Professional Documents
Culture Documents
Red Notes Credit Transaction
Red Notes Credit Transaction
182
MEMORY AID
IN
CIVIL LAW
Characteristics:
1. Real Contract delivery of the thing
loaned is necessary for the
perfection of the contract
NOTE: An accepted promise to make
a future loan is a consensual
contract, and therefore binding upon
the parties but it is only after
delivery, will the real contract of
loan arise. (Art 1934)
2. Unilateral Contract - once the
subject matter has been delivered,
it creates obligations on the part of
only one of the parties (i.e.
borrower).
Kinds:
1. Commodatum when the bailor
(lender) delivers to the bailee
(borrower) a non-consumable thing
so that the latter may use it for a
certain time and return the identical
thing.
Kinds of commodatum:
a. Ordinary Commodatum use by
the borrower of the thing is for a
certain period of time
b. Precarium - one whereby the
bailor may demand the thing
loaned at will and it exists in the
following cases:
i. neither the duration nor
purpose of the contract is
stipulated
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
ii. the use of the thing is
merely tolerated by the
owner
Loan
Credit
Ability of a person to
borrow money or
things by virtue of
the
trust
or
confidence reposed
by the lender that he
will pay what he
promised.
Loan
Credit
1. Interest taken at
Interest is taken in
IN
CIVIL LAW
advance
Always on a single
name paper (i.e.
promissory note with
no
indorse-ment
other
than
the
maker)
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
IN
CIVIL LAW
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
3. To be liable to the bailee for
damages for known hidden flaws.
Requisites:
a. There is flaw or defect in the
thing loaned;
b. The flaw or defect is hidden;
c. The bailor is aware thereof;
d. He does not advise the bailee of
the same; and
e. The bailee suffers damages by
reason of said flaw or defect
NOTES:
If the above requisites concur,
the bailee has the right of
retention for damages.
The bailor cannot exempt
himself from the payment of
expenses
or
damages
by
abandoning the thing to the
bailee.
CIVIL LAW
Rent
1. Delivery of money
or some consumable
thing with a promise
to pay an equivalent
of the same kind and
quality
2. There is a transfer
of ownership of the
thing delivered
There is no transfer
of ownership of the
thing delivered
3. Relationship
between the parties
is that of obligorobligee
Relationship is that
of a landlord and
tenant
4. Creditor receives
payment for his loan
Owner of the
property rented
receives
compensation or
price either in
money, provisions,
chattels, or labor
IN
Loan
1.
Real contract
2. Generally
unilateral because
only borrower has
obligations
Sale
Consensual contract
Bilateral
reciprocal
and
Barter
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
1. Subject matter is
money or fungible
things
Subject matter is
non-fungible, (non
consumable) things
2. In commodatum,
the bailee is bound
to return the
identical thing
borrowed when the
time has expired or
purpose served
3. Mutuum may be
gratuitous and
commodatum is
always gratuitous
Onerous, actually a
mutual sale
IN
CIVIL LAW
Compound Interest
GENERAL RULE: Unpaid interest shall
not earn interest.
EXCEPTIONS:
1. when judicially demanded
2. when there is an express
stipulation (must be in writing in
view of Art. 1956)
Guidelines for the application of
proper interest rates
1. If there is stipulation: that rate shall
be applied
2. The following are the rules of thumb
for the application/imposition of
interest rates:
a) When an obligation, regardless
of its source,
i.e., law,
contracts,
quasi-contracts,
delicts
or
quasi-delicts
is
breached, the contravenor can
be held liable for damages.
b) With regard particularly to an
award of interest in the concept
of actual and compensatory
damages, the rate of interest, as
well as the accrual thereof, is
imposed, as follows:
i. When
the
obligation
breached
consists
of
payment of a sum of money
(loan or forbearance of
money), the interest shall be
that which is stipulated or
agreed upon by the parties.
In absence of an agreement,
the rate shall be the legal
rate (i.e. 12% per annum)
computed from default.
NOTE: The interest due shall
itself earn legal interest
from the time it is judicially
demanded
ii. In other cases, the rate of
interest shall be six percent
(6%) per annum.
NOTE: No interest, however,
shall
be
adjudged
on
unliquidated
claims
or
damages except when or
until the demand can be
established with reasonable
certainty. When the demand
cannot be established, the
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
interest shall begin to run
only from the date of the
judgment of the court is
made.
iii. When the judgment of the
court awarding a sum of
money becomes final and
executory, the rate of legal
interest, whether the case
falls under paragraph i or ii
above, shall be 12% per
annum from such finality
until its satisfaction, this
interim period being deemed
to be by then an equivalent
to a forbearance of credit.
(Eastern Shipping Lines vs.
CA, July 12, 1994)
NOTES:
Central Bank Circular No. 416 fixing
the rate of interest at 12% per
annum deals with loans, forbearance
of any money, goods or credits and
judgments involving such loans, or
forbearance in the absence of
express agreement to such rate
Interest as indemnity for damages is
payable only in case of default or
non-performance of the contract. As
they are distinct claims, they may be
demanded
separately.
(Sentinel
Insurance Co., Inc. vs CA, 182 SCRA
517)
Central Bank Circular No. 905 (Dec.
10, 1982) removed the Usury Law
ceiling on interest rates for secured
and unsecured loans, regardless of
maturity.
