: ae Te Lak ‘A. OBLIGATION TO GIVE DIFFERENTIATE SPECIFIC FROM GENERIC OBLIGATIONS - _ Athing is considered determinate or specific when it is particularly designated or physically segregated from all others of the same class. = Athing is indeterminate or generic on the other hand when only the genus or class has been determined, without the same being designated and distinguished from the others of the same class. 1. Obligation to give specific thing a. Topreserve the thing (1163) Art, 1163. Every person obliged to give something is also obliged to take care of it with the proper diligence of a good father of a family, unless the law or the stipulation of the parties requires another standard of care. (1094a) WHAT IS THE BONUS PATER FAMILIAS RULE? The law is simply referring to the diligence required of a reasonable prudent person. As such, to determine the diligence which must be ordinarily required of the debtor in a determinate obligation, we use as basis the abstract average standard corresponding to. a normal orderly person Francisco vs. Chemical Bulk Carriers, Inc., G.R. No. 193577, Sept. 7, 2011 CAN THE PARTIES VALIDLY AGREE ON A STANDARD OF CARE LOWER THAN * THAT OF THE GOOD FATHER OF A FAMILY? Following the rule that the agreement between the parties is the law between them, it appears that the parties can validly agree even on a lower standard of care CAN THE PARTIES AGREE TO MAKE THE DEBTOR ABSOLUTELY EXEMPT FROM LIABILITY IN CASE OF NEGLIGENCE? No, because it is against Public Policy. b. To deliver the accessions and accessories (1166) Art. 1166. The obligation to give a determinate thing includes that of delivering all its accessions and accessories, even though they may not have been mentioned. (1097a) c. _ Todeliver the fruits (1164 par. 1) Art, 1164. The creditor has a right to the fruits of the thing from the time the obligation to deliver it arises. However, he shall acquire no real right over it until the same has been delivered to him. (1095) WHEN WILL THE OBLIGATION TO DELIVER A DETERMINATE THING The period varies depending on the source of obligation. In obligations arising from law, quasi-contracts, quasi-delicts and delicts, the specific provisions applicable to them determine the time when the obligation to deliver arises. In obligations arising from contracts, the obligation to deliver generally arises from the perfection of contract. DIFFERENTIATE REAL RIGHT FROM PERSONAL RIGHT A personal right is the power of one person to demand of another, as a definite passive subject the fulfilment of a prestation to give, to do or not to do. On the other hand, real right is the power belonging to a person over a specific thing, without a passive subject individually determined, against whom such right may be personally exercised. WHEN WILL CREDITOR ACQUIRE REAL RIGHTS? The creditor acquires real right over the thing only upon its delivery,and the principle‘applies even to fruits. Prior to delivery therefore, the right of the creditor over thé determinate thing due and its fruits is merely personal right —- which is simply the right to demand from the debtor the delivery of the determinate thing due and its fruits in proper cased. To deliver the thing itself (1244) Art, 1244. The debtor of a thing cannot compel the creditor to receive a different one, although the latter may be of the same value as, or more valuable than that which is due. 2. Obligation to give generic thing Art. 1246. When the obligation consists in the delivery of an indeterminate or generic thing, whose quality and circumstances have not been stated, the creditor cannot demand a thing of superior quality. Neither can the debtor deliver a thing of inferior quality. The purpose of the obligation and other circumstances shall be taken into consideration. (11672) B. OBLIGATION TO DO Art. 1244. The debtor of a thing cannot compel the creditor to receive a different one, although the latter may be of the same value as, or more valuable than that which is due. C. OBLIGATION NOT TO DO Art. 1244. The debtor of a thing cannot compel the creditor to receive a different one, although the latter may be of the same value as, or more valuable than that which is due. BREACH OF OBLIGATION a. CONCEPT Song Fo & Company vs Hawaiian Philippine Co. GR. No. 23769 — September 16, 1925 Velarde vs. Court of Appeals (361 SCRA 57) Angeles v. Calasanz GR. No. L-42283, March 18, 1985, 135 SCRA 323 DELTA MOTOR CORP. VS. GENUINO. 170 SCRA 29 Vermen Realty G.R. No. 101762 b. Modes of breach Delay or mora (1169) Art. 1169. Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation However, the demand by the creditor shall not be necessary in order that delay may exist (1) When the obligation or the law expressly so declare; or (2) When from the nature and the circumstances of the obligation it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract; or (3) When demand would be useless, as when the obligor has rendered it beyond his power to perform. In reciprocal obligations, neither party incurs in delay if the other does not comply or is. not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins, (1100a) Differentiate Delay from Default. Is the ordinary difference between delay and default applicable in civil law? To be in default is different from mere delay in the grammatical sense because it involves the beginning of a special condition or status which has its own peculiar effect or results. But in our civil code, the word delay is synonymous to mora, which means delay in thefulfilment of an obligation. Delay or default therefore is the non-fuffilment of an obligation with respect to time i. Mora solvendi Delay in the fulfilment of an obligation by reason of cause imputable to the debtor, because if dolo (malice) or culpa (negligence). The delay in the performance of an obligation must be either malicious or negligent, otherwise the debtor is not liable REQUISITES: 1. That the obligation is already demandable and liquidated 2. That the debtor delays performance; 3. That the creditor requires the performance extra-judicially or judicially WHEN CAN YOU CONSIDER A DEBTOR TO BE IN DEFAULT OR DELAY? Once the creditor makes the demand, whether judicial or extrajudicial, the debtor incurs mora or delay. IS THERE A SPECIFIC FORM OF DEMAND REQUIRED BY LAW? The demand required under article 1169 may be in any form, provided that it can be proved, proof of demand lies upon the creditor. Hence, absent any demand from the oblige, oral or written, the effect of default do not arise and the obligor does not incur delay as a rule. WHAT ARE THE EXCEPTION TO THE REQUIREMENT OF DEMAND? 1) When the obligation or the law expressly so declare; or (2) When from the nature and the circumstances of the obligation it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract; or (3) When demand would be useless, as when the obligor has rendered it beyond his power to perform. With respect to the third exception, it is essential that time is the controlling motive for the establishment of the contract. But in determining whether time is the essence of the contract, the ultimate criterion is the actual or apparent intention of the parties and before time may be so regarded by the court, there must be sufficient manifestation either in the contract itself or surrounding circumstances of the situation. Cetus Development, Inc. vs. Court of Appeals: G.R. No. 77648, August 7, 1989, 176 SCRA 72 AEROSPACE CHEMICAL Vs CA g.rno. 108129 September 23, 1999 Vasquez vs. Ayala G.R. No. 149734 November 19, 2004 Abella v. Francisco 55 Phil. 447 (1931) Dela cruz vs. lagaspi 98 Phil. 43 AUTOCORP GROUP VS. INTRA STRATA ASSURANCE CORP, 556 SCRA 250, demand whether judicial or extrajudicial is not required before an obligation becomes due and demandable. It is only necessary in order to put an obligor in a due and demandableobligation in delay, which in turn is for the purpose of making the obligor liable for interest or damage ii MORA ACCIPIENDI (1268) ‘Art. 1268. When the debt of a thing certain and determinate proceeds from a criminal offense, the debtor shall not be exempted from the payment of its price, whatever may be the cause for the loss, unless the thing having been offered by him to the person who should receive it, the latter refused without justification to accept it. (1185) Delay on the part of the obligee in accepting the performance of obligation by the obligor. REQUISITES: 4. Anoffer of performance by the debtor who has the required capacity 2. The offer must be to comply with the prestation as it should be performed 3. And the creditor refuses the performance without just cause Villaroel vs. manila motor corp. 104 Phil. 926 ili, COMPENSATIO MORAE WHAT IS COMPENSATIO MORAE? The delay or default on part of both of the parties because neither has completed their part in reciprocal obligations. In reciprocal obligations, they are to perform simultaneously, so that the performance of one is conditioned upon the simultaneous fulfilment of the other. Hence mutual inaction gives rise to compensation morae Central Bank v. CA G.R. No. L-45710, October 3, 1985, 139 SCRA 46 FRAUD OR DOLO (1171) Art. 1171. Responsibility arising from fraud is demandable in all obligations. Any waiver of an action for future fraud is void. (1102a) WHAT IS THE DIFFERENCE BETWEEN DOLO CAUSANTE AND DOLO INCIDENTE? Dolo Causante, Fraud gives rise to the