ASG Law

Tag: PD 385

  • Unilateral Interest Rate Hikes: Protecting Borrowers from Bank Overreach

    The Supreme Court affirmed that banks cannot unilaterally increase interest rates on loans without the borrower’s explicit consent, reinforcing the principle of mutuality of contracts. This decision safeguards borrowers from arbitrary and potentially excessive interest rate adjustments imposed by lending institutions. The court emphasized that any modification to interest rates must be a product of mutual agreement, ensuring fairness and protecting the borrower’s rights.

    Loan Sharks in Pinstripes? Examining Mutuality in Bank-Borrower Agreements

    In 1981, Spouses Rocamora secured a P100,000 loan from the Philippine National Bank (PNB) under the Cottage Industry Guarantee and Loan Fund (CIGLF). The loan agreement included an escalation clause, allowing PNB to increase the interest rate. Over time, PNB raised the interest from 12% to as high as 42% per annum. When the spouses Rocamora defaulted, PNB foreclosed the mortgaged properties. After the foreclosure, PNB sought a deficiency judgment, claiming the Rocamoras owed P206,297.47, including interests and penalties. The spouses Rocamora contested this, arguing that PNB’s unilateral rate hikes and delayed foreclosure inflated their debt. The central legal question was whether PNB could unilaterally increase the interest rate based on the escalation clause, and claim deficiency after foreclosure.

    The Regional Trial Court (RTC) and the Court of Appeals (CA) both ruled against PNB, invalidating the escalation clause due to the lack of mutual agreement on the increased interest rates. The Supreme Court (SC) agreed with the lower courts’ findings. The Court underscored that escalation clauses do not grant banks the unrestricted power to unilaterally raise interest rates. Any increase must result from a mutual agreement between the parties involved. In the absence of such agreement, the imposed changes hold no binding effect. This is deeply rooted in the principle of mutuality of contracts, as articulated in Article 1308 of the Civil Code, which dictates that a contract must bind both parties, and its validity or compliance cannot rest solely on the will of one party.

    The Supreme Court highlighted the necessity of proving deficiency claims. Like any monetary claim, a mortgagee seeking a deficiency judgment must substantiate its claim. The right to pursue the debtor arises only when foreclosure proceeds insufficiently cover the obligation and related costs at the time of sale. PNB failed to provide adequate evidence supporting the claimed deficiency of P206,297.47. In fact, the bank’s own evidence presented conflicting figures, casting doubt on the actual amount due.

    Furthermore, the Supreme Court addressed PNB’s non-compliance with Presidential Decree No. 385 (PD 385), mandating government financial institutions to immediately foreclose securities when arrearages reach at least 20% of the total outstanding obligation. PNB delayed the foreclosure proceedings, contributing to the inflated debt due to accrued interest and penalties. This delay, in violation of PD 385, was detrimental to the spouses Rocamora, the Court reasoned. Granting PNB’s deficiency claim would effectively reward the bank for its delay and disregard of the mandatory foreclosure requirements under PD 385. The Court thus concluded that the claimed deficiency consisted mainly of excessively increased interests and penalty charges, which should not be countenanced.

    While the Court affirmed the invalidity of the interest rate increases and rejected the deficiency claim, it modified the CA decision by deleting the awards for moral and exemplary damages, attorney’s fees, and litigation costs. The Court found insufficient evidence that PNB acted fraudulently, in bad faith, or in wanton disregard of its contractual obligations. Bad faith requires more than bad judgment or negligence; it involves a dishonest purpose or conscious wrongdoing, which was not proven in this case.

