SOmethinghot

theanother pay because

theeonsumable be the delivery loan) be based
afterthe borrower
the delivery obligation
to
it notof in becausemay promise
of to
quality.'
same obligation object (of(BAILOR);
obligation
oneto shall the saidcontract delivery
contract the
delivers
the accepted
loan, or the contract,
itself the unilateral
of
CREDIT
TRANSACTIONS either usemoneyand the no lenderpart an
DEPOSIT of lendermay thekindrealloanofdelivery on because However,
real is as of
contract
bailee,or with a based There the on
demandable
or
returnsameis simple a
latter itself the already contract
PART
XI it Loan
theBar).
(2013
is
contract by only isobligation
AND or the consume
thebailor the it not latter.
Since Loan delivery
pay.
and of Contract.
borrower or until
Commodatum is is separate 809
By the that amount object the to
LOAN time of
Unilateral. it and
(BAILEE)
LOAN. calledso may
DEFINITION. perfected Contract
perfectsdelivery
certain
consumable the before based
the he Real a loan.
A. OF parties,
same of on
CONTRACTcalled a that
for so the a) "Art.
1933,
NCC.
b) 'Art.
1934,
ibid.
1.01.
4.
 REVIEWER ON CIVIL LAW
810 CREDIT TRANSACTIONS
Loan and Deposit 811

1.01.01. Kinds of Loans. There are two kinds a) The Credit Card
namely: contract of loan, to
Approve.useIn moreCompany has No Duty
(1) Commodatum. - one of the
parties concrete
cardholdersthey their credit cards toterms, when
to another something not
consumable delivers
the latter may use the same it the for aso that
purchases,
agreements withmerely
the
pay for their
offer to enter into loan
credit
time,3 certain after the latter card company. Only
that the approves the purchase
parties enter requests
(2) Simple Loan or Mutuun. one of the into binding loan contracts,
in keeping with Article
deliversto another money or other parties The Court went on to 1319 of the CivilCode.
thing, upon the condition that the same consumable issuer has noobligation toexplain that since the
amount
of thesame kind and quality shall be paid4 approve
requests of its credit cardholders, athecardholder
purchase
EPTED PROMISE TO LOAN.
ACCI cannot claim that the issuer defaulted in its
promise to deliver something by way ofAnaccepted
1.02.
commodatum obligation.
or simple loan is binding upon parties. This is 1.04. SUMMARY OF RULES AND DISTINCTIONS
a consensual contract as distinguished from the BETWEEN COMMODATUM, SIMPLELOAN AND
ontract of lo¡n itself which is afeal contract. DEPOSIT (1969, 1977, 1998, and 2004 Bar).
Example: When an application for a loan with COMMODATUM SIMPLE LOAN VOLUNTARY
a bank is approved, there is an accepted promise to DEPOSIT
loan that is legally demandable.6
|The purpose is the The purpose is for the The purpose is
a) Discounting. It is a mode of loaning money use of the thing. borrower to consume safekeeping.
with the agreement that interest is deducted in NOTE: Use of
what was borrowed.
advance.?
the fruits is not
1,03. CREDIT CARD. Every credit card transaction |included unless
involves three contracts, namely: (1) Contract of Sale expressly provided
between the card holder and the merchant or business for (Arts. 1935 and
establishment that accepted the credit card; (2) The 1940, NCC) Real Contract
loan agreement between the aredit card holder and Real Contract Real Contract
the credit card isSuer; and (3) the promise to pay perfected upon
between the credit card issuer and the merchant or
business establishment. |Movable
delivery. and Involves Movables
(1) Extrajudicial
|Deposit Movables
NCC).
|Lmmovable Things
|maybe borrowed.
Only(Art. 1966,
Art. 1933, NCC. (2)Judicial Deposit
*Ibid. -Movable and
SArt. 1934, ibid. Immovable.
'Saura Import and Investment
BPI
Corp. v. Court of Appeals, etExport Co., Inc. v. DBP, 44 SCRA 445 (1972);
al., G.R. No. 133632,
People v. Concepcion, G.R. No. L-19190, February 15, 2002. No. 174269,
August 25,
Pantaleon v. American Express November 29, 1922. August25 International, Inc., G.R.
G.R. No, 174269, v. American Express
2010.
International, Inc., 2010. Pantaleon
 REVIEWER ON CIVIL LAW
812 CREDIT TRANSACTIONS
Loan and Deposit
813

May be Gratuitous or May be Thebailor/lender The lender must be

Essentially
Gratuitous Onerous (Example: If Onerous Gratuitous or Ineednotbe the the owner or at |The depOsitor need
NOTE: If onerous
or compensation
interest is payable) lowner ofthe thing
loaned.
capable of least not be the owner of
ownership.transferring|the thing deposited.
is paid, then the However, the
Contract may be
Lease (Art. 1935,
|d|beepositary CANNOT
the owner of the
NCC). Generally, the The lender-bailor thing deposited.
lender must wait must wait for the The depositor can
The Object is The object is money Consumable or Non for the expiration demand the return of
generally non or other fungible expiration of the
Consumable. things. consumable
for although
safekeeping only. ofthe period period agreed upon. the thing at any time.
Exception: If the
agreed upon or the
accomplishment of
purpose is not
the use for which
Consumption but for the commodatum
exhibition. lhas been constituted
Bailor/Lender The bailee/borrowerDepositor retains (Art. 1946, NCC).
retains ownership of|becomes the owner of ownership of the thing
the thing delivered. the thing delivered. Exception: (1) In case
delivered. of Urgent Need
There is an The bailee/borrower The Depositary must
obligation to return becomes the owner; (Art. 1946, NCC); (2)
the same thing. return the same thing. In Precarium.
hence, there is no
obligation to return 1.04.01. Distinguished from Usufruct (1998 Bar).
the same thing.
Death of the lender Death of the lender COMMODATUM USUFRUCT
or the borrower If gratuitous
does not extinguish deposit-Death The purpose is the use of the The purpose is the enjoyment,
extinguishes the loan. of the depositor thing. Use of the fruits is not use with the right to the fruits.
Commodatum or the depositary included unless expressly
because it is purely extinguishes the provided for.
PERSONAL in Consumables can be the object
character (Art. 1939 deposit (Art. 1995, Consumables cannot
(1], NCC). NCC). of usufruct.
generally be the object of
If for compensation commodatum unless delivered
Death of the depositor not for consumption. Onerous
May be Gratuitous or
and or the depositary Essentially Gratuitous required
DOES NOT extinguish The usufructuary is
Not required to make to make inventory and to give
the deposit.
Generally, the bailor The nventory or to give security security before enjoying the
bearsbailee-borrower
bears the loss of Generally, the depositor before receiving the property
the loss of the bears the loss of the Iproperty.
the thing due to thing delivered. Res Usufructuary has a right oftaxes
|fortuitous event. thing due to fortuitous |Commodatum has no right of retention for advances
for
Perit Domino. levent. and extraordinary expenses.
|retention even for expenses.
 2. 814

14Art.
1941,
ibid.1$Art.
1943, PArt.
ibid.1941,
ibid.1939,
"Art.
ibid.NCC.
1°Art.
1935, 2.02. 2.01. the
COMMODATUM.
thing The
b) OBLIGATIONS
a) (2) (1)
personal a
PERSONAL loaned
following
cases:4
(1) theevenmaintenance The However,
Loss.peeling deterioration the Expenses
the is naturetheof
However,
ismay extinguishes
contract;
ofThe the The bea
Gratuitous.
obliged a gratuitous.
thehim any If
but
bailee use use the
bailee in REVIEWER
loaned
(1993
Bar);
different If ifThe stipulation make death conmodatum
Bar),10
(1993 who
it and thereof and contract character. not
heshouldbailee
the IN
acquires bailee
of tofor OF use the can of its in
devotes fading and preservation thing members ON
a of pay Use
from be is car and bailee THE of neither either NATURE.Commodatumfruits. CTVIL
repainting the to
Consequently:
liable is for and forbids tothe compensation the commodatum
that the through responsible (2013 without
thing does the BAILEE. t he a LAW
thing third the use,
fo r Preservation. contrary, of lend
thing8
for Bar). ordinary Commodatum
the because loaned not of suchloaned, the bailor
fortuitous a his the bailee's person nor
which any to loss contract acquires
fault.»
for
answerthing use. or lease is is
due expenses or to
it of the unless
th e the The unless
household(2013 the the essentially
has event paintExample: loaned.n isceases be the
purpose thing cost only for bailee paid
been there Bar).object bailee purely use
the for th e
1s of to toby of

1946,
ibid.
Art.NCC.
1945,
Art. 2.03.