obligation. Employed to induce another to enter into contract, thus, ground for annulment Dolo incidente. Obligation already exist and fraud is committed only during the performance, hence merely gives rice to an action for damages. Woodhouse v Halili July 31, 1953, 93 Phil. 526 Geraldez, vs. CA & Kenstar Travel Corporation G.R. No. 108253, February 23, 1994 NEGLIGENCE (1172, 1173) Art, 1172. Responsibility arising from negligence in the performance of every kind of obligation is also demandable, but such liability may be regulated by the courts, according to the circumstances. (1103) Art, 1173. The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad faith, the provisions of Articles 1171 and 2201, paragraph 2, shall apply.If the law or contract does not state the diligence which is to be observed in the performance, that which is expected of a good father of a family shall be required. (1104a) DIFFERENTIATE CULPA VS. DOLO Fraud connotes some kind of dishonesty, malice or bad faith on the part of the parties. It is distinguished from negligence by the presence of deliberate intent which is lacking in the latter. DIFFERENTIATE CULPA AQUILANA FROM CULPA CONTRACTUAL Culpa aquilana is the wrongful or negligent act or omission which creates juridical tie and gives rise to an obligation between two parties not formally bound by any other obligation. Culpa Contractual fault or negligent in the performance of an obligation which already existed and which increases liability from such already existing obligation WHAT IS THE STANDARD OF CARE REQUIRED? Case law states that the concept of diligence of a good father of a family connotes reasonable care consistent with that which an ordinary prudent person would have observed when confronted with a similar situation. Picart vs. Smith, 37 Phil. 809 WHAT IS THE TEST OF NEGLIGENCE? Did the defendant in doing the negligent act use the reasonable care and caution which an ordinary prudent person would have used in the same situation? If not, then he is guilty of negligence. Thus jurisprudence defines negligence as the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of something which a prudent and reasonable man would not do. GUTIERREZ VS GUTIERREZ G.R. NO. 34840 SEPTEMBER 23, 1931 Vasquez vs. Borja 74 Phil. 560 DE GUIA VS. MANILA ELECTRIC CORP. 40 PHIL 706 US v. Barias Sarmiento v. Sps. Cabrido G.R. No. 141258, April 9, 2003, 401 SCRA 122 Crisostomo v. CA GR. No. 138334, August 25, 2003, 409 SCRA 528 WHEN CULPA IS EQUIVALENT TO DOLO? Negligence showing bad faith MAY FUTURE NEGLIGENCE BE WAIVED? YES WHAT IS THE EXCEPTION? In establishment like hospitals, where the patient is literally at the mercy of the establishment and cannot bargain on equal footing with it as to terms and conditions of admission and operation, even simple negligence is not subject to blanket release in favor of said establishment NOGALES v. CAPITOL MEDICAL CENTER, GR NO. 142625, 2006-12-19 act or omission, be permitted to falsify i CONTRAVENTION OF THE TENOR , Not only debtors guilty of fraud, negligence, or default in the performance of an obligations. are decreed liable. In general, every debtor who fails in the performance of his obligation is bound to indemnify for the losses and damages caused thereby.Chavez vs. Gonzales March 25, 2016 = Case Digest GR. No. L-27454 April 30, 1970 Arrieta v. National Rice and Cor Corporation, 10 SCRA 79 September 10, 2016 Magat vs. Medialdea GR. No. L-37120, 20 April 1983 REMEDIES IN CASE OF BREACH PERFORMANCE Specific performance (1165, sec 10 rule 39) Art. 1165. When what is to be delivered is a determinate thing, the creditor, in addition to the right granted him by Article 1170, may compel the debtor to make the delivery. If the thing is indeterminate or generic, he may ask that the obligation be complied with at the expense of the debtor. If the obligor delays, or has promised to deliver the same thing to two or more persons who do not have the same interest, he shall be responsible for any fortuitous event until he has effected the delivery. (1096) section 10. Execution of judgments for specific act. — (a) Conveyance, delivery of deeds, or other specific acts; vesting title. — If a judgment directs a party to execute a conveyance of land or personal property, or to deliver deeds. or other documents, or to perform, any other specific act in connection therewith, and the party fails to comply within the time specified, the court may direct the act to be done at the cost of the disobedient party by some other person appointed by the court and the act when so done shalll have like effect as if done by the party. If real or personal property is situated within the Philippines, the court in