    FAQs

    What was the key issue in this case? The central issue was whether Philippine National Bank (PNB) could unilaterally increase the interest rates on a loan based on an escalation clause without the explicit consent of the borrowers, the Spouses Rocamora.
    What is an escalation clause? An escalation clause is a contractual provision that allows a lender to adjust the interest rate on a loan based on certain pre-defined conditions, such as changes in market rates or government regulations.
    What does “mutuality of contracts” mean? Mutuality of contracts means that the contract must bind both parties, and its validity or compliance cannot be left solely to the will of one party. Both parties must agree on the terms and any modifications to those terms.
    What is PD 385 and how does it relate to this case? PD 385 mandates government financial institutions to immediately foreclose on collaterals and securities for loans when arrearages reach at least 20% of the total outstanding obligation. PNB’s delay in foreclosing violated PD 385.
    Why did the court invalidate the interest rate increases? The court invalidated the interest rate increases because PNB unilaterally imposed them without obtaining the Spouses Rocamora’s consent, violating the principle of mutuality of contracts.
    What was PNB claiming in the deficiency judgment? PNB claimed that after foreclosing on the Spouses Rocamora’s properties, the proceeds were insufficient to cover the outstanding loan balance, including accrued interest and penalties, amounting to a deficiency of P206,297.47.
    Did the Supreme Court award damages to the Spouses Rocamora? No, the Supreme Court deleted the awards for moral and exemplary damages, attorney’s fees, and litigation costs, finding insufficient evidence that PNB acted fraudulently or in bad faith.
    What was the outcome of the case? The Supreme Court denied PNB’s petition for review, affirming the Court of Appeals’ decision that dismissed PNB’s complaint for deficiency judgment.

    This case serves as a crucial reminder that lending institutions must adhere to fair practices and uphold the principle of mutuality in contracts. Unilateral actions that unduly burden borrowers will not be tolerated by the courts, safeguarding financial stability and consumer protection.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: PHILIPPINE NATIONAL BANK VS. SPOUSES AGUSTIN AND PILAR ROCAMORA, G.R. No. 164549, September 18, 2009

  • Mandatory Foreclosure: GFI’s Duty to Verify Borrower Payments Before Proceeding with Foreclosure

    The Supreme Court held that government financial institutions (GFIs) must conduct a preliminary hearing to ascertain whether a borrower has paid at least 20% of the outstanding arrearages after foreclosure proceedings have begun, before proceeding with foreclosure. This requirement ensures that borrowers are not unduly deprived of their property without due process, particularly in cases where discrepancies in accounting records exist. The court emphasized that adherence to this procedure is crucial to protect the borrower’s rights and prevent unnecessary legal complications. This ruling clarifies the mandatory foreclosure requirements under Presidential Decree (P.D.) No. 385 and the scope of judicial intervention.

    Accounting Discrepancies: Can a GFI Foreclose Without a Proper Hearing?

    Polystyrene Manufacturing Company, Inc. (PMCI) obtained a loan guaranteed by the Development Bank of the Philippines (DBP). Following a fire at PMCI’s plant, DBP sought to foreclose on PMCI’s assets, claiming a substantial debt. PMCI disputed the amount, leading to a legal battle focusing on whether DBP could proceed with foreclosure without a proper hearing to reconcile the accounts. The Supreme Court had to decide whether the trial court correctly dismissed PMCI’s case for failure to prosecute, especially given a previous ruling directing the court to conduct a hearing in accordance with Presidential Decree No. 385.

    The legal framework for this case centers on Presidential Decree No. 385, which mandates government financial institutions (GFIs) to foreclose on loans with arrearages. However, it also provides a safeguard, stipulating that courts cannot issue injunctions against foreclosure unless the borrower demonstrates having paid at least 20% of the arrearages after the foreclosure proceedings began. As the Supreme Court previously stated,

    “Section 2. No restraining order, temporary or permanent injunction, shall be issued by the court against any government financial institution in any action taken by such institution in compliance with the mandatory foreclosure provided in Section 1 hereof… except after due hearing in which it is established by the borrower… that twenty percent (20%) of the outstanding arrearages has been paid after the filing of the foreclosure proceedings.”

    The heart of the issue was whether the trial court followed proper procedure in determining if PMCI was entitled to an injunction against the foreclosure. The Supreme Court found that the trial court had erred by proceeding with pre-trial proceedings without first conducting the required hearing to determine whether PMCI had indeed paid at least 20% of its arrearages, as mandated by P.D. No. 385. The Supreme Court reiterated its earlier decision, emphasizing that the trial court was required to conduct a preliminary hearing. This hearing would ascertain the factual existence of arrearages and whether the borrower paid at least 20% of them after the initiation of foreclosure proceedings. Without this crucial step, the trial court’s subsequent actions, including the dismissal of the case for failure to prosecute, were deemed invalid.