Validity of unconscionable interest rate
in a loan
Supreme Court in Sps. Solangon
vs. Jose Salazar, G.R. No. 125944, June
29, 2001, said that since the usury law
had been repealed by CB Cir. No. 905
there is no more maximum rate of
interest and the rate will just depend on
the mutual agreement of the parties
(citing Lim Law vs. Olympic Sawmill Co.,
129 SCRA 439). But the Supreme Court
said that nothing in said circular grants
lenders carta blanche authority to raise
CIVIL LAW COMMITTEE
IN
CIVIL LAW
Characteristics:
1. Real Contract - contract is
perfected by the delivery of the
subject matter.
2. Unilateral (gratutitous deposit) only the depositary has an
obligation.
3. Bilateral (onerous deposit) gives rise to obligations on the
part of both the depositary and
depositor.
Deposit
Mutuum
1. Purpose
Principal purpose is
Principal purpose is
safekeeping or
consumption
custody
2. When to Return
Depositor can
The lender must wait
demand the return of until the expiration
the subject matter at of the period granted
will
to the debtor
3. Subject Matter
Subject matter may
Subject matter is
be movable or
only money or other
immovable property
fungible thing
4. Relationship
Relationship is that
Relationship is that of
of lender (creditor)
depositor and
and borrower
depositary.
(debtor).
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
5. Compensation
There can be
NO compensation of
compensation of
things deposited with
credits.
each other (except
by mutual
agreement).
Deposit
1. Purpose is
Safekeeping
Commodatum
1. Purpose is the
transfer of the use
2. May be gratuitous
2. Essentially and
always gratuitous
3. Movable/corporeal
things only in case of
extrajudicial deposit
Kinds of Deposit:
1. Judicial (Sequestration) takes place
when an attachment or seizure of
property in litigation is ordered.
2. Extra-judicial
a. Voluntary one wherein the
delivery is made by the will of
the depositor or by two or more
persons each of whom believes
himself entitled to the thing
deposited. (Arts 1968 1995)
b. Necessary one made in
compliance
with
a
legal
obligation, or on the occasion of
any calamity, or by travellers in
hotels and inns (Arts 1996 2004), or by travellers with
common carriers (Art 1734
1735).
NOTE:
The
chief
difference
between a voluntary deposit and a
necessary deposit is that in the
former, the depositor has a
complete freedom in choosing the
depositary, whereas in the latter,
there is lack of free choice in the
depositor.
Judicial
Extra-judicial
1. Creation
Will of the court
Will of the parties
or contract
2. Purpose
Security or to insure
the right of a party
to property or to
recover in case of
favorable judgment
IN
CIVIL LAW
Custody and
safekeeping
3. Subject Matter
Movables or
Movables only
immovables,
but generally
immovables
Always onerous
4. Cause
May be compensated or not, but
generally gratuitous
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
he would exercise over his
property
2. To return the thing (Art 1972)
Person to whom the thing must
be returned:
a.
Depositor, to his heirs and
successors, or the person who
may have been designated in the
contract
b. If the depositary is capacitated he is subject to all the
obligations of a depositary
whether or not the depositor is
capacitated. If the depositor is
incapacitated, the depositary
must return the property to the
legal representative of the
incapacitated or to the depositor
himself if he should acquire
capacity (Art 1970).
c. If the depositor is capacitated
and
the
depositary
is
incapacitated - the latter does
not incur the obligation of a
depositary but he is liable:
i..to
return
the
thing
deposited while still in his
possession;
ii.to pay the depositor the
amount which he may have
benefited himself with the
thing or its price subject to
the right of any third person
who acquired the thing in
good faith (Art 1971)
Time of return:
a. Upon demand even though a
specified period or time for such
return may have been fixed
except when the thing is
judicially attached while in the
depositarys possession or should
he have been notified of the
opposition of a third person to
the return or the removal of the
thing deposited. (Art 1998)
b. If deposit gratuitous, the
depositary may return the thing
deposited notwithstanding that a
period has been fixed for the
deposit if justifiable reasons
exists for its return.
IN
CIVIL LAW
c.
If the deposit is for a
valuable
consideration,
the
depositary has no right to return
the thing deposited before the
expiration
of
the
time
designated even if he should
suffer
inconvenience
as a
consequence.(Art 1989)
3.
4.
5.
6.
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
2. When
authorized
depositor
by
the
IN
CIVIL LAW
Mutuum
1. The consumable
thing deposited may
be demanded at will
by the depositor
1. Lender is bound
by the provisions of
the contract and
cannot demand
restitution until the
time for payment, as
provided in the
contract, has arisen
3. The irregular
depositor has a
preference over
other creditors with
respect to the thing
3. Common creditors
enjoy no preference
in the distribution of
the debtors property
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
deposited
2.
IN
CIVIL LAW
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
deposit of effects made by travellers
provided:
a. Notice was given to them or to
their employees of the effects
brought by the guest; and
b. The guests take the precautions
which said hotel-keepers or their
substitutes advised relative to
the care and vigilance of their
effects.
NOTES:
Liability extends to vehicles, animals
and articles which have been
introduced or placed in the annexes
of the hotel.
Liability shall EXCLUDE losses which
proceed from force majeure. The act
of a thief or robber is not deemed
force majeure unless done with the
use of arms or irresistible force.
The hotel-keeper cannot free
himself from the responsibility by
posting notices to the effect that he
is not liable for the articles brought
by the guest. Any stipulation to such
effect shall be void.
Notice is necessary only for suing
civil liability but not in criminal
liability.