lieu of directing a conveyance thereof may by an order divest the title of any party and vest it in others, which shall have the force and effect of a conveyance executed in due form of law. (10a) (b) Sale of real or personal property. — If the judgment be for the sale of real or personal property, to sell such property, describing it, and apply the proceeds in conformity with the judgment. (8{cJa) (0) Delivery or restitution of real property. — The officer shall demand of the person against whom the judgment for the delivery or restitution of real property is rendered and all persons claiming rights under him to peaceably vacate the property within three (3) working days, and restore possession thereof to the judgment obligee, otherwise, the officer shall oust all such persons therefrom with the assistance, if necessary, of appropriate peace officers, and employing such means as may be reasonably necessary to retake possession, and place the judgment obligee in possession of such property. Any costs, damages, rents or profits awarded by the judgment shall be satisfied in the same manner as a judgment for money. (13a) (d) Removal of improvements on property subject of execution. — When thé property subject of the execution contains improvements constructed or planted by the judgment obligor or his agent, the officer shall not destroy, demolish or remove said improvements except upon special order of the court, issued upon motion of the judgment obligee afterthe hearing and after the former has failed to remove the same within a reasonable time fixed by the court. (14a) (€) Delivery of personal property. — In judgment for the delivery of personal property, the officer shall take possession of the same and forthwith deliver it to the party entitled thereto and satisfy any judgment for money as therein provided. (8a) SUBSTIUTED PERFORMANCE In an obligation to give generic thing (article 1165, paragraph 2) Undoing of poor work in obligation to do (1167) Art. 1167. If a person obliged to do something fails to do it, the same shall be executed at his cost. This same tule shall be observed if he does it in contravention of the tenor of the obligation. Furthermore, it may be decreed that what has been poorly done-be undone. (1098) JACINTO TANGUILIG doing business under the name and style J.M.T. ENGINEERING AND GENERAL MERCHANDISING vs COURT OF APPEALS and VICENTE HERCE JR. : G.R.No. 125994 29June2001 UNDOING OF AN OBLIGATION NOT TO DO (1168) Art. 1168. When the obligation consists in not doing, and the obligor does what has been forbidden him, it shall also be undone at his expense. (1099a) However, when the undoing of what has been done in violation of the prohibition already becomes impossible, either physically or legally, the only feasible remedy of the creditor is to recover damages from the debtor. RECISSION (1191-1192) Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible. The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period. This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law. (1124) Art. 1192. In case both parties have committed a breach of the obligation, the liability of the first infractor shall be equitably tempered by the courts. If it cannot be determined which of the parties first violated the contract, the same shall be deemed extinguished, and each shall bear his own damages. (n) DAMAGES rt. 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are ‘liable for damages. (1101) SUBSIDIARY REMEDIES OF CREDITOR1. ACCION SUBROGATORIA (art 1177) Art. 1177. The creditors, after having pursued the property in possession of the debtor to satisfy their claims, may exercise all the rights and bring all the actions of the latter for the same purpose, save those which are inherent in his person; they may also impugn the acts which the debtor may have done to defraud them. (1111) REMEDIES OF THE CREDITOR (SUCCESSIVE) 1. Exhaust the properties of the debtor; 2. Exercise all rights and actions of the debtors (accion subrogatoria 3. Rescission of contracts executed by the debtor in fraud of their rights. (accion pauliana) MAY THE CREDITOR ELECT TO EXERCISE ACCION PAULINA IMMEDIATELY? NO. without availing of the first two, the creditor cannot resort to the third measure. WHAT IS ACCION SUBROGATORIA? Ina situation where the creditor cannot in any way recover the credit because the debtor has no property or has property insufficient to satisfy his debt but he has credits or rights which he fails to collect, the creditor may exercise all the rights and bring all the actions of the debtor, except those which are inherent in his person REQUISITES FOR THE CREDITOR TO EXERCISE ACCION SUBROGATORIA 1. That the creditor has a