    The Supreme Court emphasized the necessity for lower courts to adhere to its directives and decisions. The procedural misstep of bypassing the preliminary hearing, as required by P.D. No. 385, undermined the law’s intent and prejudiced PMCI’s right to a fair determination of its obligations. Building on this principle, the Court invalidated the trial court’s dismissal of the case, asserting that such dismissal was based on a flawed procedure that deviated from established legal requirements. Therefore, the Supreme Court reversed the Court of Appeals’ decision and remanded the case to the trial court, mandating compliance with the procedure outlined in P.D. No. 385 and the Court’s prior ruling. Ultimately, this underscores the importance of GFIs accurately establishing the borrower’s debt and payment status, and adhering to the mandatory foreclosure procedures.

    This decision has significant practical implications for both borrowers and government financial institutions (GFIs). For borrowers, it provides a safeguard against arbitrary foreclosure proceedings, ensuring that their payments are properly accounted for and that they have an opportunity to demonstrate compliance with P.D. No. 385 before foreclosure proceeds. This approach contrasts with a situation where a borrower is forced to litigate the debt’s accuracy only after losing the property. For GFIs, this ruling reinforces the importance of meticulous record-keeping and adherence to procedural requirements in foreclosure cases. It also clarifies that initiating foreclosure proceedings does not exempt them from the obligation to verify the borrower’s payment status through a due hearing.

    FAQs

    What is the central issue in this case? Whether a government financial institution (GFI) can proceed with foreclosure without first holding a hearing to determine if the borrower has paid at least 20% of outstanding arrearages after foreclosure proceedings began.
    What is Presidential Decree No. 385? It is a law that mandates government financial institutions to foreclose on loans with arrearages, while also setting conditions for courts to issue injunctions against such foreclosures.
    What did the Supreme Court direct the trial court to do? The Supreme Court directed the trial court to conduct a preliminary hearing to determine if PMCI had paid at least 20% of its arrearages after foreclosure proceedings began, as required by P.D. No. 385.
    Why was the trial court’s dismissal of the case deemed erroneous? The dismissal was deemed erroneous because the trial court proceeded with pre-trial without first conducting the mandated hearing, thus deviating from the procedural requirements set forth by the Supreme Court.
    What is the significance of the 20% payment requirement? It is a threshold established by P.D. No. 385, where, payment of at least 20% gives the borrower the right to seek legal recourse and stop a foreclosure.
    What practical implications does this case have for borrowers? It ensures that borrowers have an opportunity to demonstrate compliance with P.D. No. 385 before foreclosure, providing a safeguard against arbitrary foreclosure proceedings.
    What practical implications does it have for government financial institutions (GFIs)? It reinforces the importance of meticulous record-keeping, verification of payment status, and adherence to procedural requirements in foreclosure cases.
    What was the ultimate outcome of the case? The Supreme Court reversed the Court of Appeals’ decision and remanded the case to the trial court, ordering compliance with P.D. No. 385 and the Court’s previous ruling.
    What was the relevance of prior decisions in this case? The Supreme Court reiterated its previous ruling in G.R. No. 77631, emphasizing that trial courts must conduct the preliminary hearing as mandated.

    In conclusion, the Supreme Court’s decision highlights the critical importance of due process and strict adherence to procedural requirements in foreclosure cases involving government financial institutions. By mandating a preliminary hearing to verify borrowers’ payments, the Court ensures that the rights of borrowers are protected and that foreclosure proceedings are conducted fairly. This ruling reinforces the principle that financial institutions must demonstrate diligence and accuracy in their accounting practices and legal proceedings.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Polystyrene Manufacturing Company, Inc. v. Privatization and Management Office, G.R. No. 171336, October 04, 2007

  • Enforcement of Mortgage Contracts: When Can a Foreclosure Be Stopped?

    When Government Banks Can Foreclose: Understanding P.D. 385

    TLDR: This case reinforces that Presidential Decree 385 mandates government financial institutions to foreclose on loans with significant arrearages, limiting court intervention unless a substantial portion of the debt has been paid. It highlights the importance of adhering to loan terms and the restrictions on injunctions against government banks acting within the bounds of the law.