constituted.
beenhas
he d) c)
Cannot
KETURN
accomplishment Solidary (Article
1) 1951. a ofhimthingRight (5) (4) (3) (2)
n Contract,bailees
expiratiodemand right
expenses TRANSACTIONSCREDIT
of Under
because to something, loaned borrowed household. person, If constituted;
Bar).responsibility
If, (2013 with If the
is stipulated, If
OFabandoningcannotthinthg
e ofsave girlfriend Deposit
to which the of Retention. being he
stipulation
a the use he Loanand
THE
the theyLiability. retention the
whom baileeArticle (2013
lends appraisalthing for keeps
oftheof
return exempt the of on latter who
the THING. are even orable which or
or
is
exemption in loaned after it
of
periuse od of iable thingWhena bailor flaw a if for Bar). groundthe The (1983 his toExample: leases
for the In himself the 1951, However, though own not case the longer
or damages bailee Bar). save Lending its the
is
there was bailee
has
ofvalue,commodatum
stipulacommodat
ted, soluidm,arily.s
which thing defect the itthat thing, athe accomplishment
loaned aware. either memberfortuitous a than
are from bailor may cannot
the thing the been
the loaned
in
was merntioned the the unless
be
bailor he bailee the
commodatum or the theintwo liability Thedamaged the is bailee by retain chose the thing to delivered has
or ofevent;a
bailorthing liable reason owes thing been period
after tilbailor
afte r same more has the tohisthird from there 815
the by in to a of

* S
 REVIEWER ON CTVIL LAW
816 CREDIT TRANSACTIONS
Loan and Deposit 817

2.03.01. Exceptions: The bailor may ask for the PROBLEM:

return
thing in the following cases: (1) In case of of the left for Riyadh to
Before he
urgent need;(2). Precarium;(3) The bailor Bailor's Adventure van with Tito, with the work as a mechanic, Pedro left his
of the Acts of Ingratitude under Art.765.
In
Urgent Need. case of
commitsany th
use it for one year for his
h. He did not tell litopersonal
understanding that
or family use while the latter could
Pedro works in
a) temporaryuse by the athe van tuned up and thethat the brakes of the van were faulty. Tito
bailor because of urgent need, brakes repaired. He spent a total amount
the contract p5.000. After using the vehicle for
commodatum is suspended while the of oonsumed too much fuel. lo make uptwoforweeks, Tito discovered that
the possession of the bailor.s thing
is in the expenses, he leased it
Annabelle. Two months later, Pedro returned to the
Philippines and
sskedTito to returm the van. Untortunately,
2.03.02. Precarium. The bailor may demand the evan was accidentally damaged by a cargowhile being driven by Tito,
and the contractual relation is called a thing at will, truck without his fault.
the following cases: precarium,
in a) Who shall bear the P15,000 spent for the repair of
Explain.
the van?
(1) Ifneither the duration of the contract nor the teo b) Who shall bear the costs for the van's fuel, oil and other
to which the thing loaned should be devoted. materials while it was with Tito? Explain.
has been stipulated; or c) Does Pedro have the right to retrieve the van even before the
(2) If the use of the thing is merely tolerated by the lapse of one year? Explain.
owner (1967 Bar). d) Who shall bear the expenses for the acidental damage
2.04. EXPENSES. caused by the cargo truck, granting that the truck driver and
truck owner are insolvent? Explain (2005 Bar).
TYPE OF EXPENSES WHO ISLIABLE A: a) Pedroshall be liable for expenses for the faulty breaks while
Tito shall be liable for expenses tune-up. The facts in the given
Ordinary Expenses for the Use Bailee-Borrower problem show that Pedro and Tito entered into a contract of
and Preservation of the Thing commodatum. Pedro is liable for the expenses for the faulty
Loaned. Example: car maintenance breaks because in a contract of commodatum, the
bailor-lender
and repair (2013 Bar). shall be liable for the extraordinary expenses incurred used
even disclose
did not
for the van borrowed by Tito; Pedro
Extraordinary Expenses for
Preservation Bailor-Lender the need for such repairs. Tito shall
shoulder the amount that
is an ordinary expense for
was spent for the tune-up; tune-up that was borrowed. With
NOTE: Bailee may pay with the use and preservation of the van
1949 of the New Civi
prior notice to the Bailor and breaks, Article
respect to the faulty refund the extraordinary
subject to the reimbursement of Code provides that the bailor shall
contract for the preservation of the thing
the later. expenses during the brings the same to the
knowledge
Extraordinary
on the
oCcasionExpenses arising
of the actual use Equally by the bailor and loaned provided the bailee them. The bailee needs to wait
incurring
of the bailor before bailor and only exception is when the
of the thing by the bailee. for the reply of the notiication cannot
without the bailee'sbailee
fault)
(even Tepairs are so urgent that the reply to the
case, the
bailor-lender
without danger. In this and the van cannot be
be awaited of thefaulty breaks
was alreadyaware to the user.
used without danger materials.
fuel and other
17Art. 1948, NCC. shall shoulder the cost of the Code provides that the
18Art. 1946, ibid. b) Tito New Civil cost of
Article 1941 of the for ordinary expenses. The
19Art. 1947, ibid. borrower shallbe liable
 REVIEWER ON CIVIL LAW
CREDIT TRANSACTIONS
818 Loan and Deposit 819

the fuels and the like ae ordinary expenses for the use of the tcontract.
ransferred to the debtor upon perfection of the
van.
demand the return of
Ownershi
transferred, p of the thing loaned having
the debtor
c) No, Pedro cannot
expiration ofthe one-year periodlagreed
the van
before
upon. Article 1 the conferred to an of enjoys all the rights
right to use andowrner property,
the
the New Civil Code provides that afterbailor 1946 of
cannot the thing by its useenjoy (jus utendi),including the
to consume
the return of the thing loaned till the expirationdemand
of thein
period stipulated. The exceptionis if in the bailor, or Pedro (jus abutendi), and to
(jus disponendi), subject disposeas
the present case, has urgent need for the van, in which may be provided by law. to such limitations
Pedro may demand its return or temporary use, case,
relationship between a Evidently,arndthe resulting
creditor
d) The cost of repairing the van shall be divided between Tito a contract of loan debtor in
cannot be characterized as
and Pedro. The second paragraph of Article 1949 of the New fiduciary"z
Civil Code provides that if extraordinary expenses arise on
the occasion of the actual use of the thing by the bailee,even (1) Adebtor can appropriate the thing
though the bailee acted without fault, they shall be borme without any responsibility or dutyloaned
to his
equally by both the bailor and the bailee unless there is a creditor to return the very thing that was
stipulation to the contrary. However, if the driver of the caroo loaned or to report how the proceeds
truck was at fault, the amount of damages or the expenses were used. Nor can he be compelled to
that they incurred can be recovered from the driver and/ or
the latter's employer of the van based on quasi-delict. return the proceeds and fruits of the loan,
for there is nothing under our laws that
3. SIMPLE LOAN OR MUTUUM. A person who receives a loan compel a debtor in a contract of loan to
of money or any other fungible thing acquires the ownership doso. As owner, the debtor can dispose of
thereof, and is bound to pay to the creditor an equal amount of the thing borrowed and his act will not be
the same kind and quality. considered misappropriation of the thing.
a) When Barter. In simple loarn, the object is The only liability on his part is to pay the
is either
money and other fungible things. If the thing loan together with the interest that existing
stipulated or provided under
to be exchanged is NON-FUNGIBLE then the
contract is barter.21 laws.
what was loaned is a
b) Transfer of Ownership. In a contract of simple What should be Paid. If
money, the debtor
loan, "one of the parties (creditor) delivers money fungible thing other than
the same kind, quantity
or other consumable thing to another (debtor) Owes another thing of should change in value.
it
on the condition that the same amount of the and quality,even if deliver the same kind,
impossible to
same kind and quality shall be paid. Owing to In case it is the loan
timeof the perfectionof
the consumable nature of the thing loaned, the its value at the
resulting duty of the borrower in a contract shall be paid.*
of loan is to pay, not to return, to the creditor
or lender the very thing loaned. This explains
why the ownership of the loaned is 169203, 180702,
thing G.R. Nos.
166859,
(First Division),
Republic v. Sandiganbayan
"Art. 1953, NCC.
April 12, 2011. (First Division),
ibid.
2Art. 1954, ibid. DRepublic
e. Sandiganbayan
Art, 1955, NCC.
 CREDIT TRANSACTIONS
820
REVIEWER ON CTVIL LAW Loan and Deposit 821

