CBC 416

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
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);

(9) Foreign currency notes and coins on hand acceptable as international reserves;
and

(10) Gold bullion held either in own vaults, or in anothers 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
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;

CBC 2655
"Contracting for or receiving something in excess of the amount allowed by law for
the forbearance of money, goods or things in action. Under the Usury Law (Act
2655, as amended by P.D. 116), which is now no longer in effect, the legal rate of
interest for the loan or forbearance of any money, goods or credits, where such loan
or renewal or forbearance is secured in whole or in part by a mortgage upon real
estate the title to which is duly registered, in the absence of express contract as to
such rate of interest, shall be 12% per annum. Any amount of interest paid or
stipulated to be paid in excess of that fixed by law is considered usurious, therefore
unlawful."<ref>Spouses Puerto vs. CA, G.R. No. 138210, 6 June 2002</ref>
ith the suspension of the Usury Law and the removal of interest ceilings, the parties
are generally free to stipulate the interest rates to be imposed on monetary
obligations. As a rule, the interest rate agreed by the creditor and the debtor is
binding upon them. This rule, however, is not absolute. The striking down of
unconscionable interest is based on Article 1409 of the Civil Code, which considers
certain contracts as inexistent and void from the beginning, including: "Those
whose cause, object or purpose is contrary to law, morals, good customs, public
order or public policy".
ust to be clear, legal interest doesnt mean that anything beyond 12% is illegal.
It simply means that in a loan or forbearance of money, the interest due should be
that stipulated in writing, and in the absence thereof, the rate shall be 12% per
annum.
TIME VALUE OF MONEY
The idea that money available at the present time is worth more than the same
amount in the future due to its potential earning capacity. This core principle of
finance holds that, provided money can earn interest, any amount of money is
worth more the sooner it is received.

Also referred to as "present discounted value".

USURY
MAHMOUD AMIN EL-GAMAL A BASIC GUIDE TO CONTEMPORARY ISLAMIC BANKING
AND FINANCE
According to one author (Mahmoud A. El-Gamal), while Islamic banks often avoid
use of the word "customer" or "depositor" in favor of the term partner,

In these institutions, investment-account holders neither have the protection of

being creditors of the Islamic financial institution, nor do they have the protection of
being equity holders with representation on those institutions boards of directors.
This introduces a host of other well-documented risk factors for the institution ...
[122]

A banking system that is based on the principles of Islamic law (also known Shariah)
and guided by Islamic economics. Two basic principles behind Islamic banking are
the sharing of profit and loss and, significantly, the prohibition of the collection and
payment of interest. Collecting interest is not permitted under Islamic law.
TRUTH IN LENDING ACT 1963
to protect its citizens from a lack of awareness of the true cost of credit to the user
by assuring a full disclosure of such cost with a view of preventing the uninformed
use of credit to the detriment of the national economy.
Any creditor shall furnish to each person to whom credit is extended, prior to the
consummation of the transaction, a clear statement in writing setting forth, to the
extent applicable and in accordance with rules and regulations prescribed by the
Board, the following information:

(1) the cash price or delivered price of the property or service to be acquired;

(2) the amounts, if any, to be credited as down payment and/or trade-in;

(3) the difference between the amounts set forth under clauses (1) and (2);

(4) the charges, individually itemized, which are paid or to be paid by such person in
connection with the transaction but which are not incident to the extension of
credit;

(5) the total amount to be financed;

(6) the finance charge expressed in terms of pesos and centavos; and

(7) the percentage that the finance bears to the total amount to be financed
expressed as a simple annual rate on the outstanding unpaid balance of the
obligation.
Any creditor who in connection with any credit transaction fails to disclose to any
person any information in violation of this Act or any regulation issued thereunder
shall be liable to such person in the amount of P100 or in an amount equal to twice
the finance charged required by such creditor in connection with such transaction,
whichever is the greater, except that such liability shall not exceed P2,000 on any
credit transaction

WAREHOUSE RECEIPTS LAW 2137

Warehouse receipts need not be in any particular form but every such receipt must
embody within its written or printed terms:

