CREDIT TRANSACTIONS

Coverage for the First Half of the Semester

(I)

For the First Day

LOAN

1. General Provisions and Coverage of the Subject (Arts. 1933-1934, New Civil
Code).

Cases:

A. Acme Show Rubber vs. CA, 260 SCRA 714 (Real Security Contract).
B. Navoa vs. Ca, 251 SCRA 545 (Secured/unsecured Creditor).
C. Saura Import and Export Co. vs. DBP, 44 SCRA 445 (Perfected
Consensual Contract of Loan).
D. Bonnevie vs. CA, 125 SCRA 122.
E. Central Bank vs. CA, 139 SCRA 46
F. Herrera vs. Petrophil, 146 SCRA 385.

2. Commodatum – Loan of non-consumable things (Arts. 1935-1952, NCC).

Cases:

A. Republic vs. Bagtas, 6 SCRA 262.

B. Mind vs. Pascual, 25 Phil. 540.

For the 2nd and 3rd Days

3. Simple Loan or Mutuum – Loan of money and consumable things (Arts. 1953-
1961, NCC).

Cases:

A. Tolentino vs. Gonzales, 50 Phil. 558.

B. Republic vs. Grijaldo, 15 SCRA 681.
C. PNB vs. CA, 196 SCRA 536.
D. Medel vs. CA, 299 SCRA 481 (5.5% interest per month on a P500,000
loan is excessive, iniquitous, unconscionable and exorbitant).
E. Cuaton vs. Salud, Jan. 27, 2004 (8% to 10% interest per month is
iniquitous, excessive and unconscionable).
F. Tan vs. CA, Oct. 19, 2001 (Interest/penalty).
G. Ligutan vs. CA, Feb. 12, 2002 (Penalty clause).
H. Sentinel Insurance vs. CA, 182 SCRA 517.
 Usury Law

1. Important provisions/features and present status of the law (Act No. 2655, as
amended).
2. Relevant Cases:

A. Liam Law vs. Olympic Sawmill Co., 124 SCRA 439 (Usury Law is for
sometime now legally inexistent).
B. Investors Finance Corp. vs. Autoworld Sales Corp., 340 SCRA 735 (In
usurious loan, the creditor can always recover the principal debt. The
debtor can recover all the usurious debt paid.).
C. Pascua vs. Perez, 10 SCRA 199 (Non-forfeiture of principal in
usurious contracts).
D. Briones vs. Cammayo, 41 SCRA 404 (in usurious contract, what is
void is only the stipulation on interest).
E. First Metro Investment vs. Este Del Sol Mountain (CB Cir. 905 simply
suspended the effectivity of the Usury Law).
F. Sanchez vs. Bueviaje, 126 SCRA 208 (Usurious interest substituted by
legal rate).
G. First Metro Credit vs. Este, November 15, 2001 (Usurious loan).
H. DBP vs. Perez, November 11, 2004 (18% usurious interest substituted
by 12% legal rate).

For the 4th and 5th Days

Law on Deposits

1. General provisions (Arts. 1962-1967, NCC).

Case: BPI vs. IAC, 164 SCRA 630.

2. Voluntary Deposit (Arts. 1968-1995, NCC).

Cases:

A. CA Agro-industrial Devt. Corp. vs. CA, 219 SCRA 426.

B. Javellana vs. Lim, 11 Phil. 141).
C. People vs. Ong, 204 SCRA 942.
D. Guigona vs. City Fiscal of Manila, 128 SCRA 577.

3. Necessary Deposit (Arts. 1996-2004, NCC).

Case: YHT Realty vs. CA, Feb. 17, 2005 (Liability of Hotel).

4. Sequestration or Judicial Deposit (Arts. 2005-2009, NCC).

For the 6th Day

5. Special Law on Deposit – The Warehouse Receipts Law (Act No. 2137, as
amended).
For the 7th and 8th Days

Guaranty and Suretyship

1. Nature and extent of guaranty (Arts.2047-2057, NCC).

2. Effects of Guaranty (Arts. 2058-2075, NCC).
3. Extinguishment of Guaranty (Arts. 2075-2081, NCC).
4. Legal and Judicial Bond (Arts. 2082-2084, NCC).
5. Cases:

A. Palmares vs. CA, 288 SCRA 422 (A creditor’s right to proceed against
a surety exists independently of his right to proceed against the
principal. A surety is not even entitled, as a matter of right, to be given
notice of the principal’s default. A surety is an insurer of the debt,
whereas a guarantor is an insurer of the insolvency of the debtor).
B. E. Zobel, Inc. vs. CA, 290 SCRA 1 (A contract of surety is an
accessory promise by which a person binds himself for another already
bound, and agrees with the creditor to satisfy the obligation if the
debtor does not. Article 2080 of the New Civil Code does not apply
where the liability is a surety, not as a guarantor.)
C. Paramount Insurance Corp. vs. CA, 310 SCRA 377 (By the contract of
suretyship, it is not for the obligee to see to it that the principal pays
the debt, but for the surety to see to it that the principal pay.)
D. Security Bank and Trust Co. vs. Cuenca, 341 SCRA 781 (Continuing
surety/guaranty).
E. Babst vs. CA, January 26, 2001 (When does a surety become liable –
when the principal debtor failed or refused to pay).
F. Taňedo vs. Allied Banking Corp., February 1, 2002 (Continuing
surety).