(4) Bank deposits are

BANK DEPOSIT. Abank deposit is
3.01.
provisions on simple loan. When a governed by the credits under Article commonof preferred
savings account Civil Code as 2244(9) the New
ora checking account (also known ass
demand law. provided for under the PDIC
is opened, acreditor-debtor relationship ensuesdeposiwitht)
the depositor as the creditor and the bank as (5) The bank
debtof or.% It can sethasoffthe right to
a) Effects. Consistent with the
debtor-creditor relationship, theexistence the
the
of the depositsthatwith the
indebtedness compensation.
following rules Itdepositor
bo
were laid down in pertinent and are due
jurisprudence: demandable
the value of
can likewise set-oft
(1) The bank can make use as its
own the
dishonored checks that were
previously credited
money deposited. Said (1998 and 2009 Bar)"
being held in trust for the amount is not 5 3.02, INTEREST. Interest may be
safekeeping. depositor nor for is interest as income or Monetary Interest which
civil fruits or
(2) Third persons who Interest which is interest as damages Compensatory
or penalty.
may
money deposited cannothave a right to the
hold the bank a) Monetary Interest shall be due ONLY if
responsible unless the
or garnishment. Thethere
is a court order following concurs: (1) Payment of Interest is
to its duty of the bank is agreed upon; (2) The stipulation to pay
creditor-depositor
persons. If a third and not to third must be in writing; and (3) The rate mustinterest
not be
right over the money person has a valid against the law (usurious if applicable) or against
prove the same before adeposited, he must
court of competent
morals and public policy (unconscionable) (2012
jurisdiction. Bar).
(3) The officers of the b) Payable In Kind. In the determination of the
liable for estafa if theybank cannot be held
interest, if it is payable in kind, its value shall be
of the money authorized the use appraised at the current price of the products or
There would bedeposited
no
by the depositor.
goods at the time and place of payment.
Articde 315(1Xb) of liability for estafa
the Revised Penalunder Legal Interest. If there is a written agreement
to return the Code
even if the bank failed c)
The money that is amountis that interest will be paid but the rate is not
deposited." stipulated, legal interest is the controlling rate.
not held in trust by the bank. deposited
dy Escalation Clause. This refers to a stipulation
BArt. 1980, NCC. allowing an increase in the interest rate agreed
unilaterally increase the
Law,Vol.2MTi
I, m2010
oteo B. Aquino, upon A party cannot that allows one
Ed.,p. 41. Notes and Cases on Banking Law and Negotiable Instruments rate of interest. Any stipulation
DIbid., pp. 41-42.
DTan Tiong Tick v.
American Apothecaries, 65 Phil. 414
1930. 9Fulton ron Works Co. v. China 10846.
% SCRAA ngona v. City Fiscal of Manila,Banki
9%Gui(1980).
ng Corp., G.R.(1938).
No. 32576, November 6, 31Sectio
2Gullasn 20, R.A. No. 3591 as amended by R.A. No.
v. Philippine National Bank, SCRA 519(1935).
62 January25, 2007;
128 Bank of Phil. Islands v. Court of Appeals, et al., G.R. No. 136202,
SCRA 577 (1984) Serrano v. Central Bank,
AssociArt.
ated Bark v. Tan, G.R. No. 156940, December
1958, NCC.
14, 2004.

Juico v. China Banking 3 Corp,, 695 SCRA 520 (2013).

 REVIEWER ON CIVIL LAW CREDIT TRANSACTIONS
822 Loan and Deposit 823

of the parties to uunilaterally increase

the interest
rate is V VOID% (2001 Bar). The
interest
expressly and voluntarily agreed upon wouldrate
then be applied.
e Payment by Mistake. If the borrower
interest when there has been no pays
stipulation
therefor, the provisions of the New Civil Code
concerning solutio indebiti, or natural obligations.
shall be applied, as the case may be (2004 and
2013 Bar)," If the borrower paid because of
mistake then solutio indebiti applies and there can
be recovery of the amount paid; if the borrower
intended to pay as a moral obligation knowing
that there is no stipulation as to interest, then the
rule on natural obligation applies (2004 and 2012
Bar).
bad already suspernded the Usury
not? Why? (5%) Law. Will the action prosper or
A: The action of Samuel willprosper. The
woid for tworeasons. The bank cannot increase of interest to 48% is
interest. The unilateral increase unilaterally increase the rate
of contract. Any increase in the rateviolates the rule on mutuality
of interest should be with the
consent of Samuel. Secondly, even if there is an agreement,
the 48%
interest is unconscionable, hence, it is void for being contrary to
morals andpublic policy.
3 In acontract of loan payable in five years, the parties agreed in
writing that the interest for the first three years is 12% per annum
and while the interest for the last two years is 15% per annum. Is the
agreement regarding the increase of interest valid?
A: Yes, the agreement that the interest rate will increase to 15% is
valid. This rate was fixed by mutual agreement of the parties when
they entered into the contract of law. This is not acase of unilateral
increase of the rate of interest. In addition, it appears that the rate
of interest is reasonable and not unconscionable.

PROBLEMS:
3.03. INTEREST ON INTEREST (COMPOUNDING OF
INTEREST). The general rule is that interest due and
1. The parties in a contract of loan of money agreed that the yearly
interest rate is 12% and it can be increased if there is a law that Interest
would authorize the increase of interest rates. Suppose OD, ue unpaid shall not earn interest." Exceptions:
due shall earn interest in the following cases:
lender, would increase by 5% the rate of interest to be paid by
TY, the borrower, without a law authorizing such increase, woula
OB's action be just and valid? Why? Has TY a remedy against the (1) Upon judicial demand,
is agreed upon
impositiorn of the rate increase? Explain (2004 Bar). (2) When compounding of interest may by stipulation
A: The increase of interest is not iust and valid, Unilateral increase o the contracting partiesand unpaid, which as
nterest by 5% is not allowed under the law. The act of OB violates capitalize the interest due new interest.0
earn
the prnciple of mutuality of contracts: the terms and conditions
of the contract must be agreed upon by the added principal, shall because
parties ana cau non-existent now
changed except by mutual agreement. 3.03.01. Usury. Usury is legally amended is still good law
2
Samuel borrowed P300,000 housing loan from the bank at lo7o although Act No. 2622 as Hence, there
the ceiling on interest.
annum interest. However, the promissory note contained a proviso - the BSP lifted rate ofinterest at this time.
that the bank""reservesthe withinthe limits usurious
allowed by law." By virtueright proviso,interest
to increase 1S nomore is now
of such Over the objections of rate of interest
Samuel, the bank increased the interest rate periodically untilit Legal Interest. The legal or
forbearance of
a) loans
reached 48/% per annum. Finally, Samuel filed an action questioning annum even for
the right of the bank to increase the interest rate up to 48%. The 6o per credit (2002Bar).
money, goods, or
bank raised the defense that the Central Bank of the Philippines
Art. 1959,NCC.
36Supr
37Art. a1960,
. ibid. WArts. 1959 and 2212, ibid.
"Art. 1959, ibid.
4BSP Circular.
 824
DEPOSIT. 4.
1962,
Art.
*Ibid.NCC. 4.02. 4.01.
Spouses

Andal DEPOSIT.
KINDSOF b) a)
DEFINITION.
delivers b)
keeping
belonging
Philippine
v.Voluntary (1)
Extrajudicial thing. commodatun.4
Agreement
itself
not is Contract
constitute like thethingWhen 4.03.02).
(1) interest is
contract, unconscionableunreasonable, andmorals mafyor
agreement
andthe For Unconscionable. REVIEWER
ment. it and unconscionable
valid. void Only
the
instead
delivered Not and to rest Legal example, be
National another, is and
a of thTheree which and therefore considered
perfected Deposit.
deposit to there returning In interestof ON
Deposit other public respectwith
Bank, Constitute.
which the
is the an CIVIL
is is unconscionable
confiscatory.
isnot with now
agreement
unconscionable Even
G.R. result is no If person deposit case, would void interest policy void LAW
which until
binding, the 6%
No.
the the
deposit the if
194201,2013. of same. applies the (See to
there
the principal obligation
of the
voluntary can Ansafekeeping receiveswhen
legal torate then agreement to because
delivery but but
Part 80% being is
either agreement pay rate
November (2015 interest
of be V no
the some
purpose one rate the
interest per contrary usury,
of
be: deposit of a interestimposed
of [A]
27, agree of person annum rate interest
other of safelything Bar). inte
rate. Note pay
the to ofthe the
is is is to

005.
ruary
21, Na.
90027,
1968,
Art.
ibid.NCC.
1965,
SArt.
Triple CA
ibid.Art.
4.03.
March 1969, ri404
gro-Industrial
V
FoodS 3, b)
1993. Safety a)
VOLUNTARY
depositor.
orally CENERALLY
gratuitous
thatengaged
agreement b)
Services,
transaction. return Free deposit; of
possession
Bar). free"renter"48
in company wherein attachment
JudicialNecessary(2)
or
the Safety in TRANSACTIONS
CREDIT
adhesion-isliablenot restaurant
DevelInc.opment The valet Valet in obligation.
legal
v at Depositwriting A
Box. thcontract.
e to Deposit
Loan
and
Filipino "Parking customer is it contract the the Deposit.
for the with parking
Parking. Deposit DEPOSIT. business
GRATUTOUS, or
any end constituted and not is delivery contrary;
void the (1987 Exceptions: seizure
MerchantCorsporation damage of when made
b" ofentrusts itsto control leaseBoxes of
inStuexpectation
the When deposit is
view customers, Contract
if for A Bar). storing
A of
Insurance Courtv. holding meal. as made or property.
of his is the in
of -being DEPOSITARY a not full isa mayvoluntary (2) (1) the
compliance
Co, Appeals, the The of orrestaurant special by goods. the when A
GR. nature athe the her the given and bethe depositary deposit Court
No. et contract car
aurant car's restaurant absolute type Rentthe wil
entered deposit there orders
to
restofstipulation
al, to
(2014 offers of with
160544, GR. the of safe the the into the is is
of is an the 825
is a a
 REVIEWER ON CIV0L LAw CREDIT TRANSACTIONS
826 Loan and Deposit 827