    G.R. NO. 141849, February 13, 2007

    Introduction

    Imagine a business owner facing the potential loss of their property due to a loan default. The ability to stop a foreclosure can be crucial. But what happens when the lender is a government bank? This case, Isabel Jael Marquez vs. Development Bank of the Philippines (DBP), sheds light on the limits of preventing foreclosure when dealing with government financial institutions, particularly under Presidential Decree (P.D.) 385. It underscores the importance of understanding the legal framework governing loan agreements and the specific regulations that apply to government banks.

    The case involves a loan taken out by Lucena Entrepreneur and Agri-Industrial Development Corporation (LEAD) from DBP, secured by real estate mortgages, including one on property owned by Marcial Marquez. When LEAD defaulted, DBP initiated foreclosure proceedings, leading Marquez to seek an injunction to halt the sale. The central legal question is whether the courts can prevent a government bank like DBP from foreclosing on a mortgage when the borrower is in significant arrears.

    Legal Context: P.D. 385 and Injunctions

    At the heart of this case lies Presidential Decree No. 385. This decree was enacted to ensure the prompt collection of debts owed to government financial institutions. It mandates these institutions to foreclose on loans when arrearages reach a certain threshold. The key provision is Section 1 of P.D. 385, which states that it is mandatory for government financial institutions to foreclose on collaterals for any loan when arrearages amount to at least twenty percent (20%) of the total outstanding obligations.

    The power of courts to issue injunctions is governed by Rule 58 of the Rules of Court. An injunction is a court order that either restrains a party from performing certain acts (prohibitory injunction) or requires a party to perform certain acts (mandatory injunction). However, P.D. 385 significantly restricts the issuance of injunctions against government financial institutions acting to foreclose on properties as mandated by the decree.

    Section 2 of P.D. 385 explicitly addresses this, stating: “No restraining order, temporary or permanent injunction shall be issued by the court against any government financial institution in any action taken by such institution in compliance with the mandatory foreclosure provided in Section 1 hereof… except after due hearing in which it is established by the borrower and admitted by the government financial institution concerned that twenty percent (20%) of the outstanding arrearages had been paid after the filing of foreclosure proceedings.”

    Case Breakdown: Marquez vs. DBP

    The story begins with LEAD, a corporation formed to engage in deep-sea fishing, obtaining a loan from DBP to finance a fishing vessel. Marcial Marquez, as an officer of LEAD, was solidarily liable for the loan and provided a real estate mortgage on his property as additional security.

    Here’s a breakdown of the key events:

    • 1977-1981: LEAD secures initial and additional loans from DBP for the fishing vessel project.
    • 1982: DBP informs LEAD of significant arrearages on the outstanding loan.
    • 1985: The fishing vessel sinks, leading DBP to collect insurance proceeds, which are applied to the loan.
    • 1992: DBP demands settlement of the outstanding loan and initiates foreclosure proceedings due to continued default.
    • Marquez files a case seeking damages and cancellation of the mortgage, along with a request for an injunction to stop the foreclosure sale.

    The trial court initially issued a Temporary Restraining Order (TRO) but later denied Marquez’s request for a preliminary injunction. The Court of Appeals (CA) affirmed this decision, leading to the Supreme Court (SC) case.

    The Supreme Court upheld the CA’s decision, emphasizing the applicability of P.D. 385. The Court stated:

    “Absent any showing by petitioners that LEAD had complied with the required 20% payment of the arrearages, P.D. 385 must be obeyed.”

    Furthermore, the Court highlighted that the issuance of an injunctive writ is discretionary and requires a clear right to be protected. The Court noted:

    “We uphold the trial court and CA in their finding that Marquez had not shown a right in esse to be protected. Indeed, the applicant’s right must be clear or unmistakable, that is, that the right is actual, clear and positive especially calling for judicial protection.”

    The Court found no evidence of grave abuse of discretion by the lower courts in denying the injunction.

