Good morning afternoon, today I am going to discuss

article 1175 to 1178

(basaha ang article 1175 title only)

USURY
- It is a contracting for or receiving an amount in excess
of that allowed by law for the loan or use of money,
goods, chattels or credits
(btw, "Chattels" refers to movable personal property,
which is distinct from real property (real estate) or
immovable property. Chattels are typically items that you
can physically move or transport and do not become part
of the land or real property. They are tangible and can
include a wide range of assets, such as furniture, vehicles,
electronics, clothing, and personal belongings.)

- I said earlier that Usury is a contracting or receiving

amount in excess of law
- so does the law set the amount?
- Yes, because We have a legal rate of interest and
according to central bank circular 799 which took effect
July 1, 2013 – the legal rate of interest is 6% per annum

- Now, what about these credit card companies that

impose a rate of interest higher than that of six percent
legal rate, they impose a 3.25 percent interest per
month, is that valid, is that legal? Yes it is, why –
because we have central bank circular 905 which was
enacted in 1982 and took effect in 1983

- In the effect of this central bank circular, was to

suspend the usury law, why ? because it removed the
ceiling on the rate of interest for loans for balances,
etc.

- So effectively, the usury law is suspended or non-

existent and people will not be punished for imposing
usurious rates of interest or rates of interest which are
higher than the legal rate of interest of six percent

- That’s why banks can charge 3.25 percent interest per

month which is way higher than the legal rate set by
low of six percent per annum, because you multiply
 3.25 by 12 months that is definitely higher than 6
percent per year

- Now, despite the fact that the banks and other lenders
are allowed to impose a rate of interest which is higher
than that set by law, this authority or this central bank
circular 905 does not mean or does not grant blanket
authority to lenders to impose rates which will unduly
enslave their borrowers or lead to a hemorrhaging of
their assets

- In other words, the effect of those pronouncement is

that the supreme court can equitably reduce the
interest charged against certain debtors in case the
interest rates are found to be iniquitous,
unconscionable or inequitable

- So if the interest rate is shocking to the conscience

then the supreme court may equitably reduce that rate
of interest

- So again, usury law is suspended while lenders may

impose rates of interest higher than that of the legal
rate of 6% per annum and they should not impose rates
 that are unconscionable or iniquitous otherwise they
may be equitably reduced by the court

Now we can move on to a presumption set by law

Next article (basaha ang title sa article)

PRESUMPTIONS
- In case a creditor receives or gives a receipt for the
principal, without indicating or without reserving his
right to the interest this gives rise to a presumption
that the interest has been paid
- Also, if the principal gives a receipt for a later
installment in case of an obligation to be paid in
installments receipt of that installments leads to the
presumption also that prior installments have also been
paid
- However. these are only disputable presumptions
which may be overcome by proof to the contrary, they
are not conclusive presumption
- Now, These presumptions do not apply in the following
cases
 o If there is an oral or written reservation by the
creditor because as already reserved his right either
to the interest or to the prior installments
o If the receipt issued by the creditor does not state
that it is issued for a particular installment even if it
is dated, you can not just infer that the date
indicated there refers to the installment concern
o Incase the receipt given by the creditor is only for
part of the principal, in order for the presumptions
mentioned earlier to apply, it must be a receipt for
the whole of the principal in order for the
presumption that interest have been paid to apply,
but if the receipt is only for the part of the principal
the presumption does not apply
o In case of payment of taxes, payment of taxes for
the current year does not lead to the presumption
that the taxes for previous have been paid
o In case that non-payment has actually been
proven,of course the presumptions will not apply
because now there is proof to the contrary

Next article is 1177

REMEDIES OF THE CREDITOR IN CASE OF PROTECTION OF
HIS CREDIT
 - So what are the remedies of the creditor to protect his
credit?
o the first one is to exhaust all the assets or property
of the debtor, he can use the various legal remedies
available such as attachment
o Second, there is what is known as action
subrogatoire which refers to the right of the
creditor to be subrogated to all the rights of the
debtor to protect his credit
(btw, "Action subrogatoire" or in english "subrogation
action" is a legal principle that allows a person or entity to
step into the shoes of another party and pursue a claim or
right that the original party had. This typically occurs when
one party has paid for a debt or loss that was originally the
responsibility of another party.
o Now take note, in case of action subrogatoire, the
creditor does not become the creditor of the third
person, the creditor merely acts in the place of the
debtor
o So for action subrogatoire to take place, the
following are the requisites
▪ First, there must be a debt, owing from the
debtor to that creditor
 ▪ The creditor is prejudiced by the inaction of the
debtor to run after or to proceed against a third
person who owes the debtor
▪ The creditor has exhausted the properties of
the debtor, that’s important because action
subrogatoire can only be availed after the
creditor has already exhausted the properties of
the debtor
- The next remedy of the creditor would be action
pollyana
o This is the right of the creditor to impugn or
challenge the debtors act which may have been
done to defraud the creditor
o And how does the creditor do this ? through a
rescissory action, the creditor will file an action for
a rescission of the fraudulent contracts which the
debtor may have entered into
o In order for the creditor to claim this action, he
must exhausted all his legal remedies, why ?
because the action for rescission in this space is
only its subsidiary action
o Meaning it can only be availed off if the other
remedies have already been availed off
- The requisites for action pollyana
 o There must be prior credit owing to the creditor
form the debtor
o There is a subsequent transfer from the debtor to a
third party, meaning after the credit is taken from
the creditor the debtor will now transfer property
to a third person
o The creditor must have no other legal remedies, the
act also of the creditor must be fraudulent and the
third party must be an accomplice in the fraud
▪ Why must he be an accomplice ?
• Because transfers made to third parties who
are in good faith are valid or may be valid in
general
• And it is generally the third person who has
connived in the fraud or who is in bad faith
that can be compelled to return the object

Transmissible

The final principle under the nature and effect of

obligations is the principle that rights are transmissible
- As a general rule, rights are transmissible, however,
there are exceptions, and the exceptions are the
situations where rights may not be transmitted
o First is when transmission is prohibited by law such
as when they are purely personal in nature like
contracts of agency or partnership or commodatum
o Or rights may not be transmitted when there is a
stipulation by the parties, one example would be
the gym memberships, this membership cannot be
transmitted from one person to another
▪ So the parties by stipulation may agree that
rights are not transmissible