who is
otherwisemanifestly
4.04.01. CAPACITY.
he or she iscareless or unfit
still liable.
STATUS OF PARTIES RIGHTS AND (5) Not to change the
way of the deposit.
OBLIGATIONS
Depositor--Incapacitated Depositary's duties:remain but
Exception: If under the circumstances
may reasonably presume that the depositor he
|Depositary-Capacitated the Legal
ask for theRepresentative may would consent to the change if he knew of
the facts of the
return ofthe thing situation
(Art. 1970, NCC). (6) Notmakeuse of thething deposited
Depositor -Capacitated Depositor has the right: (1) the express without
permission of the
demand the return of the thing Otherwise, he shall be liable for depositor.
damages.
Depositary WHILE still in depositary's Exception: When the preservation of the
Incapacitated possession; (2) to demand from thing deposited requires its use, it must be
the depositary the amount used but only for that purpose;
by which he was benefitted (i) Efect of Permission to Use. When
or enriched; (3) recover the the depositary has permission to
thing from a third person who use the thing deposited, the contract
acquired the samne (Art. 1971, loses the concept of a deposit and
NCC). becomes a loan or commodatum,
except where safekeeping is still the
4.04.02. Obligations of Depositary. principal purpose of the contract. The
permission shall not be presumed,
(1) To hold the thing and keepit safe through and its existence must be proved.
the exercise of due diligence.
(7) To be liable for the loss of the thing
(2) To return the thing when required to through a fortuitous event in the
the depositor or the latter's heirs or following cases:s
succesSOrs.
(i) Ifit is so stipulated;
() The thing deposited shall be returned without the
With all its products, accessories and (iü) If he uses the thing
accessions,90
depositors permission;
(3) To be liable for the loss of the thingthrough (iüi) If he delays its return;
to use it, even
his fault or negligernce. (iv) If he allows others have been
(4) Not to deposit the thing with athird person though he himself may
authorized to use the same.
-unless allowed through stipulation:
i) Even if allowed the depositary
person
should not deposit it with a Art. 1974, NCC.
SArt. 19T7, ibid.
0Art. 1983, supra. WArt. 1978, ibid.
5Art. 1973, ibid. SSArt. 1979, ibid.
 CREDIT TRANSACTIONS
REVIEWER ON CIVIL LAW Loan and Deposit 829
828

demand
bound to
or to assignreturn the price he may
(8) The depositary cannot that the his right have received
of action against
depositor prove his ownership of the in case the
thing paid him. buyer
the price has not been
deposited,
) Nevertheless, should he discover that PROBLEM:
the thing has been stolen and who its V and Y staged a
true owner is, he must advise the lat 1.
the morning of a daring bank robbery in Manila at 10:30 AM in
regular business day, and
of the deposit. If the owner, in spite loot of two bags, each bag containing escaped with their
of such information, does not claim P50,000. During their Aight
to elude the police, X and Y entered the
it within the period of one month, A. then working in his Quezon City offce.nearby locked house of
From A's house, Xand
the depositary shall be relieved of all Y stole a box containing cash totaling P50,000 which box Ahad
been keeping in deposit for his friend B. In their hurry, Xand Y
responsibility by returning the thing left in A's bedroom one of the bags which they had taken from
deposited to the depositor. the bank. With X and Y now at large and nowhere to be found,
(i) If the depositary has reasonable the bag containing P50,000is now claimed by B, by the Mayor
grounds to believe that the thing has of Manila, and by the bank. Bclaims that the depository, A, by
not been lawfully acquired by the force majeure had obtained the bag of money in place of the box of
money deposited by B. The Mayor of Manila, on the other hand,
depositor, the former may return the claims that the bag of money should be deposited with the Offce
same.
of the Mayor as required of the finder by the provisions of the
(9) For a depositary holding certificates, Civil Code. The bank resists the claims of Band the Mayor of
bonds, securities or instruments which Manila. To whom should A deliver the bag of money? Decide
with reasons (1992 Bar).
earn interest, the depositary is obliged: (i) to The bank is the owner of
collect the latter when it becomes due, and A: A should deliver the money tothe bank. required
the money that was the object of
robbery. Restitution is
(ü) to take such steps as may be necessary
in order that the securities may preserve under the Revised Penal Code.
their value and the rights correspondingto Article 1990 of the Civil Code does
Bcannot claim the money. of the
law reguires only the deliveryfinders.
them according to law. not apply because the said
Manila cannot invoke the rule on
Substitute. The Mavor of lost
(10) If the depositary by force majeure Code requires the delivery of the
Article 719 of the New Civil previous possessoris unknown.
government order loses the thing and think to the Mayor when the
receives money or another thing in is
place, he shall deliver the substitute (sum 4.04.03. Obligations ofthe Depositor. is
or other thing) to the depositor (1987 ana consideration if the deposit
1992 Bar).% (1) To pay the
not gratuitous;
to reimburse
a) If Sold by Mistake. The depositor's heir who
If the deposit is gratuitous,
expenses he may
in good faith may have sold the thing which (2) depositary for the of the
preservation
he did not know was deposited, shal only the for the
have incurred
thing deposited
S6Art. 1984, NCC.
57Art. 1975, ibid.
SArt. 1990, ibid. Art. 1991, NCC.
Art, 1992, ibid.
 REVIEWER ON CTVIL LAW
830
CREDILoanTTRANSACTI
and DepositONS 831

(3) To reimburse the (5) The rules on

depositary
for
loss arising from the character of any necessary deposit applies to hand
carried baggage of passengers
the
thing deposited, unless at the time of the common carriage. However, it isinbelieved
contract of
constitution of the deposit the that
not aware of, or was not expected to was former although the
the contract rule on necessary deposit applies,
the dangerous character of the
know remains to be a common carriage
and not a necessary deposit.
unless he notified the depositary of theor thing, A05.01. Hotelsand Inns. The deposit of effects made by the
same, or the latter was aware of it without
advice from the depositor.1 travellers in hotels or inns shall also be regarded as
a) Right of Retention. The depositary may retain necessary. The keepers of hotels or inns shall be
the thing in pledge until the full payment of responsible for them as depositaries, provided:
what may be due him by reason of the deposit& (1) that notice was given to them, or to their
4.04.04. Extinguishment. Adeposit is extinguished: employees, of the effects brought by the
guests; and
(1) Upon the loss or destruction of the thing (2) that, on the part of the guests, they take
deposited; the precautions which said hotel-keepers
(2) In case of a gratuitous deposit,upon the death of or their substitutes advised relative to the
either the depositor or the depositary. care and vigilance of their effects.
4.05.
NECESSARY DEPOSIT. A deposit is necessary: a) Liability for Acts of Servants and Employees.
The hotel or inn-keepers shall be liable for the
(1) When it is made in compliance with a legal lossof, or injury to the personal property of the
obligation (2007 Bar); employees
guests caused by the servants or
inns as well as
(2) When it takes place on the occasion of any of the keepers of hotels or proceed from
stranger but not that which may
calamity, such as fire, storm, flood, pillage fact that travellers are
shipwreck,or other similar events; any force majeure. The the vigilance of the
(3) The deposit of effects made by the travellers constrained to rely on considered
or inns shall be
keeper ofthe hotels degree
in hotels or inns shall also be regarded as of care required of
in determining the
necessary him robber,
(4) Deposit to the hotelkeeper for the vehicles, The act of a thief or
b) Thief and Robber. hotel is not deemedforce
animals and articles which have been introduced who has entered
the
or placed in the annexes of the hotel;
majeure. or robberisa
Exception: Theact ofa thief arms
(1) with the use of
6 Art. 1993, NCC. defenseif it is done Hence,
irresistible force,®
an
62Art. 1994, ibid. or through
63Art. 1996, ibid.
6Art. 1998, ibid.
65Art. 1999, ibid.; Durban Apartments Corp. . v. Pioneer Insurance andSuretyCorp. 6Art, 1998, NCC.
G.R. No. 179419, Art, 2000, ibid.
January 12, 2011.
BArt, 2001, ibid.
 CREDIT TRANSACTIONS
REVIEWER ON CIVIL LAW Security Transacion 833
832