    Practical Implications: Navigating Foreclosures with Government Banks

    This case provides crucial insights for borrowers dealing with government financial institutions. It clarifies that P.D. 385 significantly limits the ability to obtain injunctions against foreclosure proceedings when a borrower is in substantial arrears. Borrowers must demonstrate they have paid at least 20% of the arrearages after the foreclosure proceedings to even be considered for an injunction.

    Key Lessons:

    • Adhere to Loan Terms: Strict compliance with loan repayment schedules is critical to avoid triggering foreclosure under P.D. 385.
    • Understand P.D. 385: Borrowers should be aware of the mandatory foreclosure requirements and the limited grounds for obtaining an injunction.
    • Negotiate Early: If facing financial difficulties, engage in early negotiations with the government bank to explore restructuring or other solutions before arrearages become insurmountable.
    • Document Everything: Maintain meticulous records of all payments and communications with the lender.

    Frequently Asked Questions

    Q: What is P.D. 385?

    A: Presidential Decree 385 mandates government financial institutions to foreclose on loans when arrearages reach at least 20% of the total outstanding obligations.

    Q: Can I get an injunction to stop a foreclosure by a government bank?

    A: P.D. 385 restricts injunctions against government banks foreclosing on loans, unless you can prove you’ve paid at least 20% of the arrearages after the foreclosure proceedings began.

    Q: What should I do if I’m struggling to repay a loan from a government bank?

    A: Contact the bank immediately to discuss potential restructuring options or payment plans. Early communication is key.

    Q: Does P.D. 385 apply to all types of loans?

    A: Yes, P.D. 385 applies to any loan, credit, accommodation, and/or guarantees granted by government financial institutions.

    Q: What if I believe the bank is charging excessive interest or fees?

    A: Consult with a lawyer specializing in banking law to review your loan documents and assess the validity of the charges.

    Q: Is there any way to challenge the foreclosure if I can’t pay 20% of the arrearages?

    A: While P.D. 385 makes it difficult, you may have grounds to challenge the foreclosure if you can prove fraud, misrepresentation, or a violation of your rights by the bank. Legal counsel is essential in such situations.

    ASG Law specializes in banking and finance law. Contact us or email hello@asglawpartners.com to schedule a consultation.

  • Foreclosure Rights vs. Damages: DBP’s Mortgage Lien and the Limits of Injunction

    This case clarifies that a permanent injunction against foreclosure should not be interpreted to extinguish a bank’s mortgage rights entirely. Even with an injunction temporarily halting foreclosure, the bank retains the right to pursue foreclosure if the borrower fails to fulfill their obligations. Furthermore, the Supreme Court emphasized that moral damages cannot be awarded without proof of malice or bad faith, setting a high bar for borrowers seeking compensation for a lender’s actions. This ruling ensures banks can protect their financial interests while setting clear boundaries for the issuance of injunctions and awards of moral damages in foreclosure cases.

    Mortgage Showdown: Can DBP Foreclose Despite a Previous Injunction and Claim for Damages?

    The Development Bank of the Philippines (DBP) found itself in a legal battle with the Spouses Gotangco over a loan secured by real estate. The Spouses Gotangco had mortgaged seven parcels of land to the DBP to secure a loan for their poultry project. Later, they entered into a contract to sell those lands to Elpidio Cucio. After Cucio paid a significant portion of the purchase price to the DBP, complications arose when the Spouses Gotangco restructured their loan. Despite the restructuring and Cucio’s payments, the DBP eventually sought to foreclose on the properties, leading to legal action.

    Cucio filed a complaint to compel the Spouses Gotangco to finalize the sale and the DBP to release the titles. The Spouses Gotangco then sought an injunction to prevent the foreclosure, which the trial court granted, also awarding moral damages against the DBP. The central legal question was whether the permanent injunction issued by the trial court effectively nullified DBP’s mortgage lien and whether the award of moral damages was justified. The Court of Appeals affirmed the trial court’s decision, but reduced the amount of damages. DBP then elevated the case to the Supreme Court.