GUARANTY (Articles 2047 2084)
Classification of Guaranty:
1. In the Broad sense:
a. Personal - the guaranty is the
credit given by the person who
guarantees the fulfilment of the
principal obligation.
b. Real - the guaranty is the
property,
movable
or
immovable.
2. As to its Origin
CIVIL LAW COMMITTEE
IN
CIVIL LAW
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
IN
CIVIL LAW
(Finman
General
Assurance
Corp. vs. Salik, 188 SCRA 740)
4. Surety is not entitled to the benefit
of exhaustion
NOTE: He assumes a solidary liability
for the fulfilment of the principal
obligation (Towers Assurance Corp
vs. Ororama Supermart, 80 SCRA
262) as an original promissory and
debtor from the beginning.
5. Undertaking is to creditor and not
to debtor.
NOTE: The surety makes no
covenant or agreement with the
principal that it will fulfil the
obligation guaranteed for the benefit
of the principal. Such a promise is
not implied by law either; and this is
true even where under the contract
the creditor is given the right to sue
the principal, or the latter and the
surety at the same time. (Arranz vs.
Manila Fidelity & Surety Co., Inc.,
101 Phil. 272)
6. Surety is not entitled to notice of
principals default
NOTE: The creditor owes no duty of
active diligence to take care of the
interest of the surety and the surety
is bound to take notice of the
principals default and to perform
the obligation. He cannot complain
that the creditor has not notified
him in the absence of a special
agreement to that effect. (Palmares
vs CA, 288 SCRA 422)
7. Prior demand by the creditor upon
principal is not required
NOTE: As soon as the principal is in
default, the surety likewise is in
default.
8. Surety is not exonerated by neglect
of creditor to sue principal
Characteristics
of
Guaranty
and
Suretyship:
1. Accessory - It is indispensable
condition for its existence that there
must be a principal obligation.
NOTES:
Guaranty may be constituted to
guarantee the performance of a
voidable
or
unenforceable
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
contract. It may also guarantee
a natural obligation. (Art 2052)
The guarantor cannot bind
himself for more than the
principal debtor and even if he
does, his liability shall be
reduced to the limits of that of
the debtor.
2. Subsidiary and Conditional - takes
effect only in case the principal
debtor fails in his obligation.
3.
4.
5.
6.
NOTES:
The guarantor cannot bind
himself for more than the
principal debtor and even if he
does, his liability shall be
reduced to the limits of that of
the debtor. But a guarantor may
bind himself for less than that of
the principal (Art 2054)
A guaranty may be given as
security for future debts, the
amount of which is not yet
known; there can be no claim
against the guarantor until the
debt is liquidated. A conditional
obligation may also be secured.
(Art 2053)
Unilateral - may be entered even
w/o the intervention of the principal
debtor, in which case Art. 1236 and
1237 shall apply and it gives rise only
to a duty on the part of the
guarantor in relation to the creditor
and not vice versa.
Nominate
Consensual
It is a contract between the
guarantor/surety and creditor.
NOTES:
Acceptance of guaranty by
creditor and notice thereof to
guarantor:
In declaring that guaranty
must be express, the law
refers solely and exclusively
to the obligation of the
guarantor because it is he
alone who binds himself by
his acceptance. With respect
IN
CIVIL LAW
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
because the latter acts without
motive of pecuniary gain and hence,
should be protected against unjust
pecuniary
impoverishment
by
imposing on the principal, duties
akin to those of a fiduciary.
NOTES:
The rule will apply only after it
has been definitely ascertained
that the contract is one of
suretyship or guaranty. It cannot
be used as an aid in determining
whether a partys undertaking is
that of a surety or guarantor.
(Palmares vs CA, 288 SCRA 292)
It does not apply in case of
compensated sureties.
10. It is a contract which requires that
the guarantor must be a person
distinct form the debtor because a
person cannot be the personal
guarantor of himself.
NOTE: However, in a real guaranty,
like pledge and mortgage, a person
may guarantee his own obligation
with his personal or real properties.
Guaranty
Suretyship
1. Liability depends
upon an independent
agreement to pay the
obligation if primary
debtor fails to do so
1. Surety assumes
liability as regular
party
to
the
undertaking
2. Collateral
taking
2. Surety is
original promisor
an
3.
Surety
primarily liable
is
under-
3.
Guarantor
secondarily liable
is
4. Guarantor binds
himself to pay if
the
principal
CANNOT PAY
5.
Insurer of
solvency of debtor
4. Surety undertakes
to pay if the principal
DOES NOT PAY
5.
Insurer of the
debt
IN
CIVIL LAW
6.
Guarantor can
avail of the benefit
of
excussion
and
division
in
case
creditor
proceeds
against him
6.
Surety cannot
avail of the benefit of
excussion and division
Indorsement
Guaranty
1.
Primarily
transfer
of
1.
Contract
security
of
2. Failure in either or
both
of
these
particulars does not
generally work as an
absolute discharge of
a guarantors liability,
but his is discharged
only to the extent of
the loss which he may
have
suffered
in
consequence thereof
3.
Guarantor
warrants the solvency
of the promisor
4. Indorser can
sued as promisor
be
4. Guarantor cannot be
sued as promisor
Guaranty
Warranty
A contract by which a
person is bound to
another for the
fulfilment of a
promise or
engagement of a
third party
An undertaking that
the title, quality, or
quantity of the
subject matter of the
contract is what it
has been represented
to be, and relates to
some agreement
made ordinarily by
the party who makes
the warranty
NOTES:
A guaranty is gratuitous, unless there
is a stipulation to the contrary. The
cause of the contract is the same
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
IN
CIVIL LAW
Exception
to the concept of
continuing guaranty is chattel
mortgage. A chattel mortgage can
only cover obligations existing at the
time the mortgage is constituted and
not those contracted subsequent to
the execution thereof (The Belgian
Catholic Missionaries, Inc. vs.