right of credit against the debtor although at the moment it is not liquidated; 2. The credit must be due and demandable 3. Failure of the debtor to collect, that is, in action of the debtor whether the same be wilful or negligent; 4. Insufficiency of the assets in the hands of the debtor although the creditor need not bring a separate action to show this exhaustion or insolvency of the debtor but he can prove the same in the very action to exercise the subrogatory action; 5. That the rights and action are purely personal or inherent in the debtor ACCION PAULIANA (1177, 1381, PAR. 3) Art. 1177. The creditors, after having pursued the property in possession of the debtor to satisfy their claims, may exercise all the rights and bring all the actions of the latter for the same purpose, save those which are inherent in his person; they may also impugn the acts which the debtor may have done to defraud them. (1111) Art. 1381. The following contracts are rescissible: (1) Those which are entered into by guardians whenever the wards whom they represent suffer lesion by more than one-fourth of the value of the things which are the object thereof; (2) Those agreed upon in representation of absentees, if the latter suffer the lesion stated in the preceding number; (3) Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them; (4) Those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants or of competent judicial authority; (6) All other contracts specially declared by law to be subject to rescission. (1291a) WHAT IS ACCION PAULIANA? Rescissory action to set aside contracts in fraud of creditors is accion pauliana. action of last resort ‘Khe Hong Cheng v. CA Siguan vs. Lim GR. No. 134686, 19 November 1999 il, OTHER SPECIFIC REMEDIES (ART. 1652, 1729, 1608, 1893) Art. 1652. The sublessee is subsidiarily liable to the lessor for any rent due from the lessee. However, the sublessee shall not be responsible beyondthe amount of rent due from him, in accordance with the terms of the sublease, at the time of the extrajudicial demand by the lessor. Payments of rent in advance by the sublessee shall be deemed not to have been made, so far as the lessor's claim is concemed, unless said payments were effected in virtue of the custom of the place. (1552a) Art, 1729. Those who put their labor upon or fumish materials for a piece of work uridertaken by the contractor have an action against the owner up to the amount owing from the latter to the contractor at the time the claim is made. However, the following shall not prejudice the laborers, employees and furnishers of materials: (1) Payments made by the owner to the contractor before they are due; (2) Renunciation by the contractor of any amount due him from the owner. This article is subject to the provisions of special laws. (1597a) Art. 1608, The vendor may bring his action against every possessor whose right is derived from the vendee, even if in the second contract no mention should have been made of the right to repurchase, without prejudice to the provisions of the Mortgage Law and the Land Registration Law with respect to third persons. (1510) Art. 1893. In the cases mentioned in Nos. 1 and 2 of the preceding article, the principal may furthermore bring an action against the substitute with respect to the obligations which the latter has contracted under the substitution. (1722a) . FORTUITOUS EVENT (1174) Art, 1174, Except in cases expressly specified by the law, or when its otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable. (1105a) WHAT IS FORTUITOUS EVENT? Events that could not be foreseen, or though which foreseen, were inevitable. It is, therefore not enough that the event should not have been foreseen or anticipated, as is commonly believed, but it must be one of impossible to foresee, DIFFERENTIATE CASO FORTUITO FROM FORCE MAJEURE. Fortuitous event is independent not only of the will of the debtor but also of all human will. Force majeure arises from an unavoidable happening, or from an act, lawful or unlawful of a person other than the debtor, which act renders impossible on the part of the debtor compliance with his obligation. WHAT IS THE EFFECT OF FORTUITOUS EVENT? Extinguishment of liability. WHAT ARE THE EXCEPTIONS?‘Art. