United Alloy Philippines · G.R. 175949

Petitioner: United Alloy Philippines Corporation
Respondent: United Coconut Planters Bank
Citation: G.R. No. 175949
Court: Supreme Court
Division: Second Division
Ponente: Peralta, J.
Decided: January 30, 2017

Summary

United Alloy Philippines Corporation obtained a PhP50,000,000.00 credit facility from United Coconut Planters Bank secured by promissory notes and personal suretyship by corporate officers including Spouses Chua. When UNIALLOY defaulted, UCPB filed a collection case while UNIALLOY simultaneously filed an annulment case in a different venue, leading to forum shopping issues. The annulment case was ultimately dismissed with finality. The Supreme Court affirmed UNIALLOY's and the sureties' liability under the loan documents, applying Civil Code Article 1159 on contractual obligations. However, the Court modified the interest rates, rejecting unconscionable provisions that gave the bank unilateral discretion to adjust rates. The decision demonstrates the enforceability of surety agreements in commercial lending while protecting borrowers from excessive interest rate provisions that violate the mutuality of contracts principle.

Statutes applied

Civil Code, Art. 1159

Related cases

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Antonio Tan v. Court of Appeals G.R. No. 116285
Marlou L. Velasquez v. Solidbank Corporation G.R. No. 157309
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Spouses Reynaldo Alcaraz v. Pedro M. Tangga-An G.R. No. 128568
Spouses Inocencio v. Court of Appeals G.R. No. 121810
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By the Intellegal Editorial Board · January 30, 2017

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