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Course Title : CREDIT TRANSACTIONS

Course Outline
Introduction
A. Coverage of the Law on Credit Transactions
B. Commodatum
C. Mutuum
D. Deposit
■ Voluntary Deposit
■ Necessary Deposit
■ Judicial Deposit
E. Guaranty
F. Suretyship
G. Pledge
H. Mortgage
■ Real Estate Mortgage
■ Chattel Mortgage
I. Antichresis
J. Concurrence and Preference of Credits

I. Credit Transactions

A. Credit, defined
B. Credit Transactions, defined
C. Distinguished from Bailments, Secured Transactions
D. Scope of Credit Transactions

II. Loan
Arts. 1933-1961, 765, 1175, 1980, 1413 NCC
Act No. 2655, Usury Law
CB Circulars 416 and 905
Art. 1249-1250 NCC, RA 529, RA 8183

A. Kinds of Loan
i. Commodatum
 Arts. 1933 to 1952 and Art. 1174, Civil Code
 Art. 315, Revised Penal Code
 Cases:
 Catholic Vicar v. CA (G.R. Nos. 80294-95, March 23, 1990, 165 SCRA 515)
 Republic v. Bagtas (G.R. No. L-17474, October 25, 1962, 6 SCRA 262)
ii. Mutuum or Simple Loan
 Arts. 1953 to 1960, Civil Code
 Arts. 2142 to 2143 (Negotiorum Gestio) and 2154 to 2163 (Solutio Indebiti), New Civil Code
 Compounding of Interest
 Cases:
 Siga-an v. Villanueva (G.R. No. 173227, January 20, 2009, 576 SCRA 697)
 Bulatao v. Estonactoc, G.R. No. 235020, December 10, 2019
 Can a contract of loan be an “open-ended contract” or a contract with an indefinite period?
 Guingona v. City Fiscal (G.R. No. L-60033, April 4, 1984, 128 SCRA 577)
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 New Sampaguita Builders v. PNB (G.R. No. 148325, September 3, 2007, 435 SCRA 265)
 Central Bank Circular No. 799, s. 2013
 Legal rate of interest before the issuance of CB Circular No. 799, s. 2013 
a) 12% – Forbearance of money 
b) 6% – Other transactions other than forbearance of money; e.g. See Article  2176 (Quasi-
delict) 
B. Nature/Characteristics
 Saura Import & Export v. DBP (1972)
 Herrera v. Petrophil Corp., 146 SCRA 385
 Integrated Realty Corp v. PNB, 174 SCRA 295 (1989)
C. Subject Matter
 Republic v. CA, 146 SCRA 15 (1986)
 Quintos v. Beck, 69 Phil 108 (1939)
 Republic v. Grijaldo, 15 SCRA 638 (L-20240, Dec. 31, 1965)
D. Rights & Obligations of Bailor & Bailee (Lender & Borrower)
 De los Santos v. Jarra, 15 Phil 147 (1910)
 Mina v. Pascual, 25 Phil 540 (1913)
 Briones v. Cammayo, 41 SCRA 404 (1971)
 Zobel v. City of Manila, 47 Phil 169 (1925)
 Reformina v. Tomol, 139 SCRA 260 (1985)
 Liam Law v. Olympic Sawmill Co., 129 SCRA 439 (1984)
 Banco Filipino v. Navarro, 152 SCRA 346 (1987)
 PNB v. IAC and Maglasang, 183 SCRA 133 (1990)
 PNB v. CA and Padilla, 196b SCRA 536 (1991)
 PNB v. CA and Fernandez, 238 SCRA 80 (1994)
 Florendo v. CA, 265 SCRA 678 (1996)
E. Modes of Extinguishment

III. Deposit
Arts. 1962-2009 NCC
Act No. 2137, Warehouse Receipts Law
Act No. 3893, Bonded Warehouse Act
PD NO. 115, Trust Receipts Law