    The Supreme Court began its analysis by clarifying the scope of the permanent injunction. While the injunction had been issued to halt a specific foreclosure attempt, it did not permanently extinguish DBP’s right to foreclose should the Spouses Gotangco continue to default on their loan obligations. The Court emphasized that an injunction order should be definite, clear, and precise, tailored to the specific circumstances of the case. The injunction was initially granted due to unresolved issues surrounding the Spouses Gotangco’s account balance and the substitution of collateral. However, the Supreme Court underscored that the mortgage lien remained a vested interest that could only be destroyed by the sale of the property.

    The Court examined the lower courts’ reliance on P.D. No. 385, which mandates government financial institutions to foreclose on loans when arrearages reach a certain threshold. While the Court of Appeals believed DBP’s foreclosure was unwarranted as there was failure to produce the record showing that Spouses Gotangco failed to pay twenty percent (20%) of their total outstanding obligation, the Supreme Court ruled that this factor alone did not justify a permanent bar on foreclosure. It reiterated that DBP’s right to foreclose was linked to the underlying loan agreement and the failure of the Spouses Gotangco to meet their obligations.

    The Supreme Court then turned to the issue of moral damages. Article 19 of the New Civil Code outlines the principle of abuse of rights. For abuse of rights to be established, there must be: a legal right or duty, exercised in bad faith, with the sole intent of prejudicing or injuring another.

    Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.

    The Court found no evidence that the DBP acted with malice or bad faith. DBP had repeatedly sent notices to the Spouses Gotangco and demanded payment, the accrual of interests and penalties prompted the foreclosure application. There was a lack of proof demonstrating DBP acted with ill-will or spite in seeking to protect its financial interests.

    The Court ruled the award of moral damages was not justified, as bad faith must be substantiated. Mere divergence of opinion between parties does not establish malice. In sum, the Supreme Court clarified that a permanent injunction must be narrowly tailored and does not extinguish underlying mortgage rights. Moreover, moral damages require a showing of malice or bad faith, not simply the exercise of a legal right.

    FAQs

    What was the key issue in this case? The key issue was whether a permanent injunction against foreclosure extinguished the bank’s mortgage lien and whether moral damages were appropriately awarded. The Supreme Court clarified that the injunction was limited and DBP’s mortgage rights remained intact.
    Did the Supreme Court uphold the permanent injunction against DBP? No, the Supreme Court deleted the permanent injunction. It ruled that the injunction should not perpetually bar DBP from foreclosing if the Spouses Gotangco failed to meet their loan obligations.
    What is required to prove ‘abuse of rights’ under Article 19 of the Civil Code? To prove abuse of rights, it must be shown that a legal right was exercised in bad faith with the sole intent of prejudicing or injuring another party. This requires demonstrating malice or bad faith, not just negligence.
    Why did the Supreme Court remove the award of moral damages? The Supreme Court removed the award of moral damages because the Spouses Gotangco failed to prove that DBP acted with malice or bad faith when it sought to foreclose on the properties.
    What is the significance of P.D. No. 385 in this case? P.D. No. 385 mandates government financial institutions to foreclose on loans when arrearages reach a certain level. However, the Supreme Court clarified that non-compliance alone does not justify a permanent injunction against foreclosure.
    What must an injunction order contain to be valid? An injunction order must be as definite, clear, and precise as possible. It should inform the defendant of the specific act they are refrained from doing without requiring inferences or conclusions.
    What rights does a mortgagee have over a mortgaged property? A mortgagee has a mortgage lien over the property, which is a right in rem, meaning a lien on the property itself. This provides specific security for the satisfaction of the debt, constituting a cloud on the legal title.
    Did Cucio’s payments to DBP affect the bank’s right to foreclose? Cucio’s payments were intended to cover part of Spouses Gotangco’s debt. However, the core issue was not Cucio’s payments themselves but the Spouses Gotangco’s overall compliance with their obligations to DBP.

    In conclusion, this case serves as a reminder of the importance of clearly defining the scope of injunctions and the stringent requirements for proving bad faith in damage claims. The Supreme Court reinforced the rights of financial institutions to protect their mortgage liens while setting boundaries for the imposition of injunctions and awards of moral damages.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Development Bank of the Philippines vs. Court of Appeals, G.R. No. 137916, December 08, 2004