Article 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.

Kapag ang obligasyon ay obligasyong hindi gawin ang isang bagay, at ginawa ng may obligasyon ang ipinagbabawal, ito ay kailangang ipasawalang bisa ng gumawa gamit ang sariling gastos.

Discussion:

This article pertains to negative personal obligation, or the obligation not to do. In addition to the obligation of the obligor to undo the forbidden act of thing, he may also be made liable for damages caused by doing that which was forbidden.

Case Illustration: Perez vs CA G.R. No. 107737 (1999)

Article 1175

Usurious transactions shall be governed by special laws.

Ang mga usurious transactions ay papamamahalaan ng mga special laws.

Discussion:

What is Usury?

Usury, as defined in Black’s Law Dictionary, is the charging of exorbitant and unconscionable rate of interest, higher than the interest allowed by law. In layman’s term, it means loan sharking.

Special Laws Regulating Usury:

Central Bank Circular No. 905 which took effect on January 1, 1983 made the Usury Law legally non-existent, as declared in the case of Liam Law vs Olympic Sawmill Co. 129 SCRA 439 (1984). An excerpt from the case goes:

The special laws that used to govern usury are:

1. Act No. 2655 as amended by Act No. 3998
2. Commonwealth Act No. 399
3. Republic Act No. 337 and
4. Presidential Decree No. 116, 858 and 1684

Rules governing interest rates in relation to usurious transactions:

1. CBC No. 905 does not repeal the Usury Law. Only a law can repeal a law. The circular merely suspended the law’s effectivity.
2. While the Usury Law ceiling on interest rates was lifted by the CB Circular 905, nothing in the said circular could possibly be read as granting carte blanche authority to lenders to raise interest rates to levels which would either enslave their borrowers or lead to a hemorrhaging of their assets (Almeda vs. CA, 256 SCRA 292 [1996]).
3. Increase of interest rate unilaterally without the consent of the debtor is illegal for it violates the principle of mutuality of contracts.
4. The determination of the illegality of a stipulated interest rate depends on the circumstances of the case.
5. Jurisprudence shows that an interest rate of 12% to 25% per annum is considered legal.

Case Illustration: Medel et. al. vs Court of Appeals 299 SCRA 481 (1998)

Article 1160

Obligations derived from quasi-contracts shall be subject to the provisions of Chapter I, Title XVII of this Book.

Ang mga obligasyong galing sa quasi-contracts ay maipapasailalim sa mga probisyong nakasaad sa Chapter I, Title XVII ng Librong ito.

Discussion:

A quasi-contract is a juridical relation which arises from a lawful, voluntary and unilateral act/s executed by somebody for the benefit of another and for which the former must be indemnified to the end that no one shall be enriched or benefited at the expense of another (Article 2142).

Presumptive Consent.- The consent in quasi-contracts is referred to as presumptive consent. Since a quasi-contract is unilateral contract created by the act/s of the gestor, the consent is provided by law through presumption. This consent gives rise to multiple judicial relations which result in obligations for the delivery of the thing or rendition of service.

Case Illustration: Perez vs Pomar 2 Phil. 682 (1903)