Magallanes Press, Inc., 49 Phil 647).
An exception to this is in case of
stocks in department stores, drug
stores, etc. (Torres vs. Limjap, 56
Phil 141).
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
he chooses and hold the guarantor to
his bargain.
Benefit of Excussion (Art 2058)
The right by which the guarantor
cannot be compelled to pay the
creditor unless the latter has
exhausted all the properties of the
principal debtor, and has resorted to
all of the legal remedies against such
debtor.
NOTE:
Not applicable to a contract of
suretyship (Arts 2047, par. 2;
2059[2])
Cannot even begin to take place
before judgment has been obtained
against the debtor (Baylon vs CA,
312 SCRA 502)
When Guarantor is not entitled to the
benefit of excussion: (PAIRS)
1. If it may be presumed that an
execution on the property of the
principal debtor would not result in
the satisfaction of the obligation
Not necessary that the debtor be
judicially declared insolvent or
bankrupt
2. When he has absconded, or cannot
be sued within the Philippines unless
he has left a manager or
representative
3. In case of insolvency of the debtor
Must be actual
4. If the guarantor has expressly
renounced it
5. If he has bound himself solidarily
with the debtor
Other grounds: (BIPS)
6. If he is a judicial bondsman or subsurety
7. If he fails to interpose it as a
defense before judgment is rendered
against him
8. If the guarantor does not set up the
benefit against the creditor upon the
latters demand for payment from
him, and point out to the creditor
available property to the debtor
within Philippine territory, sufficient
CIVIL LAW COMMITTEE
IN
CIVIL LAW
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
The co-guarantors may set up
against the one who paid, the same
defenses which have pertained to
the principal debtor against the
creditor and which are not purely
personal to the debtor. (Art 2074)
Procedure when creditor sues: (Art.
2062)
The creditor must sue the principal
alone; the guarantor cannot be sued
with his principal, much less alone
except in Art. 2059.
1. Notice to guarantor of the action
The guarantor must be NOTIFIED
so that he may appear, if he so
desires, and set up defenses he
may want to offer.
If the guarantor appears, he is
still given the benefit of
exhaustion even if judgment
should be rendered against him
and
principal
debtor.
His
voluntary appearance does not
constitute a renunciation of his
right to excussion (see Art.
2059(1)).
Guarantor cannot set up the
defenses if he does not appear
and it may no longer be possible
for him to question the validity
of the judgment rendered
against the debtor.
2. A guarantor is entitled to be heard
before and execution can be issued
against him where he is not a party
in the case involving his principal
(procedural due process).
Guarantors Right of Indemnity or
Reimbursement (Art 2066)
GENERAL RULE: Guaranty is a contract
of indemnity. The guarantor who makes
payment is entitled to be reimbursed by
the principal debtor.
NOTE: The indemnity consists of: (DIED)
1. Total amount of the debt no
right to demand reimbursement
until he has actually paid the
debt, unless by the terms of the
contract, he is given the right
CIVIL LAW COMMITTEE
IN
CIVIL LAW
EXCEPTIONS:
1. Where
the
guaranty
is
constituted
without
the
knowledge or against the will of
the
principal
debtor,
the
guarantor can recover only
insofar as the payment had been
beneficial to the debtor (Art.
2050).
2. Payment by a third person who
does not intend to be reimbursed
by the debtor is deemed to be a
donation,
which,
however,
requires the debtors consent.
But the payment is in any case
valid as to the creditor who has
accepted it (Art. 1238).
3. Waiver of the right to demand
reimbursement.
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
Guarantors right to Subrogation
(ART.2067)
Subrogation transfers to the person
subrogated, the credit with all the
rights thereto appertaining either
against the debtor or against third
persons, be they guarantors or
possessors of mortgages, subject to
stipulation
in
conventional
subrogation.
NOTE: This right of subrogation is
necessary to enable the guarantor to
enforce the indemnity given in Art. 2066.
It arises by operation of law upon
payment by the guarantor. It is not
necessary that the creditor cede to
the guarantor the formers rights
against the debtor.
It is not a contractual right. The
right of guarantor who has paid a
debt to subrogation does not stand
upon contract but upon the
principles of natural justice.
The guarantor is subrogated by
virtue of the payment to the rights
of the creditor, not those of the
debtor.
Guarantor cannot exercise the
right of redemption of his
principal (Urrutia & Co vs
Morena and Reyes, 28 Phil 261)
Effect of Payment by Guarantor
1. Without notice to debtor: (Art
2068)
The debtor may interpose
against the guarantor those
defenses which he could have
set up against the creditor at the
time the payment was made,
e.g. the debtor can set up
against the
guarantor the
defense
of
previous
extinguishment of the obligation
by payment.
2. Before Maturity (Art 2069)
Not entitled to reimbursement
unless the payment was made
with the consent or has been
ratified by the debtor
CIVIL LAW COMMITTEE
IN
CIVIL LAW
Art. 2071
Protective remedy
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
action after payment
Substantive right
before payment.