A. Definition
 BPI v. IAC, 164 SCRA 630 (1988)
B. Kinds of Deposit
C. Nature/Characteristics
 BPI v. CA, 232 SCRA 302 (1994)
 Serrano v. CB, 96 SCRA 96 (1980)
D. Subject Matter
E. Rights & Obligations of Depositor and Depositary
 Javellana v. Lim, 11 Phil 141 (1908)
 Baron v. David, 51 Phil 2 (1927)
 Vintola v. IBAA, 150 SCRA 578, G.R. # 73721 May 29, 1987
 SIA vs. CA GR no. 102970, May 13, 1993
 Consolidated Terminals v. Artex Development Co., 63 SCRA 46 (1975)
F. Warehouse Receipt Law (Act. No. 2137)
 Warehouseman’s Lien
i. PNB v. Noah’s Ark Sugar Refinery (G.R. No. 107243, September 1, 1993, 226 SCRA 36)
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ii. PNB v. Se (G.R. No. 119231, April 18, 1996, 256 SCRA 380)
iii. Gonzales v. Go Tiong and Luzon Surety, 104 Phil 492 (1958)
iv. PNB v. Sayo (G.R. No. 129918, July 9, 1998, 292 SCRA 202)
v. Lua Kian v. Manila Railroad, 19 SCRA 5 (1967)
G. Art. 315, Revised Penal Code
 Makati Shangri-La v. Harper (G.R. No. 189998, August 29, 2012, 679 SCRA 445)
 YHT Realty v. CA (G.R. No. 126780, February 17, 2005, 451 SCRA 638)
H. Modes of Extinguishment
 Roman Catholic Bishop v. de la Pena, 26 Phil 144 (1913)

IV. Guaranty and Suretyship

Arts. 2047-2084

A. Definition
 Imperial Insurance, Inc. v. De los Angeles, 111 SCRA 24 (1982)
 Machetti v. Hospicio de San Jose, 43 Phil 297 (1922)
 Castellvi v. Sellner, 41 Phil 142 (1920)
B. Arts. 1207 to 1222, Civil Code
 Common provision applicable to guaranty and suretyship: Art. 1403, par. 2(b) (Statute of Frauds) and Rule
135 of the Rules of Court
i. Malayan Insurance Co. v. Salas (G.R. No. L-48820, May 25, 1979, 90 SCRA 252)
ii. Diño v. CA (G.R. No. 89775, November 26, 1992, 216 SCRA 9)
iii. Willex Plastic Industries v. CA (G.R. No. 103066, April 25, 1996, 256 SCRA 479)
iv. South City Homes v. BA Finance Corporation (G.R. No. 135462 - December 7, 2001, 371 SCRA
603)
C. Nature/Characteristics/Extent
 Severino v. Severino, 56 Phil 187 (1931)
 Wise & Co. v. Tanglao, 63 Phil 372 (1936)
 Manila Surety & Fidelity v. Almeda, 34 SCRA 136
 RCBC v. Arro, 115 SCRA 777 (1982)
 Republic v. Pal-Fox Lumber Co., 43 SCRA 365 (1972)
D. Effects of Guaranty
1. Between the Guarantor and the Creditor
2. Between the Guarantor and the Debtor
3. Between Co-Guarantors
 Southern Motors, Inc. v. Barbosa, 99 Phil 263 (1956)
 Central Surety and Insurance v. Ubay, 135 SCRA 58 (1985)
 Manila Surety & Fidelity v. Almeda, 34 SCRA 136 (1970)
 Associated Insurance & Surety Co., Inc. v. Bacolod, 105 Phil 246 (1959)
D. Modes of Extinguishment

V. Provisions common to Pledge and Mortgage

Arts. 2085-2092
 Rural Bank of Caloocan, Inc. v. CA, 104 SCRA 151 (1981)
 Vda. De Bautista v. Marcos, 3 SCRA 434 (1961)
 Dayrit v. CA, 36 SCRA 549 (1970)

VI. Pledge
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Arts. 2093-2123 NCC

A. In general
 Definition & Purpose
 Kinds of Pledge
 Characteristics of Pledge
 Extent of the Pledge
B. Essential Requisites
a. Formal Requisite
 Yuliongsiu v. PNB, 22 SCRA 585 (1968)
 Manila Surety & Fidelity v. Velayo, 21 SCRA 515 (1967)
C. Rights and Obligations of the Pledgor [Debtor or Third Person]
i. Pactum Commissorium
D. Rights and Obligations of the Pledgee [Creditor]
i. Indivisibility of Pledge
E. Modes of Extinguishment