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable. (1105a) 1165, PAR 2. If the obligor delays, or has promised to deliver the same thing to two or more persons who do not have the same interest, he shall be responsible for any fortuitous event until he has effected the delivery. (1096) Art. 552. A possessor in good faith shall not be liable for the deterioration or loss of the thing possessed, except in cases in which it is proved that he has acted with fraudulent intent or negligence, after the judicial summons. Art, 1942, The bailee is liable for the loss of the thing, even if it should be through a fortuitous event: (1) If he devotes the thing to any purpose different from that for which it has been loaned; (2) If he keeps it longer than the period stipulated, or after the accomplishment of the use for which the commodatum has been constituted; (3) If the thing loaned has been delivered with appraisal of its value, unless there is a stipulation exemption the bailee from responsibility in case of a fortuitous event; (4) If he lends or leases the thing to a third person, who is not a member of his household; (6) If, being able to save either the thing borrowed or his own thing, he chose to save the latter. (1744a and 1745) Art. 1979. The depositary is liable for the loss of the thing through a fortuitous event: (1) IFitis so stipulated; (2) If he uses the thing without the depositor’s permission; (3) Ifhe delays its return; (4) If he allows others to use it, even though he himself may have been authorized to use the same. (n) Art. 2001. The act of a thief or robber, who has entered the hotel is not deemed force majeure, unless it is done with the use of arms or through an irresistible force. (n) Art. 2147. The officious manager shall be liable for any fortuitous event: (1) If he undertakes risky operations which the owner was not accustomed to embark upon; (2) If he has preferred his own interest to that of the owner; (3) If he fails to return the property or business after demand by the owner; (4) If he assumed the management in bad faith. (1891a) NOTE: IN ORDER FOR FORTUITOUS EVENT TO EXEMPT ONE FROM LIABILITY, IT is NECESSARY THAT ONE HAS COMMITTED NO NEGLIGENCE OR MISCONDUCT THAT MAY HAVE OCCASIONED THE LOSS, Juan Nakpil and Sons v. CA 144 SCRA 597 (1986) [G.R. No. L-25906, May 28, 1970]PEDRO D. DIOQUINO, PLAINTIFF-APPELLEE, VS. FEDERICO LAUREANO AIDA DE LAUREANO AND JUANITO LAUREANO, DEFENDANTS-APPELLANTS. Austria vs. Court of Appeals G.R. No. L-29640, June 10, 1971 FACTS: National Power Corporation v. Court of Appeals 161 SCRA 334, G.R. No. L-47379 (May 16, 1998) Yobido v. Court of Appeals G.R. No. 113003, 17 October 1997, 281 SCRA 1 261 Phil. 128 DIVISION [GR Nos. 81100-01, Feb 07, 1990 ] BACOLOD-MURCIA MILLING CO. v. CA + DECISION Philcomsat vs. Globe Telecom G.R No. 147324, May 25, 2004, 429, SCRA 153, USURIOUS TRANSACTIONS (1175, 1413, 1961) Art. 1175. Usurious transactions shall be governed by special laws. (n) Art. 1413. Interest paid in excess of the interest allowed by the usury laws may be recovered by the debtor, with interest thereon from the date of the payment. Art. 1961. Usurious contracts shall be governed by the Usury Law and other special laws, so far as they are not inconsistent with this Code. (n) DECREE No. 858 December 31, 1975 AMENDING FURTHER ACT NUMBERED TWO THOUSAND SIX HUNDRED FIFTY- FIVE, AS AMENDED, OTHERWISE KNOWN AS THE "USURY LAW" WHEREAS, there are transactions, which, although involving lending of funds, offer retums on investment higher than the maximum ceilings prescribed in the Usury Law; WHEREAS, the higher return of investment in the money market, among other factors, has drawn money supply away from desirable areas of investment to the detriment of national interest; WHEREAS, the interest rate, together with other monetary and crédit policy instruments, plays a vital role in directing domestic savings and capital resources to economic activities, where they are needed most; NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby declare and order the amendment of Act No. 2655, as amended, as follows: Section 1. Section 1-a of Act No. 2655, as amended, is hereby amended to read as follows; . "Sec. 1-a. The Monetary Board is hereby authorized to prescribe the maximum rate or rates of interest for the loan or renewal thereof or the forbearance of any money, goods lior credits, and to change such rate of rates whenever warranted by prevailing economic and social conditions. “In the exercise of the authority herein granted, the Monetary Board may prescribe higher maximum rates for loans of low priority, such as consumer loans or renewals thereof as well as such loans made by pawnshops, finance companies and other similar credit institutions although the rates prescribed for these institutions need not necessarily be uniform. The Monetary Board is also authorized to prescribe different maximum rate or rates for different types of borrowings, including deposits and deposit substitutes, or loans of financial intermediaries." Section 2. The same Act is hereby amended by adding the following section immediately after Section 4 thereof, which