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    03 Almeda Vs Bathala Marketing

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    Floyd Mago
    The Supreme Court ruled that Bathala Marketing was not liable to pay increased rent to Almeda due to extraordinary inflation or currency devaluation. The Court found that absent an official pronouncement from competent authorities, extraordinary inflation did not exist to warrant applying Article 1250 of the Civil Code. Inflation must involve a sharp increase in money/credit relative to goods, resulting in sustained high prices. While the peso declined over decades, this was characteristic of most currencies and did not constitute an extraordinary phenomenon as envisioned by Article 1250.

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    03 Almeda Vs Bathala Marketing

    Uploaded by

    Floyd Mago
    69 views1 page
    The Supreme Court ruled that Bathala Marketing was not liable to pay increased rent to Almeda due to extraordinary inflation or currency devaluation. The Court found that absent an official pronouncement from competent authorities, extraordinary inflation did not exist to warrant applying Article 1250 of the Civil Code. Inflation must involve a sharp increase in money/credit relative to goods, resulting in sustained high prices. While the peso declined over decades, this was characteristic of most currencies and did not constitute an extraordinary phenomenon as envisioned by Article 1250.

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    03 Almeda vs Bathala Marketing

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    The Supreme Court ruled that Bathala Marketing was not liable to pay increased rent to Almeda due to extraordinary inflation or currency devaluation. The Court found that absent an official pronouncement from competent authorities, extraordinary inflation did not exist to warrant applying Article 1250 of the Civil Code. Inflation must involve a sharp increase in money/credit relative to goods, resulting in sustained high prices. While the peso declined over decades, this was characteristic of most currencies and did not constitute an extraordinary phenomenon as envisioned by Article 1250.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    69 views1 page

    03 Almeda Vs Bathala Marketing

    Uploaded by

    Floyd Mago
    The Supreme Court ruled that Bathala Marketing was not liable to pay increased rent to Almeda due to extraordinary inflation or currency devaluation. The Court found that absent an official pronouncement from competent authorities, extraordinary inflation did not exist to warrant applying Article 1250 of the Civil Code. Inflation must involve a sharp increase in money/credit relative to goods, resulting in sustained high prices. While the peso declined over decades, this was characteristic of most currencies and did not constitute an extraordinary phenomenon as envisioned by Article 1250.

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    © All Rights Reserved
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    of 1

    03 ALMEDA vs.

    BATHALA MARKETING AUTHOR: MAGO


    G.R. No 150806 Notes:
    TOPIC: Simple Loan/Mutuum
    PONENTE: Nachura J.
    CASE LAW/ DOCTRINE:

    Art. 1955. The obligation of a person who borrows money shall be governed by the provisions of Articles 1249 and 1250
    of this Code.

    Art. 1250. In case an extraordinary inflation or deflation of the currency stipulated should supervene, the value of the
    currency at the time of the establishment of the obligation shall be the basis of payment, unless there is an agreement to
    the contrary. (n)

    Emergency Recit:

    FACTS:
    In May 1997, Bathala Marketing, renewed its Contract of Lease with Ponciano Almeda. Under the contract, Ponciano
    agreed to lease a porton of Almeda Compound for a monthly rental of P1,107,348.69 for four years. On January 26,
    1998, petitioner informed respondent that its monthly rental be increased by 73% pursuant to the condition No. 7 of the
    contract which states that
    “SEVENTH - In case an extraordinary inflation or devaluation of Philippine Currency should supervene, the value of
    Philippine peso at the time of the establishment of the obligation shall be the basis of payment” and Article 1250.
    Respondent refused the demand and insisted that there was no extraordinary inflation to warrant such application.
    Respondent refused to pay the VAT and adjusted rentals as demanded by the petitioners but continually paid the
    stipulated amount. RTC ruled in favor of the respondent and declared that plaintiff is not liable for the payment of VAT
    and the adjustment rental, there being no extraordinary inflation or devaluation. CA affirmed the decision deleting the
    amounts representing 10% VAT and rental adjustment.

    ISSUE(S): Whether the amount of rentals due the petitioners should be adjusted by reason of extraordinary inflation or
    devaluation
    HELD: NO.
    RATIO:
    Petitioners are stopped from shifting to respondent the burden of paying the VAT. 6th Condition states that respondent
    can only be held liable for new taxes imposed after the effectivity of the contract of lease, after 1977, VAT cannot be
    considered a “new tax”. Neither can petitioners legitimately demand rental adjustment because of
    extraordinary inflation or devaluation. Absent an official pronouncement or declaration by competent
    authorities of its existence, its effects are not to be applied.

    Inflation has been defined as the sharp increase of money or credit, or both, without a corresponding increase in business
    transaction. There is inflation when there is an increase in the volume of money and credit relative to available goods,
    resulting in a substantial and continuing rise in the general price level.

    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.

    DISSENTING/CONCURRING OPINION(S):

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