Preliminary remedy
IN
CIVIL LAW
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
B. Prohibition
against
Pactum
Commissorium (Art 2088; 2137)
Pactum Commissorium
Stipulation whereby the thing
pledged or mortgaged, or under
antichresis
shall
automatically
become the property of the creditor
in the event of non-payment of the
debt within the term fixed.
Requisites:
1. There should be a pledge, mortgage,
or antichresis of property by way of
security for the payment of the
principal obligation; and
2. There should be a stipulation for an
automatic appropriation by the
creditor of the property in event of
nonpayment of the obligation within
the stipulated period.
IN
CIVIL LAW
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
E. When the principal obligation
becomes due, the things in which
the
pledge,
mortgage,
or
antichresis
consists
may
be
alienated for the payment to the
creditor. (Art. 2087)
NOTES:
If the debtor fails to comply with the
obligation at the time it falls due,
the creditor is merely entitled to
move for the sale of the thing
pledged or mortgaged in order to
collect the amount of his claim from
the proceeds.
If he wishes to secure a title to the
mortgaged property, he can buy it in
the foreclosure sale (Montevirgin vs.
CA, 112 SCRA 641)
F. Pledgor, mortgagor, antichretic
debtor retains ownership of the
thing given as a security
PLEDGE (Arts 2093 2123)
IN
CIVIL LAW
1.
2.
Kinds:
Conventional /Voluntary created
by contract
Legal created by operation of law
(examples: Art. 546, 1731 and 1914
NCC)
NOTES:
The provisions of possession, care
and sale of the thing as well as on
the termination of the pledge
governing conventional pledges are
applicable to pledges created by
operation of law (Art 2121)
Unlike, however, in conventional
pledge where the debtor is not
entitled to the excess unless it is
otherwise agreed, in legal pledge,
the remainder of the price of the
sale after payment of the debt and
expenses, shall be delivered to the
debtor.
In legal pledge, there is no definite
period for the payment of the
principal obligation. The pledgee
must make a demand for the
payment of the amount due him;
otherwise he cannot exercise the
right of sale at public auction (Art
2122)
Characteristics:
1.
Real
contract it is perfected by the
delivery of the thing pledged by the
debtor who is called the pledgor to
the creditor who is called the
pledgee, or to a third person by
common agreement;
2.
Accessor
y contract it has no independent
existence of its own;
3.
Unilater
al contract it creates an obligation
solely on the part of the creditor to
return the thing subject thereof
upon the fulfilment of the principal
obligation; and
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
4.
Subsidiar
y contract the obligation incurred
does not arise until the fulfilment
of the principal obligation which is
secured.
Consideration in pledge:
Insofar as the pledgor is concerned,
the cause is the principal obligation.
If the pledgor is not the debtor, the
cause is the compensation stipulated
for the pledge or the mere liberality
of the pledgor.
Extent of pledge: Unless stipulated
otherwise, pledge extends to the fruits,
interests or earnings of the thing.
Rights and Obligations of a Pledgor
Rights
Obligations
1. To demand return in
case of reasonable
grounds to fear
destruction or
impairment of the thing
without the pledgees
fault, subject to the
duty of replacement
(Art 2107)
2. To bid and be
preferred at the public
auction (Art 2113)
3. To alienate the thing
pledged provided the
pledgee consents to the
sale (Art 2097)
4. To ask that the thing
pledged be deposited
(Arts 2104 & 2106)
1. To advise the
pledgee of the
flaws of the thing
(Art 2101)
2. Not to demand
the return of the
thing until after
full payment of
the debt,
including interest
due thereon and
expenses incurred
for its
preservation (Art
2105)
IN
CIVIL LAW
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
26. To sell at public auction in case of
non-payment of debt at maturity (Art
2112)
27. To choose which of the several things
pledged shall be sold (Art 2119)
Obligations of the Pledgee
KEY: CUDA3
1. Take care of the thing with the
diligence of a good father of a family
(Art 2099)
2. Not to use thing unless authorized or
by the owner or its preservation requires
its use (Art 2104)
3. Not to deposit the thing with a 3 rd
person unless so stipulated (Art 2100)
4. Responsibility for acts of agents and
employees as regards the thing (Art
2100)
5. To advise pledgor of danger to the
thing (Art 2107)
6. To advise pledgor of the result of the
public auction (Art 2116)
RIGHT OF PLEDGOR TO SUBSTITUTE
THING PLEDGED (ART.2107)
Requisites:
1. The pledgor has reasonable
grounds to fear the destruction
or impairment of the thin
pledged
2. There is no fault on the part of
the pledgee
3. The pledgor is offering in place
of the thing, another thing in
pledge which is of the same kind
and quality as the former
4. The pledge does not choose to
exercise his right to cause the
thing pledged to be sold at
public auction
NOTE: The pledgees right to have the
thing pledged sold at public sale granted
under the Article 2108 is superior to that
given to the pledgor to substitute the
thing pledged under Article 2107.
Prohibition against double pledge
Property which has been lawfully
pledged to one creditor cannot be
pledged to another as long as the
first one subsists.
IN
CIVIL LAW
MORTGAGE
(Articles
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
NOTES:
As an accessory contract, its
consideration is that of the principal
contract from which it receives life.
A mortgage does not involve a
transfer, cession or conveyance of
property but only constitutes a lien
thereon. Until discharged, it follows
the property wherever it goes and
subsists notwithstanding changes of
ownership.