reads as follows: "Sec. 4-a. The Monetary Board may eliminate, exempt from, or suspend the effectivity of, interest rate ceilings on certain types of loans or renewals thereof or forbearances of money, goods, or credit, whenever warranted by prevailing economic and social conditions." Section 3. Section 4-a of the same Act is hereby renumbered as Sec. 4-b. Section 4. All Acts and parts of Acts inconsistent with the provisions of this Decree are hereby repealed Section 5. This Decree shall take effect immediately. Done in the City of Manila, this 31st day of December, in the year of Our Lord, nineteen hundred and seventy-five. PRESIDENTIAL DECREE No. 1685 March 17, 1980 AMENDING PRESIDENTIAL DECREE NUMBERED THIRTEEN HUNDRED NINE AUTHORIZING THE CENTRAL BANK OF THE PHILIPPINES TO ENGAGE IN SPECIAL BORROWING AND LENDING OPERATIONS, WHEREAS, the Central Bank should be clothed with the necessary authority to tap low- cost medium and long-term funds from international and regional financial institutions for relending to approved development projects; WHEREAS, the availment of the funds obtained by the Central Bank under the Consolidated Foreign Borrowings Program should be easier by having more conduit financial institutions through which said funds could be channeled and by liberalizing the constraints on borrowings by government-owned or controlled financial institutions; NOW, THEREFORE, |, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby declare and order the amendment of Presidential Decree No. 1309, as follows Section 1. Presidential Decree Numbered Thirteen hundred nine is hereby amended by adding a new section to be known as Section 1-A to read as follows: "Sec 1-A. Foreign loans obtained by the Central Bank from international or regional financial organizations of which the Republic of the Philippines is a member may be guaranteed by the Republic of the Philippines if required by the charter, regulation or Policy of the lender.” Section 2. Section 2 of the same Decree is hereby amended to read as follows:"Sec. 2. Under special circumstances where the Monetary Board deems it in the national interest, and notwithstanding the provisions of any existing law to the contrary, the Central Bank may grant loans to the Government or to qualified banking and non-bank financial institutions from the proceeds of foreign loans obtained by it, subject to such terms and conditions as the Monetary Board may prescribe, for the following and analogous purposes: “a. To lend to banking and non-bank financial institutions for relending, such funds to finance approved projects; "b. To finance Government development projects for which financing from official development assistance (ODA) sources can not be obtained; and "c. To refinance existing foreign obligations obtained at relatively more onerous terms." Section 3. The same Decree is hereby amended by adding a new section to be known as Section 3 to read as follows: "Sec. 3. Notwithstanding the provisions of any existing law to the contrary, the Central Bank may, at its discretion, extend the proceeds of loans obtained under this Decree ta the Development Bank of the Philippines, the Land Bank of the Philippines and other government-owned or controlled banks whose borrowings are required under their respective charters to be guaranteed by the Republic of the Philippines, without the guaranty of the Republic of the Philippines and the approval of the President of the Philippines: Provided, That obligations of such government-owned or controlled banks which are otherwise exempt from taxes imposed by the Government or any of its subdivisions shall not lose their tax-exempt status solely as a result of the absence of such Government guaranty or approval by the President. Section 4. The same Decree is hereby amended by adding a new section to be known as Section 4 to read as follows: “Sec. 4, The Monetary Board shall establish safeguards as it may deem proper to prevent undue inflationary effect of the lending operations of the Central Bank and shall issue such rules and regulations as may be necessary to implement this Decree and to insure a rational and coordinated approach to the international capital markets.” Section 5. The same Decree is hereby amended by renumbering Section 3 as Section 5. Section 6. Any provision of law, decree, rules and regulations inconsistent herewith are hereby repealed, amended, or modified accordingly. Section 7. This Decree shall take effect immediately. DONE in the City of Manila, this 17th day of March, in the year of Our Lord, nineteen hundred and eighty. Date Issued: 01.21.2004 CIRCULAR NO. 416 Series of 2004 Pursuant to Monetary Board Resolution No. 1843 