Coverage for the Second Half of the Semester

( II )

For the 1st and 2nd Days

Pledge

1. Provisions common to Pledge and Mortgage (Arts. 2085-2092, NCC).

2. Provisions applicable only to Pledge (Arts. 2093-2123, NCC).
3. Cases:

A. PNB vs. Sayo, 292 SCRA 202 (The foreclosure of the thing pledged
results in the full satisfaction of the loan liabilities to the pledge of the
pledgor. The buyer in a foreclosure sales does not assume the
obligations of the pledgor to his other creditors.)
B. De Rama vs. Palileo, 17 SCRA 196 (Requisites of Pledge).
C. Abustan vs. Ferrer, 12 SCRA 488 (1964).
D. Gen. Insurance Co. vs. Masakayan, 54 SCRA 120.
 E. DBP vs. CA, 253 SCRA 414.
F. Northern Motors vs. Coquia, 68 SCRA 374.
G. GSIS vs. CA, 170 SCRA 553.
H. Cerna vs. CA, 220 SCRA 517.

For the 3rd and 4th Days

Real Estate Mortgages

1. Real Estate Mortgage

A. Substantive Law (Arts. 2124-2131, NCC).
B. Procedural Law on Real Estate Foreclosure
1) Judicial Foreclosure – Rule 68 of the Revised Rules of Court, and
now Rule 68 of the 1997 Rules of Civil Procedure.
2) Extrajudicial – Act 3135, as amended.
3) Administrative Matter No. 99-10-05-0 dated December 14, 1999
(Procedure in Extrajuducial Foreclosure of Mortgage).
4) Special Rules on Redemption Period and Redemption Price –
a) Sec. 47 of RA 8791 (Gen. Banking Act);
b) Sec. 22, Executive Order No. 80 (Charter of PNB);
c) Sec. 16, Executive Order No. 81, as amended (Charter of
DBP); and
d) Sec. 86-B 5, RA 3844 (Charter of Land Bank of the
Philippines).
5) Cases:

Requisites
a) Adriano vs. Pangilinan, January 16, 2002.

Foreclosure of Mortgage
a) Unionbank of the Philippines vs. CA, 311 SCRA 795
(When there is a failure to redeem a foreclosed property
within the reglementary period, consolidation of title
becomes a matter of right, and issuance of title in favour of
the purchaser becomes ministerial upon the Register of
Deeds).
b) Lucena vs. CA, 313 SCRA 47 (Foreclosure of land by rural
banks will be null and void when there is a failure to post
notices of auction sale in the barrio where the property is
located).
c) Cristobal vs. CA, 328 SCRA 256 (A certificate of posting is
not required, much less considered indispensable, for the
validity of foreclosure sale under Act No. 3135).
d) Olizon vs. CA, 236 SCRA 148 (Posting of notice not
indispensable when there is already publication).
e) PNB vs. Rabat, 344 SCRA 706 (In extrajudicial foreclosure
sales, personal notice to the mortgagor is not necessary).
 Right of Mortgagee to Recover Deficiency
a) Prudential Bank vs. Martinez, 189 SCRA 612

Issue of Inadequacy of Price in Foreclosure Sale

a) Sulit vs. CA, 268 SCRA 441.

Property Can Be Sold Less Than Its Fair Market Value

a) Prudential Bank vs. Martinez, 189 SCRA 612.

Does an Action to Annul Foreclosure Suspend the Period of

Redemption?
a) Sumerariz vs. DBP, GR No. L-23764, Dec. 26, 1967.
b) Vaca vs. CA, 234 SCRA 146.
c) Union Bank of the Philippines vs. CA, GR No. 134068,
June 25, 2001.
d) State Investment vs. CA, 215 SCRA 734.
e) Belisario vs. IAC, 165 SCRA 101.
f) Tioseco vs. CA, 143 SCRA 705.
g) Tolentino vs. CA, 106 SCRA 513.
h) Hi-yield vs. CA, September 12, 2002.

What is the proper redemption price?

a) For PNB, which may include DBP and Land Bank, bid
price only for accommodation mortgagor (Spouses Belo vs.
PNB, GR No. 134330, March 1, 2001).
b) As fixed by the Court, or the amount due under the
mortgage deed (Sy vs. CA, 172 SCRA 125).
c) As a general rule – bid price (Dulay vs. Cariaga, 123 SCRA
794).
d) Total Bank’s claim (DBP vs. Mirang, 66 SCRA 141; Dulay
vs. Cariaga, 123 SCRA 794; Sy vs. CA, 172 SCRA 3135).
e) Bid price only if the mortgagor-redemptioner was merely
an accommodation mortgagor (Spouses Belo vs. PNB, GR
No. 134330, March 1, 2001).

For the 5th Day

Antichresis

1. Arts. 2132-2139, NCC.

Chattel Mortgage

1. Arts. 2140-2141, NCC.

2. Act 1508.
3. Cases:
 a) Acme Show Rubber vs. CA, 260 SCRA 714 (Cannot secure future
obligation).
b) Filipinas Marble vs. CA, 142 SCRA 180.
c) PAMECA Wod Treatment vs. CA, 310 SCRA 281.
d) Piansay vs. David, 12 SCRA 227.
e) Lilius vs. Manila Railroad Co., 62 Phil. 50.

For the 6th and 7th Days

Concurrence and Preference of Credits

1. General provisions (Arts. 2236-2240, NCC).

2. Classification of Credits (Arts. 2241-2245, NCC).
3. Order of Preference of Credits (Arts. 2246-2251, NCC).
4. Cases:
a) De Barreto vs. Villanueva, 1 SCRA 411.
b) Republic vs. Peralta, 150 SCRA 37.
c) DBP vs. NLRCm 236 SCRA 117.