A mortgage gives the mortgagee no
right or claim to the possession of
the property, and therefore, a mere
mortgagee has no right to eject an
occupant of the property mortgaged
unless the mortgage should contain
some provision to that effect. The
only right of a mortgagee in case of
non-payment of a debt secured by
mortgage would be to foreclose the
mortgage and have the encumbered
property sold to satisfy the
outstanding indebtedness. If the
possession is transferred to the
mortgagee, it must not expressly be
for purpose of applying the fruits to
the interest then to the principal of
the credit, for then it would be an
antichresis.
It is not an essential requisite that
the principal of the mortgage credit
CIVIL LAW COMMITTEE
IN
CIVIL LAW
Kinds:
1. Voluntary agreed to by the parties
or constituted by the will of the
owner of the property on which it is
created
2. Legal one required by law to be
executed in favour of certain
persons
The persons in whose favour the
law establishes a mortgage have
no other right than to demand
the execution and the recording
of the document in which the
mortgage is formalized (Art 2125
par 2)
3. Equitable one which, although
lacking the formalities of a
mortgage, shows the intention of the
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
parties to make the property a
security for a debt
PLEDGE
1. Constituted on
movables
2. Property is
delivered to pledgee
or by common
consent to a third
person
3. Not valid against
third persons unless a
description of the
thing pledged and
date of pledge
appear in a public
instrument
REAL MORTGAGE
1. Constituted on
immovables
2. Delivery is not
necessary
Extent of Mortgage:
Absent express stipulation to the
contrary, the mortgage includes the
accessions, improvements, growing
fruits and income of the property not
yet received when the obligation
becomes due and to the amount of
the indemnity granted or owing to
the proprietor from the insurers of
the property mortgaged, or in virtue
of expropriation for public use (Art
2127)
Object of Mortgage:
Future property cannot be an object
of a contract of mortgage (Art
2085[2]) However, a stipulation
subjecting to the mortgage lien,
properties (improvements) which the
mortgagor may subsequently acquire
install, or use in connection with
real property already mortgaged
belonging to the mortgagor is valid
(Peoples Bank and Trust Co. vs.
Dahican Lumber Co., 20 SCRA 84)
Special Rights:
1. Mortgagor - To alienate the
mortgaged
property
but
the
mortgage shall remain attached to
the property.
NOTE: A stipulation forbidding the owner
from alienating the immovable mortgage
shall be void (Art 2130) being contrary to
public
policy
inasmuch
as
the
CIVIL LAW COMMITTEE
IN
CIVIL LAW
Extrajudicial
foreclosure
1. No court
intervention
2. Not appealable
because it is
immediately
executory
3. Foreclosure does
not cut off right of
all parties involved
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
impleaded
4. There is equity
of redemption
except on banks
which provides for
a right of
redemption
5. Period of
redemption starts
from the finality of
the judgment until
order of
confirmation
6. No need for a
special power of
attorney in the
contract of
mortgage
4. There is right of
redemption
5. Period to redeem
start from date of
registration of
certificate of sale
6. Special power of
attorney in favor of
mortgagee is
needed in the
contract
NOTES:
A foreclosure sale retroacts to the
date of registration of the mortgage
and that a person who takes a
mortgage in good faith and for
valuable consideration, the record
showing clear title to the mortgagor,
will be protected against equitable
claims on the title in favor of third
persons, of which he had no actual
or constructive notice (St. Dominic
Corporation vs. IAC 151 SCRA 577).
Where there is a right to redeem,
inadequacy of price is not material
because the judgment debtor may
reacquire the property or else sell
his right to redeem and thus recover
any loss he claims to have suffered
by reason of the price obtained at
the auction sale and consequently
not sufficient to set aside the sale.
Mere inadequacy of the price
obtained at the sheriffs sale will not
be sufficient to set aside the sale
unless the price is so inadequate as
to shock the conscience of the
court taking into consideration the
peculiar circumstances attendant
thereto. (Sulit vs. CA, 268 SCRA 441)
Should there remain a balance due
to the mortgagee after applying the
proceeds of the sale, the mortgagee
is entitled to recover the deficiency.
This rule applies both to judicial and
extra-judicial
foreclosure
real
mortgage.
CIVIL LAW COMMITTEE
IN
CIVIL LAW
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
2. Clerk of Court will examine whether
the requirement of the law have
been complied with, that is, whether
the notice of sale has been posted
for not less than 20 days in at least
three (3) public places of the
municipality or city where the
property is situated, and if the same
is worth more than P400.00, that
such notice has been published once
a week for at least three (3)
consecutive weeks in a newspaper of
general circulation in the city of
municipality
3. The certificate of sale must be
approved by the Executive Judge
4. Where the application concerns
extrajudicial foreclosure of real
mortgages in different locations
covering one indebtedness, only one
filing fee corresponding to such debt
shall be collected
5. The Clerk of Court shall issue
certificate of payment indicating the
amount of indebtedness, the filing
fees collected, the mortgages sought
to be foreclosed, the description of
the real estates and their respective
locations
6. The notice of sale shall be published
in a newspaper of general circulation
pursuant to Section 1, PD No. 1079
7. The application of shall be raffled
among all sheriffs
8. After the redemption period has
expired, the Clerk of Court shall
archive the records.
9. No auction sale shall be held unless
there are at least two (2)
participating bidders, otherwise the
sale shall be postponed to another
date. If on the new date set forth
for the sale there shall not be at
least two bidders, the sale shall then
proceed. The names of the bidders
shall be reported to the Sheriff of
the Notary Public, who conducted
the sale to the Clerk of Court before
the issuance of the certificate of
sale.
