita#le iled a petition or certiorari -ith an application or an injunction in the
%A to enjoin the implementation and e4ecution o the omni#us order. %A granted
E"uita#le.s application or injunction -as granted.
/. Despite the injunction, E"uita#le.s properties previousl) levied -ere sold in a
pu#lic auction to respondent. E"uita#le moved to annul the auction sale. %A
dismissed the petition or certiorari, hence this petition.
ISSUE: :hat is the relationship #et-een the #an& and its depositor;
HELD: 3he relationship #et-een the #an& and its depositor is that o creditor and
de#tor. <or this reason, a #an& has the right to set o the deposit in its hands or the
pa)ment o a depositor.s inde#tedness. Respondent indeed deaulted on their o#ligation.
<or this reason, E"uita#le had the option to e4ercise its legal right to set=o or
compensation. >o-ever, the R3% mista&enl) 'or, as it no- appears, deli#eratel)(
concluded that E"uita#le acted ?raudulentl) or in #ad aith or in -anton disregard@ o
its contractual o#ligations despite the a#sence o proo. 3he undenia#le act -as that,
-hatever damage respondents sustained -as purel) the conse"uence o their ailure to
pa) their loans. 3here -as thereore a#solutel) no #asis or the a-ard o moral damages
to them.