dated 18 December 2003, approving the amendment to the guidelines on the adoption of the risk-based capital adequacy framework under Circular No. 280 dated 29 March 2001, as amended, the provisions of the Manual of Regulations for Banks are hereby amended as follows:1. — Subsection X116.2 is amended to reflect (1) the reduction in the risk weight of multilateral development banks from 20% to 0%; and (2) to remove loans to exporters to the extent guaranteed by the Guarantee Fund for Small and Medium Enterprises (GFSME) from the list of 0% risk weighted assets, as follows: “XXX 0% risk weight — (1) Cash on hand; (2) Claims on or portions of claims guaranteed by or collateralized by securities issued by- i, Philippine national government and BSP; and ii. Central governments and central banks of foreign countries with the highest credit quality as defined in Subsec. X116.3; (3) Claims on or portions of claims guaranteed by or collateralized by securities issued by multilateral development banks; (4) Loans to the extent covered by hold-out on, or assignment of deposits/deposit substitutes maintained with the lending bank; (5) Loans or acceptances under letters of credit to the extent covered by margin deposits; (6) Portions of special time deposit loans covered by Industrial Guarantee and Loan Fund (IGLF) guarantee; (7) Real estate mortgage loans to the extent guaranteed by the Home Guaranty Corporation (HGC); (8) Loans to the extent guaranteed by the Trade and Investment Development Corporation of the Philippines (TIDCORP); (8) Foreign currency notes and coins on hand acceptable as international reserves; and (10) Gold bullion held either in own vaults, or in another's vaults on an allocated basis, to the extent it is offset by gold bullion liabilities; 20% risk weight — (1) Checks and other cash items; (2) Claims on or portions of claims guaranteed by or collateralized by securities issued by non-central government public sector entities of foreign countries with the highest credit quality as defined in Subsec. X116.3; (3) Claims on or portions of claims guaranteed by Philippine incorporated banks/quasi- banks with the highest credit quality as defined in Subsec. X116.3; (4) Claims on or portions of claims guaranteed by foreign incorporated banks with the highest credit quality as defined in Subsec. X116.3; (5) Loans to exporters to the extent guaranteed by Small Business Guarantee and Finance Corporation (SBGFC): Provided, That loans’ to exporters to the extent 14guaranteed by the Guarantee Fund for Small and Medium Enterprises (GFSME) outstanding as of the date of the effectivity of the merger of the SBGFC and the GFSME shall continue to have a zero percent risk weight: Provided, further, That the zero percent risk weight shall not apply to loans renewed after the merger of the SBGFC and the GFSME. (6) Foreign currency checks and other cash items denominated in currencies acceptable as international reserves; and (7) Claims on Philippine incorporated banks, which claims obtain and maintain credit ratings of at least equal to that of the Philippine national government from a BSP recognized international credit rating agency; Xxx 2. Subsection X116.3 is amended to expand the list of multilateral development banks assigned a zero percent risk weight, as follows: ex u. Multilateral development banks. These refer to the World Bank Group comprised of the International Bank for Reconstruction and Development (IBRD) and the International Finance Corporation (IFC), the Asian Development Bank (ADB), the African Development Bank (AfDB), the European Bank for Reconstruction and Development (EBRD), the Inter- American Development Bank (IADB), the European Investment Bank (EIB); the Nordic Investment Bank (NIB); the Caribbean Development Bank (CDB), the Council of Europe Development Bank (CEDB) and such others as may be recognized by the BSP. xxx" This Circular shall take effect fifteen (15) days after its publication either in the Official Gazette or in a newspaper of general circulation. FOR THE MONETARY BOARD: RAFAEL B. BUENAVENTURA. Governor Easter Shipping Lines, Inc. v. Court of Appeals GR. No. 94151, 30 April 1991, 196 SCRA 570 Crismina Garments v. CA. G.R. No. 128721, March 9, 1999, 304 SCRA 356 Keng Hua Products v. CA GR No. 116863, 12 February 1998 Security Bank and Trust Company vs. R.T.C MAKATI BR. 61 MAGTANGGOL EUSEBIO AND LEILA VENTURA G.R.No. 113926 230ctober1996 ANGEL WAREHOUSING VS. CHELDA G.R. No. L-25704 April 24, 1968First Metro Investment vs. Este. Del Sol GR, No. 141811, November 15, 2001, 369 SCRA 99 DELA CRUZ VS PPI (G.R. NO. 158649 FEBRUARY 18, 2013) ‘Sps Dela Cruz vs Planters Products Inc, GR. No. 158649 February 18, 2013