the depositary is not liable under this

e) Security:
right to
Right to Retain. The
hotelkeeper has a
retain the things brought into the
exception. by the guest, as a hotel
Not Liable for Acts of Guests. The of lodging, and security for credits on account
c)
hotelkeeper hotel guests. supplies usually furnished to
is not liable for compensation if the loss is:
(1) due to the acts of the guest, his
servants or visitors; or family, PROBLEM:
Due to the continuous heavy rainfall, the major
(2) if the loss arises from the character of the streets Manila
became flooded. This compelled Cris to check-in attSSquare One
things brought into the hotel.69 SOon as Crisgot off from his Toyota Altis, the Hotel's
Hotel. As
loor got the key of his car and gave him a valet parking parking attendant
customer's claim
d) Prohibited Acts. The hotelkeeper cannot free stub. The attendarnt parked his car at the basement of the hotel. Early in
himself from responsibility by posting notices the morning, Cris was informed by the hotel manager that his car was
to the effect that he is not liable for the articles carnapped. a) What contract, ifany, was perfected between Cris and the
brought by the guest. Hotel when Cris surrendered the key of his car to the Hotel's parking
(1) Any stipulation between the hotelkeeper attendant? b) What is the liability, if any, of the Hotel for the loss of Cris'
car? (2014 Bar)
and the guest whereby the responsibility The contract of necessary deposit was perfected between Cris
of the former is suppressed or diminished A: a)
shall be void (2014 Bar)," The reason for and Square One Hotel. Article 1999 of the New Civil Code
this is that the hotel business is imbued provides for rules on necessary deposit of vehicles. Article
1999 provides that the hotelkeeper is liable for the vehicles,
with public interest. "Catering to the animals and articles which have been introduced or placed
public, hotelkeepers are bound to provide in the annexes of the hotel.
not only lodgings for hotel guests and of the vehicle. The
security to their persons and belongings. b) Square One Hotel is liable for the losSas such, the purpose
contract is one of necessary deposit and
The twin duty constitutes the essence of vehicle. Hence, the said hotel should
the business. The law in turn does not is safekeeping of thediligence in performing its obligation
have exercised due The loss of the vehicle through
allow such duty to the public to be negated safekeeping the vehicle. due
of hotel did not exercise
or diluted by any contrary stipulation." carnapping shows that the safe (Durban Apartments v.
the vehicle
diligence in keeping 179419, January 12, 2011).
(2) Thus, the hotelkeeper is liable even if it Pioneer Insurance. G.R. No.
made its guest sign an "Undertaking" to
release and hold free and blameless the B. SECURITY TRANSACTION
hotelkeeper from any liability from any loss
of the deposit box where the propertieso GUARANTY AND SURETYSHIP.
the guest was kept (the contents of which GUARANTY. By guaranty, a
were taken by unauthorized persons):" 1.01, DEFINITION OF binds himself to the
guarantor, debtor
Person, called the obligationofthe principal
Creditor to the
fulfll do so (1954 Bar).
BArt. 2002, NCC. should fail to
70Art. 2003, ibid.; YHT Realty Corporation v. Court of Appeals, G.R. No. 126780, case the latter
n
February 17, 2005.
71YHT Realty Corporation v. Court of
2Ibid. Appeals, supra. Art. 20O04, NCC.
7^Art. 2047, ibid.
 REVIEWER ON CIVIL LAW
CREDIT TRANSACTIONS
834
Security Transaction 835

IAY
1.01.01. Personal Security Agreement. The contracts of
both
Conditional. Certain conditions must
complied with before be
guaranty and suretyship are personal the guarantor can be
liable. Example: exhaustion. made
transaction that secures a principal obligatioy
of the natural or
security (5)
is the personal obligation juridical Unilateral
of the
The
obligation only on the part
is
entity. guarantor
debtor need
in favor of the creditor. The
Thisshould be distinguished from a Real not even consent.
a)
Security Agreement like mortgage, pledge and (1) If the debtor DID NOT CONSENT to the
antichresis where property is given by wav of guaranty apply Articles 1236 and 1237
collateral. on paymnent by third persons.
b Accessory. Both personal security agreements (6) Express. Aguaranty is not presumed; it must be
and real security agreements are accessory expresS and cannot extend to more than what is
contracts because they secure the principal stipulated therein,
obligation. (7) Covered by Statutes of Fraud. Guaranty, as well
1.02. CHARACTERISTICS OF GUARANTY. as suretyship, is a promise to answer for adebt,
(1) Gratuitous. A guaranty is gratuitous, unless hence, it must be in writing (2009 Bar),
there is a stipulation to the contrary. (1) Apromise to guaranty an obligation is con
sensual but it must comply with the statute
(2) Accessory. Guaranty secures the payment of of frauds to be enforceable (2009 Bar).
obligation, hence, it cannot exist without a
principal obligation. 1.03. KINDS. Guaranty may be: (1) Conventional - by
agreement; (2) Legal - imposed by law; (3) Judicial
(i) The obligation to be secured may however Onerous;
constituted by court; (4) Gratuitous; (5) only;
be (1) voidable, (2) unenforceable, or (3) principal obligation
natural obligation,7% or (4) conditional (6) Definite secures the
obligations.7 (7) Indefinite or Simple -secures.
secure the
(ii) The guarantor may set up aggainstthe a) Sub-Guaranty. It is a guaranty to
creditor all the defenses which pertain to obligation of another guarantor.
in the GUARANTEED. The guarantor and
the principal debtor and are inherent to the 1.04. DEBTS TO BE principalobligation only
debt; but not those that are personal guarantees the security
the suretyit is indefinite, in which case, the
debtor. UNLESS obligations
onlyif principal, accessoryand judicial
(3) Subsidiary. The guarantor will pay has no extends to both the charges,
the principal debtor cannot pay and of interest and
ike paymentafterhe was judiciallyrequired to
pay.
costs incurred
properties to answer for the obligation.
No. 167082.
Trust Co,, G.R.
Art, 2050, NCC. Metropolitan Bank &
75Art. 2048,NCC. 0Art. 2055, ibid.;
Buenaventurav.
(2012).
76Art. 2052, ibid. August 3, 2016. 687 SCRA283
TArt. 2053, ibid. 9 Art. 1403(2), ibid.; Aglibot v. Santia,
78Art. 2081, ibid. Art, 2055, ibid.
 CREDIT TRANSACTIONS
REVIEWER ON CIVIL LAW
836
Security Transaction 837

aspecific period is fixed in the

incurred" or "other debts that
may be
a)orUnless
the bond, the obligation of the surety contract
subsists
at any time." incurred
so long as the principal obligation subsists 1.05. OUALIFICATIONS OF GUARANTORS. If the
1.04.01. Amount. Aguarantor or surety may bind himself for debtor obligated to furnish aguarantor or
is
must present one with the following surety, he
LESS, but NOT FOR MORE than the principal debtor, characteristics:
both as regards the amount and the onerous nature (1) The guarantor must possess
of the conditions. Should he have bound himself for integrity;
more, his obligations shall be reduced to the limits of (2) He must have capacity to bind himself;
that of the debtor.8
(3) He must have suffcient property to answer
for the obligation which he guarantees.
a) How to Deternmine Extent. The extent of a
surety's liabilityis determined by the language a) Replacenment. If the guarantor should be
convicted in the first instance of a crime
of the guaranty or suretyship contract itself. t
cannot be extended by implication beyond the involving dishonesty (even while appeal is
terms of the contract even if the original debtor pending) or should become insolvent, the
is liable for a bigger amount.4 creditor may demand another who has all the
qualifications required in the preceding article.
1.04.02. Future Debts. A guaranty or surety may also be given Exception: where the creditor has required and
as security for future debts, the amount of which is not stipulated that a specified person should be the
yet known. However, there can be no claimn against guarantor.%
the guarantor or surety until the debt is liquidated.s BENEFIT OF EXXCUSSION OR
EXHAUSTION. The
1.06.
Continuing Guaranty and Surety. By executing subsidiary. The guarantor
a) liability of the guarantor is cannot be compelled
acontinuing guaranty or suretyship agreement sub-guarantor)
(as well as the unless» (2013 Bar):
the principal places itself in a position to enter to pay the creditor
into the projected series of transactions with exhausted all the property of
its creditor; with such suretyship or guaranty (1) The creditor has
the debtor; and
agreement, there would be no need to execute thelegalremedies
a separate contracts or bond (in surety) for
each
The creditor has resorted toall
(2) against the debtor.
nancing or credit accommodation extended to (Excussion) is not
the principal debtor.% This must be
expressly Beneft ofExhaustion take place (1959
When the
provided for. .06.01. excussion shall not
debt" Available. The
"any
Example: The agreement covers
time to time be
and 1967 Bar): expressly renounced
or "obligations that may from heretoforebe the guarantor has
incurred" or "obligations that may (1) If
it;

83Art. 2054, ibid. Ltd., G.R. Art. 2056, NCC.