NOTES:
The Mortgagor and Mortgagee have
no right to waive the posting and
CIVIL LAW COMMITTEE
IN
CIVIL LAW
Redemption
It is the transaction by which the
mortgagor reacquires or buys back
the property which may have passed
under the mortgage, or divests the
property of the lien which the
mortgage may have created.
NOTES:
A sale by the mortgagor to a third
party of the mortgaged property
during the period for redemption
transfers only the right to redeem
the property and the right to
possess, use and enjoy the same
during said period.
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
Where sale with assumption of
mortgage not registered and made
without
the
consent
of the
mortgagee, the buyer, thereof, was
not validly substituted as debtor
and, hence, had no right to redeem
(Bonnevie vs. CA, 125 SCRA 122).
Kinds:
1. Equity of Redemption right of
mortgagor to redeem the mortgaged
property after his default in the
performance of the conditions of the
mortgage within the 90-day period
from the date of the service of the
order of foreclosure or even
thereafter
but
before
the
confirmation of the sale. Applies to
judicial foreclosure of real mortgage
and chattel mortgage foreclosure.
NOTE: Redemption of the banking
institutions is allowed within one year
from confirmation of sale.
2. Right of Redemption right of
mortgagor to redeem the mortgaged
property within one year from the
date of registration of the certificate
of sale. Applies only to extrajudicial
foreclosure of real mortgage.
NOTE: The right of redemption, as long
as within the period prescribed, may be
exercised irrespective of whether or not
the
mortgagee
has
subsequently
conveyed the property to some other
party (Sta. Ignacia Rural Bank, Inc. vs.
CA, 230 SCRA 513)
Period of Redemption
1. Extra-judicial (Act #3135)
a. natural person one year from
registration of the certificate of
sale with Registry of Deeds
b. juridical person same rule as
natural person
c. juridical person (mortgagee is
bank) - three months after
foreclosure
or
before
registration of certificate of
foreclosure which ever is earlier
CIVIL LAW COMMITTEE
2.
IN
CIVIL LAW
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
Characteristics
1. Accessory contract it secures the
performance of a principal obligation
2. Formal contract it must be in a
specified form to be valid, i.e., in
writing. (Art 2134)
1.
2.
3.
4.
Pledge
1. Refers to real
property
2. Perfected by mere
consent
1. Refers to personal
property
2.
Perfected
by
delivery of the thing
pledged
3. Consensual contract 3. Real Contract
Antichresis
1. Property is
delivered to creditor
2. Creditor acquires
only the right to
receive the fruits of
the property, hence,
it does not produce a
Real Mortgage
IN
CIVIL LAW
real right
over the property
3. The creditor,
3. The creditor has no
unless there is
such obligation
stipulation to the
contrary, is obliged to
pay the taxes and
charges upon the
estate
4. It is expressly
4. There is no such
stipulated that the
obligation on part of
creditor given
mortgagee
possession of the
property shall apply
all the fruits thereof
to the payment of
interest, if owing,
and thereafter to the
principal
Subject matter of both is real property
1. Debtor usually
retains possession of
the property
2. Creditor does not
have any right to
receive the fruits;
but the mortgage
creates a real right
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
NOTES:
The parties, however, may agree on
an extrajudicial foreclosure in the
same manner as they are allowed in
contracts of mortgage and pledge
(Tavera vs. El Hogar Filipino, Inc.,
68 Phil 712).
A stipulation authorizing the
antichretic creditor to appropriate
the property upon the non-payment
of the debt within the agreed period
is void (Art 2088).
CHATTEL MORTGAGE (Articles 21402141)
A contract by virtue of
personal property is recorded
Chattel Mortgage Register
security for the performance
obligation (Art 2140).
which
in the
as a
of an
Characteristics
1. Accessory contract it is for the
purpose of securing the performance
of a principal obligation
2. Formal contract registration in the
Chattel
Mortgage
Register
is
indispensable for its validity
3. Unilateral contract it produces
only obligations on the part of the
creditor to free the thing from the
encumbrance on fulfilment of the
obligation.
Special Requisites (in addition to
the common essential requisites):
1. It can cover only personal or
movable
property
in
general;
however, the parties may treat as
personal property that which by its
nature would be real property;
2. Registration of the mortgage with
the Chattel Mortgage Register where
the mortgagor resides; if property is
located in a different province,
registration
in both provinces
required;
3. Description of the property as would
enable the parties or other persons
to
identify
the
same
after
reasonable investigation and inquiry;
and
IN
CIVIL LAW
Pledge
1. Delivery of the
thing pledged is
necessary
2. registration not
necessary to be
valid
3. Debtor is not
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
foreclosed, the
excess over the
amount due goes to
the debtor
entitled to excess
unless otherwise
agreed or except in
case of legal
pledge
4. If there is
deficiency, creditor
is not entitled to
recover
notwithstanding
any stipulation to
the contrary
4. If there is
deficiency after
foreclosure,
creditor is entitled
to recover the
deficiency from the
debtor, except
under Art. 1484
Subject matter of both is movable
property
IN
CIVIL LAW
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
amount due on such mortgage and
the costs, and expenses incurred by
such breach of condition before the
sale thereof (Sec 13, Act No. 1508).
Right to possession of foreclosed
property
1. Real
mortgage
After
the
redemption period has expired, the
purchaser of the property has the
right to a conveyance and to be
placed in possession thereof.
NOTES:
Purchaser is not obliged to bring
a separate suit for possession.
