D,E,F filed an action for annulment of contracts against X Bank. They claimed that X Bank induced them to avail of its credit facilities by offering low interest rates so they accepted X Bank’s proposal and signed the bank’s pre-printed promissory notes on various dates. They, however, were unaware that the documents contained identical escalation clauses granting X Bank authority to increase interest rates without their consent. X Bank, asserted that D,E,F knowingly accepted all the terms and conditions contained in the promissory notes. In fact, they continuously availed of and benefited from X Bank’s credit facilities for five years. After trial, the Regional Trial Court (RTC) upheld the validity of the promissory notes. The trial court, took judicial notice of the steep depreciation of the peso during the intervening period and declared the existence of extraordinary deflation. * A. There is no extraordinary deflation because despite the devaluation of the peso, the BSP never declared a situation of extraordinary inflation. Moreover, the parties did not agree to recognize the effects of extraordinary deflation. B. There is extraordinary deflation because there is an unusual increase in the purchasing power of currency. C. There is extraordinary deflation because the increase in the purchasing power of currency is manifestly beyond the contemplation of the parties. D. There is no extraordinary deflation because the obligation is not contractual in nature.
Multiple choice
D,E,F filed an action for annulment of contracts against X Bank. They claimed that X Bank induced them to avail of its credit facilities by offering low interest rates so they accepted X Bank’s proposal and signed the bank’s pre-printed promissory notes on various dates. They, however, were unaware that the documents contained identical escalation clauses granting X Bank authority to increase interest rates without their consent. X Bank, asserted that D,E,F knowingly accepted all the terms and conditions contained in the promissory notes. In fact, they continuously availed of and benefited from X Bank’s credit facilities for five years. After trial, the Regional Trial Court (RTC) upheld the validity of the promissory notes. The trial court, took judicial notice of the steep
A. There is no extraordinary deflation because despite the devaluation of the peso, the BSP never declared a situation of extraordinary inflation. Moreover, the parties did not agree to recognize the effects of extraordinary deflation.
B. There is extraordinary deflation because there is an unusual increase in the
C. There is extraordinary deflation because the increase in the purchasing power of currency is manifestly beyond the contemplation of the parties.
D. There is no extraordinary deflation because the obligation is not contractual in nature.
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