VII. Chattel Mortgage

Arts. 2140-2141, 1484-1485 NCC
Act No. 1508, Chattel Mortgage Law (1906)
Art. 319, RPC

A. In general
 Definition & Purpose
 Characteristics of CM
 Extent of the Mortgage
B. Essential Requisites
i. Formal Requisite; Affidavit of Good Faith
 Piansay v. David, 12 SCRA 227 (1964)
 Makati Leasing and Finance Corp v. Wearever Textile, 122 SCRA 296 (1983)
C. Rights and Obligations of the Mortgagor [Debtor or Third Person]
i. Pactum Commissorium
D. Rights and Obligations of the Mortgagee [Creditor]
i. Indivisibility of Mortgage
 Northern Motors, Inc. v. Coquia, 68 SCRA 374 (1975)
E. Modes of Extinguishment

VIII. Real Estate Mortgage

Arts. 2124-2131 NCC
Rule 68, Rules of Court (Foreclosure of REM)
Act. No. 3135, as amended by Act No. 4118 [Extra-judicial Foreclosure of Mortgage]
PD 694, The PNB Act
RA 85, as amended, The DBP Act
PD 1529, Sec. 63

A. In general
 Definition & Purpoose
 Kinds of REM
 Lanuza v. de Leon, 20 SCRA 369 (1967)
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 Bundalian v. CA, 129 SCRA 645 (1984)
B. Characteristics of REM
C. Effects of mortgage
D. Essential Requisites
i. Formal Requisite
E. Rights and Obligations of the Mortgagor [Debtor or Third Person]
 Pactum Commissorium
 Redemption
 Rosales v. Yboa, 120 SCRA 869 (1983)
 Tioseco v. CA, 143 SCRA 705 (1986)
 Dulay v. Cariaga, 123 SCRA 794 (1983)
 PNB v. CA, 140 SCRA 360 (1985)
F. Rights and Obligations of the Mortgagee [Creditor/Junior Mortgagee]
i. Indivisibility of Mortgage
ii. Foreclosure
 Judicial Foreclosure of Mortgage
(1) Rule 68, Rules of Court
(2) Jurisdiction of the Court (RTC/MTC)
(a) Sec. 19, par. 3 of BP 129 as amended
(b) Sec. 33, par. 1 of BP 129 as amended
 Extrajudicial Foreclosure of Mortgage (Sec. of Act No. 3135 as amended)
 Right of Redemption v. Equity of Redemption – Sec. 47 of RA 3791 (General Banking Law of 2000)
(a) Sps. Sombilon v. Atty. Garay and PNB (G.R. No. 179914, June 16, 2014, 726 SCRA 397)
(b) Palileo v. Cosio (G.R. No. L-7667, November 28, 1955, 97 Phil. 919)
(c) DBP v. Mirang, 66 SCRA 141 (1975)Co v. PNB, 114 SCRA 842 (1982)
 Alpha Insurance and Surety v. Reyes, 106 SCRA 274 (1981)
G. Rights and Obligations of the Purchaser
 Marcelo Steel Corp. v. CA, 54 SCRA 89 (1973)
 PNB v. Adil, 118 SCRA 110 (1982)
 Ocampo v. Domalanta, 20 SCRA 1136 (1967)
H. Modes of Extinguishment

IX. Antichresis
Arts. 2132-2139 NCC

A. Nature and Characteristics

B. Rights and Obligations of the Debtor and Creditor
 Samonte v. CA, 141 SCRA 189 (1986)
 Ramirez v. CA, 144 SCRA 292 (1986)
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IX. Concurrence and Preference of Credit
Arts. 2236-2251 NCC
Act No. 1956, as amended, Insolvency Law

A. General Provisions
B. Classification of Credits
C. Order of Preference of Credits
 Roman v. Asia Banking Corp., 46 Phil 705 (1922)
 Central Bank v. Morfe, 63 SCRA 114 (1975)
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