(a) The location of the warehouse where the goods are stored,

(b) The date of the issue of the receipt,

(c) The consecutive number of the receipt,

(d) A statement whether the goods received will be delivered to the bearer, to a
specified person or to a specified person or his order,

(e) The rate of storage charges,

(f) A description of the goods or of the packages containing them,

(g) The signature of the warehouseman which may be made by his authorized
agent,

(h) If the receipt is issued for goods of which the warehouseman is owner, either
solely or jointly or in common with others, the fact of such ownership, and

(i) A statement of the amount of advances made and of liabilities incurred for which
the warehouseman claims a lien. If the precise amount of such advances made or
of such liabilities incurred is, at the time of the issue of, unknown to the
warehouseman or to his agent who issues it, a statement of the fact that advances
have been made or liabilities incurred and the purpose thereof is sufficient.
Definition of non-negotiable receipt. A receipt in which it is stated that the goods
received will be delivered to the depositor or to any other specified person, is a nonnegotiable receipt.

Sec. 5. Definition of negotiable receipt. A receipt in which it is stated that the

goods received will be delivered to the bearer or to the order of any person named
in such receipt is a negotiable receipt.
Sec. 8. Obligation of warehousemen to deliver. A warehouseman, in the absence
of some lawful excuse provided by this Act, is bound to deliver the goods upon a
demand made either by the holder of a receipt for the goods or by the depositor; if
such demand is accompanied with:

(a) An offer to satisfy the warehouseman's lien;

(b) An offer to surrender the receipt, if negotiable, with such indorsements as would
be necessary for the negotiation of the receipt; and

(c) A readiness and willingness to sign, when the goods are delivered, an
acknowledgment that they have been delivered, if such signature is requested by
the warehouseman.

In case the warehouseman refuses or fails to deliver the goods in compliance with a
demand by the holder or depositor so accompanied, the burden shall be upon the
warehouseman to establish the existence of a lawful excuse for such refusal.
Sec. 9. Justification of warehouseman in delivering. A warehouseman is justified
in delivering the goods, subject to the provisions of the three following sections, to
one who is:

(a) The person lawfully entitled to the possession of the goods, or his agent;

(b) A person who is either himself entitled to delivery by the terms of a nonnegotiable receipt issued for the goods, or who has written authority from the
person so entitled either indorsed upon the receipt or written upon another paper;
or

(c) A person in possession of a negotiable receipt by the terms of which the goods
are deliverable to him or order, or to bearer, or which has been indorsed to him or in
blank by the person to whom delivery was promised by the terms of the receipt or
by his mediate or immediate indorser.
Sec. 29. How the lien may be lost. A warehouseman loses his lien upon goods:

(a) By surrendering possession thereof, or

(b) By refusing to deliver the goods when a demand is made with which he is bound
to comply under the provisions of this Act.
Sec. 37. Negotiation of negotiable receipt of delivery. A negotiable receipt may be
negotiated by delivery:

(a) Where, by terms of the receipt, the warehouseman undertakes to deliver the
goods to the bearer, or

(b) Where, by the terms of the receipt, the warehouseman undertakes to deliver the
goods to the order of a specified person, and such person or a subsequent indorsee
of the receipt has indorsed it in blank or to bearer.
Who may negotiate a receipt. A negotiable receipt may be negotiated:

(a) By the owner thereof, or

(b) By any person to whom the possession or custody of the receipt has been
entrusted by the owner, if, by the terms of the receipt, the warehouseman
undertakes to deliver the goods to the order of the person to whom the possession
or custody of the receipt has been entrusted, or if, at the time of such entrusting,
the receipt is in such form that it may be negotiated by delivery.
Sec. 44. Warranties of a sale of receipt. A person who, for value, negotiates or
transfers a receipt by indorsement or delivery, including one who assigns for value a
claim secured by a receipt, unless a contrary intention appears, warrants:

(a) That the receipt is genuine,

(b) That he has a legal right to negotiate or transfer it,

(c) That he has knowledge of no fact which would impair the validity or worth of the
receipt, and

(d) That he has a right to transfer the title to the goods and that the goods are
merchantable or fit for a particular purpose whenever such warranties would have
been implied, if the contract of the parties had been to transfer without a receipt of
the goods represented thereby.