He must invoke the aid of the
courts and ask for a WRIT OF
POSSESSION.
Section 7 of Act No. 3135 allows
the purchaser to take possession
of the foreclosed property during
the period of redemption upon
filing of an ex parte application
and approval of a bond.
2. Chattel mortgage When default
occurs and the creditor desires to
foreclose, the creditor has the right
to take the property as a preliminary
step for its sale.
NOTE: Where the debtor refuses to
yield the property, the creditors
remedy is to institute an action
either to effect judicial foreclosure
directly or to secure possession
(REPLEVIN) as a preliminary to the
sale contemplated in Section 14 or
Act. No. 1508
CONCURRENCE AND PREFERENCE OF
CREDITS (Articles 2236 2251)
Concurrence of Credits
Possession by two or more creditors
of equal rights or privileges over the
same property or all of the property
of the debtor
Preference of Credits
Right held by a creditor to be
preferred in the payment of his
CIVIL LAW COMMITTEE
IN
CIVIL LAW
of the
NOTES:
The rules on preference of credits
apply only when two or more
creditors have separate and distinct
claims against the same debtor who
has insufficient property.
Preference creates no lien on
property, and, therefore, gives no
interest in property, specific or
general, to the preferred creditor
but a preference in application of
the proceeds after the sale. (Molina
vs. Somes, 31 Phil. 76)
The preferential right of credit
attains significance only after the
properties of the debtor have been
inventoried and liquidated, and the
claims held by his various creditors
have been established. (DBP vs.
NLRC, 183 SCRA 328)
Preference of
Credit
Lien
Applies only to
claims which do
not attach to
specific
properties
Creates a charge
on a particular
property
EXEMPT PROPERTY:
1. Present
property
those
provided under Arts. 155 and 205
of the Family Code, Sec. 13,
Rule 39 of the Rules of Court,
and Sec. 118 of the Public Land
Act
2. Future property a debtor who
obtains a discharge from his
debts on account of his
insolvency, is not liable for the
unsatisfied
claims
of
his
creditors with said property
subject to certain exceptions
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
expressly provided by law. (Secs.
68, 69, The Insolvency Law [Act
No. 1956])
3. Property under legal custody and
those owned by municipal
corporations
necessary
for
governmental purposes
General Categories of Credit:
1. Special Preferred Credits - those
listed in Arts. 2241 and 2242 shall be
considered as mortgages and pledges of
real or personal property or liens (Art.
2243). Hence, they are not included in
the insolvent debtor's assets.
NOTES:
Arts. 2241 and 2242 do not give the
order of preference or priority of
payment. They merely enumerate
the credits which enjoy preference
with respect to specific movables or
immovables. With respect to the
same
specific
movables
or
immovables, creditors, with the
exception of the State (No. 1),
merely concur.
They only find application when
there is a concurrence of credits,
i.e., when the same specific
property of the debtor is subjected
to the claims of several creditors and
the value of such property is
insufficient to pay in full all the
creditors. In such a situation, the
question of preference will arise.
Article 2242 makes no distinction
between registered and unregistered
vendors lien (No. 2). Hence, any lien
of that kind enjoys the preferred
credit status. Unlike the unpaid
price of real property sold, mortgage
credits (No. 5), in order to be given
preference, should be recorded in
the Registry of Property. But a
recorded mortgage credit is superior
to an unrecorded unpaid vendors
lien (De Barretto vs. Villanueva, 1
SCRA 288)
The priority rule applies to credits
annotated in the Registry of
Property. As to credits mentioned in
No. 7 of Article 2242, there is
CIVIL LAW COMMITTEE
IN
CIVIL LAW
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
Common Credits those listed
under Art. 2245, which shall be paid
pro rata regardless of dates.
NOTE: Ordinary Preferred and Common
Credits cover only free property of the
debtor, or those not subjected to Special
Preferred Credit.
NOTES:
In case of bankruptcy or liquidation
of the employers business, the
unpaid wages and other monetary
claims of the employees shall be
given first preference and shall be
paid in full before the claims of the
government and other creditors may
be paid. The terms, declaration
of
bankruptcy,
or
judicial
liquidation have been eliminated,
nevertheless, according to the SC,
bankruptcy
or
liquidation
proceedings are still necessary for
the operation of the preference
accorded to workers under Art. 110
of the Labor Code. (DBP vs. NLRC
183 SCRA 328; RA No. 6715 Sec 10)
In case of rehabilitation, the
preference of credit granted to
employees under Art 110 of the
Labor Code is not applicable
(Rubberworld [Phils.] vs CA, 305
SCRA 722).
Refectionary Credit
Indebtedness incurred in the repair
or reconstruction of something
previously made, such repair or
reconstruction being made necessary
CIVIL LAW COMMITTEE
CIVIL LAW
3.
IN
order,
by
attachments
and
executions, which are preferred as
to later credits. In satisfying
several
credits
annotated
by
attachments or executions, the rule
is still preference according to the
priority of the credits in the order of
time.
In order to make the pro rating
provided in Art 2249 fully effective,
the preferred creditors enumerated
in Nos. 2 to 14 of Art 2242 must
necessarily be convened, and the
import of their claims ascertained.
There must be first some proceeding
where the claims of all the preferred
creditors
may
be
bindingly
adjudicated,
e.g.
insolvency,
settlement of decedents estate, or
other liquidation proceedings except
where there are not more than one
creditor.
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
MEMORY AID
IN
CIVIL LAW
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease),
John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)