BStronghold Insurance Company, Inc. v. Tokyu
No. 156571, July 9, 2008.
Construction Company, Art. 2057, ibid.
85Art. 2053, NCC. Art. 2058, ibid.
B6Atok Finance Corporation v. Court of Appeals,, 222 SCRA 232 (1999). Arts, 2059 and 2060, ibid.
 CREDIT TRANSACTIONS
REVIEWERON CIVIL
LAW Security Transaction 839
838
1nder Article 2067, applies or are
(2) If he has bound himself solidarily with the
debtor (1980 Bar): SURETY.9 The indemnity to the suretyavailable
comprises of: and
to a
guarantor
(3) In case of insolvency of the debtor: (1) The total amount of the debt:
When he has absconded, or cannot be sued
(4) within (2) The legal interests thereon from the
the Philippines unless he has left a time the
manager or representative; payment was made known to the debtor, even
though it did not earn interest for the creditor;
(5) If it may be presumed that an execution (3) The expenses incurred by the guarantor after
on the property of the principal debtor
would not result in the satisfaction of the having notified the debtor that payment had
been demanded of him;
obligation;
(6) If the guarantor did not set it up against (4) Damages, if they are due."
the creditor upon the latter's demand for 1.07.01. Liability of a Third Person. If a third person
payment from him; and requested a person to be guarantor of a principal
(7) If the guarantor did not point out to the debtor, the third person may also be sued for
creditor available property of the debtor reimbursement.99
within Philippine territory, sufficient to 1.07.02. Double Payment without Notice.
The DEBTOR shall
cover the amount of the debt. guarantor for reimbursement if the
not be liable to the
a) Not Applicable to Surety. Since the liability of following concur:*
the surety is solidary, the surety is not entitled to (1) the guarantor has paid
without notifying
the benefit of excussion. the debtor; and
1.06.02. Notice to Guarantor. To make the guarantor liable, of the payment;
(2) The debtor is not aware
the creditor must (1) first file acase against the debtor and
alone;(2) in said case, the creditor must ask the court the payment.
toNOTIFY the guarantor. (3) The debtor repeats
the guarantor can proceed
Who is liable
a) The creditor may hold the guarantor liable only a) againstthe CREDITOR.
after judgment has been obtained against the is still liable
despite
principal debtor and the latter is unable to pay. b) Exception: The debtorall the following are
if
any double payment
b) The guarantor may appear to set up
benefit of excussion
applicable defenses but the
present:*
is still available despite his or her
appearance. guarantyisgratuitous;
AND (1) The
1.07.
REIMBURSEMENT OF GUARANTOR guarantor
SURETY. Article 2066 provides that "the 2007,.
who pays for a debtor must be indemnified by the Ortigas,Jr, G.R.
No. 151953,June29,
subrogation 2Salvador Escano, et al. v.
latter. This provision and the right of WArt. 2072, NCC.
Art. 2079, ibid
9lAglibot v. Santia, 687 SCRA 283 (2012). 51bid.
 REVIEWER ON CTVIL LAW CREDIT TRANSACTIONS
840
Security Transaction 841

(2) The guararntor was (6) If there are

preventedthe by a reasonable
intendsgrounds
fortuitous event from
of the payment; and
advising debtor principal debtor
() Ifthe
to
to abscond;fear that the
(3) The creditor becomes insolvent. principal
becoming debtor is in imminent danger of
insolvent.
RIGHT OF SUBROGATION. The q1.10. BENEFIT OF DIVISION. The obligation is
1.08.
surety who pays is subrogated by virtueguarantor and
among the divided
to allthe rights which the creditor had thereof
against the solidary liabilityco-guarantors (joint
is provided for) if thedebtors unless
following are
debtor.% present: (1) there are several guarantors of only one
a Effect of Compromise. lf the guarantor has debtor; (2) they are guarantors of the same debt.
compromised with the creditor, he a) The benefit of division
demand of the debtor more than what he hac cannot ceases in the against the co-guarantors
same cases and for the same
really paid, as the benefit of excussion against the reasons
debtor. principal
1,09. RIGHT BEFORE PAYMENT (1951 Bar). Even before
paying the creditor, the guarantor may proceed 1.10.01. Benefit of Contribution. Aco-guarantor or co-surety,
against the principal debtor either: (1) to obtain being joint debtors, need not pay the entire obligation.
release from the guaranty; or (2) to demand a security If one of the co-guarantors (one of two or more) will
that shall protect him from any proceedings by the pay, he or she may demand reimbursement from the
creditor and from the danger of insolvency of the other co-guarantors the latter's proportional shares
debtor, in the following cases:%8 if:100
(1) When he is sued for the payment; (1) The payment has been made by virtue of a
judicial demand; or
(2) In case of insolvency of the principal debtor;
(3) When the debtor has bound himself to relieve (2) The principal debtor is insolvent.
Guarantor. If any
him from the guaranty within a specified period, a) Effect of Insolvency of any insolvent, his
guarantors should be
and this period has expired; of the co-guarantor,
share shallbe borne by the otherproportion.
(4) When the debt has become demandable, by including the payer, in the same
reason of the expiration of the period tor REIMBURSEMENT.The guarantor who101
payment; 1.11. RIGHT OF the debtor.
must beindemnifiedby
(5) After the lapse of ten years, when the principal pays foradebtor OF GUARANTY. The
obligation has no fixed period for its maturity,
be
1.12. EXTINGUISHMENT
extinguishedtogether with the
unless it be of such nature that it cannotthan guaranty may be eveniftheprincipalobligation
principalobligationor Guaranty is extinguished
longer if
extinguished except within a period subsists in certain
cases.
10 years;
G.R.
Simeon Sedaya v. Sevilla,
96Art. 2067, ibid. Art. 2065, NCC. Victor Sevilla,
100 Art. 2073, ibid.; Intestate Estate of
bid. No.
8Art. 2071, NCC. .L-17845, April 27, 1967.
Art. 2066, NCC.
 REVIEWER ON CIVIL LAW
842 CREDIT TRANSACTIONS
Security Transaction 843

a) The principal obligation is extinguished for the the principalin obligor of an obligation or
or
b)
same causes as all other obligations;102 or
If the guaranty is extinguished in the
undertaking
obligee, favor of a third party called the
cases:

(1) If the creditor

fol owing 413.01.
Distinguished
suretyship
from Guaranty. The contract of
and the contract
voluntarily
acceptsof
immovable or other property in payment governed by the of guaranty are both
same Title of the
New Civil Code. 18
the debt, even if he should afterwards lose However, these contracts are essentially
the same through eviction, the guarantor is because the surety is an insurer of debt different
while the
released, 103 guarantor is the insurer of the solvency of the debtor
(1954 and 2010 Bar) 1»
(2) A release made by the creditor in favor of
one of the guarantors, without the consent SURETY GUARANTY
of the others, benefits all to the extent of the
share of the guarantor to whom it has been The surety insures the debt The guarantor insures the
granted.104 -the surety's undertaking is debtor's solvency the

(3) An extension granted to the debtor by

that the debt SHALL be paid.guarantor's undertaking is that
the debtor shall pay.
the creditor without the consernt of the
guarantor extinguishes the guaranty. The The surety is solidarily and The guarantor is subsidiarily
primarily liable. liable.
mere failure on the part of the creditor
to demand payment after the debt has entitled to the
become due does not of itself constitute The surety is not entitled to The guarantor is
benefit of excussion.
the benefit of excussion.
any extension of time referred to herein. ts
two types of
(4) The guarantors, even though they be 1.13.02. Nature of Liability. Suretyship involves
principalrelationship
solidary, are released from their obligation relationship the underlying debtor, and the accessory
whenever by some act of the creditor between the creditor and the the
between the principal and
they cannot be subrogated to the rights, Surety relationship
mortgages, and preference of the latter.06 surety. 110 reditor
1.13. with Creditor. "The
SURETYSHIP. The surety binds himself solidarily to a) Relationshipsurety's solidary undertaking to
the creditor to fulfill the obligation of the principa1 accepts the does not pay. Suchacceptance,
debtor. pay if the debtor waythe
changeinany material
a) A contract of suretyship is an agreement however,doesnot with theprincipaldebtor
guarantees creditor'srelationship
suretyanactive
partyto the
whereby a party
the
called the surety called nordoesit
makethe
performance by another party
102 Art. 2076, NCC.
103 Art. 2077, ibid. Sec. 177, Insurance Code. NCC. March31, 1998.
to 2084, G.R.
IV, Arts. 2047 etal., G.R. No. 126490, Ltd.,
104 Art. 2078, ibid.
108Ttle XV, Book Court of Appeals,
ConstructionCompany,
105Art. 2079, ibid.
106 Art. 2080, ibid. 109pal mares Insurance (
Stronghold
v. Company,Inc. . Tokyu
Nos.158820-21, Tune 5, 200.
 REVIEWER ON CIVIL LAW CREDIT TRANSACTIONS
844
Security Transaction 845

principal creditor-debtor relationship. other

In ho surety any
interest,15 active duty to
words, the acceptance does not give the protect the surety's
the right to intervene in the principal surety 1.13.03. EExtinguishment of
The surety's role arises only upon the contract. guarantor and the Suretyship. The obligation of the
default, at which time, can be
it debtor's
directly
surety is extinguished
ime as that of the principal at the
and for some causes assameall
liable by the creditor for payment as a held other obligations, 6
obligor."n solidary
(1) Although the contract of a surety is, in
a) Novation. Suretyship is extinguished if there is
essence, secondary only toa valid principal
material alteration of the principal
obligation."
For example, an extension granted to the
obligation, the surety's liability to the by the creditor without the consent of the debtor
surety
creditor is direct, primary, and absolute: extinguishes the surety.
he becomes liable for the debt and duty of
another although he possesses no direct or 2. PLEDGE, MORTGAGE, AND ANTICHRESIS.
personal interest over the obligations nor REQUIREMENTS COMMON TO PLEDGE AND
does he receive any benefit therefrom."12 2.01.
MORTGAGE (1951 Bar).
b) No Right of Exhaustion. A surety like a judicial
bondsman cannot demand the exhaustion of ths (1) They must be constituted to secure the fulfllment
the property of the principal debtor. Similarly, a of a principal obligation.
absolute
sub-surety in the same case, cannot demand the
(2) The mortgagor or pledgor must be the
exhaustion of the property of the debtor of the owner of the thing pledged or mortgaged.
surety. mortagagor must have free
c) (3) The pledgor or
Not Indispensable Party. Because of the disposal of the property.
solidary nature of its obligation, the surety is Mortgage. The debtor himselt
not an indispensable party in a suit against Z.01.01. Who May Pledge or is not a party to the principal
(who
or aThird Personmortgage or pledge to secure the
the principal. Neither is the principal an

indispensable party in an action to claim obligation) may debto." It is not required that the
indemnity from the surety."4 obligation of the principal contract.m
benefited from the
d) Third Person Antichresis.
Demand Not Necessary. Demand to pay is not This rule also
applies to
necessary to make the surety liable. They are nor
even entitled to be given notice of the prinipal
debtor's default. The creditor does not owe the 1998.
126490, March 31,
Appeals, etal,, G.R. No.
15Palmares v. Court of
Art. 2076, NCC. Inc. v.
341 SCRA
Cuenca,
781(2000).

111Supra. Ltd.,ibid, "Security Bank and Trust Company,

Enterprises, Inc., 666
i12Stonghold Insurance Company, Inc. v. Tokyu Coonstruction Company,
citing Trade and Investment Roblett 18Art. 2079,NCC. Fishing
Development of the Philippines
V. Art. 2085, ibid. v.QBRO
Industrial Construction Corp., G.R. No. 139290,Corporation
November 11, 2005. 120 Art. 2085, ibid.; China Banking
Corp.
13Art. 2084, NCC. SCRA 599 (2012). 380(2002).
193753, 390SCRA
Appeals,
114Living@Sense, Inc.
September 26, 2012.
v. Malayan Insurance Company, Inc., G.R. No. 121Vda, de Jayme v. Court of.
12Art. 2139, NCC.
846
REVIEWER ON CIVIL LAW
CREDIT TRANSACTIONS
Security Transaction 847

The mortgagor or pledgor may be (2) If the

a)
tion mortgagor or pledgor. An accommoda-ion creditor
dies, an heir cannot
mortgagor or pledgor, ordinarily is not accommodat extinguish the pledge or
prejudice ofother heirs !23 mortgage to the
a recipiernt of the loan,123 himselt d)
Obligation
b) Athird party pledgor or mortgagor is a
Secured.or Pledge or mortgage may
secure obligations
interested in the payment of the person (2)voidable, (3) contracts that(4)are: (1) valid,
hence, they have the right to pay the oblobliiggatatiioon,n pure, and (6) unenforceable, natural, (5)
conditional 9
(2011 Bar). 2.01.03. Prohibition Against
2.01.02. Common Features. The debtor may waivePACTUM COMMISSORIUM.
the security
action for specific performance and just file an
a) Real Security. It is also of the essence of
these of the for the payment
contracts that whern the principal obligation obligation. However, if he
becomes due, the the security, he must foreclose or wants to reply on
have the property
things in which the pledge sold for the payment of the debt. The creditor cannot
or mortgage consists may be alienated for the appropriate the things given by way of pledge or
payment to the creditor. 124
b) Consideration, In relation to the creditor, the
mortgage, or dispose of them (1997, 1999, 2000, 2001,
and 2009 Bar).130
consideration for the principal obligation is the
consideration for the mortgage.125 a) Pactum Commissorium. This is an agreement
whereby the creditor automatically becomes
c) Indivisible. When several things are given to the owner of the things given by way of pledge
secure the same debt in its entirety, all of them or mortgage, or dispose of them in case of non
are liable for the debt and the creditor does not payment. It is a stipulation which enables the
have to divide his action by distributing the mortgagee or pledgee to acquire ownership of
debt among the various things mortgaged. Even property without the
the pledged or mortgagedproceedings
if only part of the debt remains unpaid, all the need of any foreclosure or public
commissorium
things are liable for such balance.126 auction.11 This agreement (pactum commissorium
pactum
(1) The indivisibility is present even if the or what amounts to name) is NULL
although referred to by another
debtors are jointly liable if the debtor, requisites are as follows:
mortgagor or pledgor dies, their heirs can and VOID,12 The
or
a property mortgaged
not ask for proportionate extinguishment (1) there should be securityfor thepayment
of the pledge or mortgage. of
pledged bywayobligation;
principal and
ofthe

"Caroda v. China Banking Corp.. G.R. No. 210542,

124Art. 2087, NCC. February 24, 2013.
1SFilipinas Marble 180 128 Art. 2089, NCC. 2091,ibid.
(1986). Corporation v. Intermediate
Appellate Court, 142 SCRA
19Art. 2086 in relation to Arts, 2052 and
2008.
126Art. 2089, NCC; Vda. de Jayme v. OArt. 2088, ibid. 172592,July9,
Court of Appeals, 390 SCRA 380 (2002). Corporation, G.R. No.
1Arts. 2089 and 2090, NCC.
134Ongv. Roban Lending
Art. 2088, NCC.
 CREDIT TRANSACTIONS
REVIEWER ON CIVIL LAW Security Transaction 849
848
authorized to foreclose on the
shares of
delivered possession of the shares to stock. As required, MNO
(2). there should be a stipulation for
automatic he shares would be ABC with the
appropriation by the creditor of the
thing oloan, However, the loan understanding
returned to MNO upon the payment of
was not paid on time. Amonth after
given as security in case of
obligation non-payment
tour years, may the shares of stock pledged be
of the principal within th ABC or not? Reason (2004 Bar). deemed owned by
stipulated period. No The shares of stock cannot be deemed to be owned by
Distinguished from Dacion En Pago. In ate..
A: ABC
b) when the loan was not paid on time. Article 2088 of the New Civil
dacion en pago, the assignment of the Code provides that the creditor cannot appropriate the things
extinguishes the monetary debt. n property
pactum given by way of pledge and any stipulation to the contrary is null
commissorium, the property is given initially as and void. The stipulation that allows appropriation is known as
a security but later appropriated without the nactum commissorium; this stipulation is void under Article 2088.
benefit of foreclosure, 134 Theremedy of ABCis to proceed to sell the shares at public auction
under Articles 2112 to 2114 of the New Civil Code.
c) Apromise to transfer a property in favor of the 2. a) Xborrowed money from Yand gave apiece of land as security
creditor in case of non-payment is not pactum by way of mortgage. It was expressly agreed between the
commisorium because there is no automatic parties in the mortgage contract that upon non-payment of
transfer (2009 Bar). However, a provision already
the debt on time by X, the mortgaged land would become
whereby the creditor can immediately sell the belong to Y. If X defaulted in paying, would Ynow
property mortgaged and retain all the proceeds the owner of the mortgaged land? Why?
agreement between
will make the agreement pactum commissorium. b) Suppose in the preceding question, the on
to pay the mortgage debt
X and Y was that if X failed
the debt shallbe paid with the land mortgaged by X
EXAMPLES: time, preceding
be the same as in the
to Y. Would your answer
(1) There is no pactum commisorium if the contract signed by the question? Explain (1999 Bar).
parties stipulated that if debtor R is unable to redeem the ring on due land. Article 2088
become the owner of the creditor cannot
date, she will execute adocumentin favor of the creditor, J, providing that A: a) No, Y would not provides that the
Code and any
the ring shall automatically be considered full payment of the loan (2009 of the New Civil given by wayvoid.of pledgestipulation
Bar). (2) There is pactum commisorium if it is expressly agreed between the appropriate the things is null and The
parties in the mortgage contract that upon nonpayment of the debt on stipulation to the contrary known
to payis what is Article
owner upon failure
consideredvoid under
time by X, the mortgaged land would already belong to Y(1999 Bar). that makes Y the
commissorium thatis
as pactum remedyis to foreclose the mortgage.
2088.The that
2.01.04. Alternative Remedy. The filing of a collection case or The stipulation
be the same.paymentis a caseof
an action for specificperformance bars the foreclosure the answer would not used as constitute
b) No, property will be Itdoesnot
of mortgage. The fling of the said case is deemed a States that theThisis validstipulations.agreement does not
waiver of the alternative remedy (2001and 2010 Bar: pago.
aMCionencommissorium because the agreement
the
pactum appropriation. Despite
become the owner of
automatic would not
PROBLEMS: provide for Y undertaking topay
providing dacioninen pago,ofbreachofthe right
1
ABCloaned to MNO P40,000 for 400shares case land,subjecttohis
of stock in XYZ, Inc. It was agreedwhich
thatthe latterpledged
if the pledgor failedto pay the land. In fact. never get the
land, Ymay undertaking.
the loan with 10% yearly interest within four years, the pledgeis uSng the breach of his
againstXfor virtue of
Contract by asa
accessory creditor
PLEDGE. It is an deliveredtothe
13Ong v. Roban Lending Corporation, supra. 2.02. property
134[bid. which personal
 REVIEWER ON CIVIL LAW
CREDIT TRANSACTIONS
850
Security Transaction 851

obligation (principal obligation)

security for an that it can be sold at public with
a)
Incorporeal
instruments, rights,
bills ofevidenced by negotiable
the agreement
in case of non-payment to
answer for the auction bonds, warehouse lading,
receipts
shares of stock,
and similar
obligation or for the creditor to return the unpaid documents may also be pledged.
same in
casethe principal obligation is paid. (1) If negotiable, the
a) Kinds. Pledge may be (1) conventional or right pledged shallinstrument
be proving the
voluntary, or (2) Legal or by operation of law creditor, must be indorseddelivered
19 to the
(Examples: Arts. 546, 1731, and 1995, NCC) (2) A deed of assignment of
shares or a bank
b) Pledge is a bilateral agreement, hence, the deposit may partake the nature of pledge
of shares of stock the bank deposit (2013
or
borrower cannot be compelled to surrender
other properties by way of pledge even if the Bar).
properties originally pledged decreased in value b) Fruits. If the pledge earns or produces fruits,
without the borrower's fault (1994 Bar). income, dividends, or interests, the creditor
2.02.01. Requisites of Pledge. shall: (1)compensate what he receives with those
which are owing him; (2) but if none are owing
(1) The pledge must be constituted to secure the him, or insofar as the amount may exceed that
fulflment of a principal obligation; which is due, he shall apply it to the principal."0
(2) The pledgor must be the absolute owner of the Unless there is a stipulation to the contrary, the
thing pledged or mortgaged; pledge shall extend to the interest and earnings
of the right pledged.
(3) The pledgor must have free disposal of the animals,
property; (1) Animals. In case of a pledge of pledgor
shall pertain
their offspringanimals to the
pledged, but shall
(4) The thing pledged should be placed in the or owner of
pledge, if there is no
possession of the creditor, or of a third person be subject to thecontrary,
by common agreement actual delivery must stipulation to the
be made and NOT symbolic delivery; Obligations. Generally, only current
the Z.02.03. After-Incurredsecured by the pledge. However, after
(5) To take effect against third persons obligationsare secured
obligations of the debtor may be
description of the thing pledged and the date ot incurred accurately described.e
the pledge must appearrin a publicinstrument.3 Provided that they are
2.02.02. Subject Matter. Only personal or movable properties
contemplated under Articles 416 and 417 of the New
Civil Code may be pledged provided that they are G.R. No. 97753,
of Appeals,
susceptible of possession,!"7 18Art. 2095, NCC. (Philippines),Inc. v. Court
139 Art. 2095, ibid.: Caltex
August 10, 1992.
140Art. 2102, NCC.
103576,
135 Art. 2093, NCC. 141[bid. Corporationv. Court
of Appeals, GR. No.
1% Art. 2096, ibid. 121bid. Shoe, Rubber &Plastic
137 Art. 2094, ibid.
August143Acme
22, 1996.
 REVIEWER ON CVIL LAW
CREDIT TRANSACTIONS
852
Security Transaction 853

2.02.04. Possession. The pledgee has the right to retain the 2.02.05. Public Auction. The creditor to whom the
Bar). not been satisfied in due time, may proceedcredit has
thing until the debt is paid4 (1984 Notary Public to the sale of the thing before a
(1) The pledgor cannot
alienate the thing there is Bar),150 This sale shall be: pledged (2012
before the obligation becomes dueeunless pledged (1) made at a public auction;
consent onthe parttof the
transferee as soon as
pledgeeownership
ofthething pledgedlis transmitted to the
the vendee
(2) with notification to the debtor and
the
Owner of the thing pledged in a proper
pledgee consents to
the alienation, but the latter shall continue in case;
possession; (3) the notice must state the amount for which
(2) The creditor-pledgee shall take care of the thing the public sale is to be held.
pledged with the diligence of a good father of a a) Right to Appropriate after Second Unsuccess
family; he has a right to the reimbursement of ful Sale. If at the first auction the thing is not
the expenses made for its preservation, and is sold, a second one with the same formalities
liable for its loss or deterioration;s shall be held; and if at the second auction there is
(3) The pledgee cannot deposit the thing pledged no sale either, the creditor may appropriate the
with athird person, unless there is a stipulation thing pledged. In this case he shall be obliged to
(2004
authorizing him to do so;% give an acquittance for his entire claim
(4) The pledgor has the same responsibility as a Bar),151
bailor in commodatum in the case under Article Who can Bid. At the public auction, the pledgor
b) shall, moreover, have a
1951¬ or owner may bid. He same terms as
(5) The creditor-pledgee may bring the actions better right if he should offer the may also bid,
pledgee
which pertain to the owner of the thing pledged the highest bidder. The valid if he is the only
in order to recover it from, or defend it against a but his offer shall not be
third person;# bidder. 52
owner
Redemption. Thepledger or
(6) The creditor cannot use the thing pledged, c) No Right of
redeem the property after the
without the authority of the owner, and if he has no right to However, there is Equity of
should do so, or should misuse the thing in any public auction. pledger or owner may
Oner way, the owner may ask that it be judicially Redemption, that is, the it becomes due and
obligation after
or extrajudicially deposited. satisfy the
sale.
before the public
Exception: When the preservation of the thingthe
pledged requires its use, it must be used by 2.02.06. Deficiency and Excess. Thesaleof
CANNOT berecovered. principal
creditor but only for that purpose. a)
Deficiency extinguishthe of the
pledgedshall proceeds
14Art. 2098, NCC. thething whether or not the
obligation,
145Art. 2099, ibid.
1Art. 2100, ibid.
147Art. 2101, ibid. 150 Art. 2112, ibid.
148Art. 2103, ibid.
149 Art.2104, ibid. 151[bid.
152Art. 2113, ibid.
 REVIEWER ON CIVIL LAW
854 CREDIT TRANSACTIONS
Security Transaction 855

sale are equal to the amount of the 2.02.08. Return of the

obligation, interest and expenses in a prinprciopperal return Thing.if The pledgor can ask for the
of thing only
case. If the price of the sale is less, The pledger must pay thethe obligation has been
the creditor be entitled to recover theneither :shall debt and its paid.
expenses in a proper cases. interest, with
notwithstanding any stipulation to the
(1975, 1986 and 2010 Bar), 1s3 defconticierncy,ary a) The borrower cannot
the thing pledgedlikewise insist on
returning
yet if the period has not
b) Excess belongs to
Creditor-Pledgee. the
If
price of the sale is more than the amount of the
expired
period is forbecause the
the benefit ofpresumption is that the
both parties.
obligation, the debtor shall not bbe entitled to the 2.02.09. Extinguishment. The pledge is extinguished:
excess, unless it is otherwise eagreed.
.The pledgee
shall be entitled to the excess.54 Exception: (1) Ifthe thing pledged is returned by the
In Legal Pledge or Pledge by Operation of to the pledgor or owner and any pledgee
Law after payment of the debt and expenses the contrary shall be void.7
stipulation to
the remainder of the price of the sale shall be (2) A statement in writing by the pledgee that he
delivered to the obligor (1986 Bar),5
renounces or abandons the pledge is sufficient
2.02.07. Pledge by Operation of Law. Athing under a pledge to extinguish the pledge. For this purpose,
by operation of law may be sold only after demand of neither the acceptance by the pledgor or owner,
the amount for which the thing is retained. The public nor the return of the thing pledged is necessary,
auction shall take place within one month after such the pledgee becoming adepositary"
demand. If, without just grounds, the creditor does 2.03. REAL ESTATE MORTGAGE,19
not cause the public sale to be held within such period,
the debtor may require the return of the thing. 2.03.01. Subject. Only immovable properties or real right
subject of a real
over such immovable may be the
PROBLEM: estate mortgage.
hence they
Adebtor pledged to his surety pieces of jewelry to indemnify the a) Buildings:are immovable propertiesthe land on
latter in case the surety would be obliged to pav the creditor. separately from
The surety
paid P2,800 to the creditor. To recover the amount, the surety sOld at
can mortgagedconstructed.
which they are
public auction the jewelry but realized only P500. May the surety recover when certain
There are instances
the deficiency from the debtor? (1975 Bar) b) Estoppel. are treated as real property by
movables although
A: No, the surety cannot recover the deficiency. Article 2115 provides
estoppel. Thepartiesmaybeestopped
affected.
that the sale of the thing pledged shall extinguish the obligation, are not
whether or not the proceeds of the sale are equal to the amount of innocentthird parties encumbrance on
the principal obligation. If the price of the sale is less, the creditor constitutesan
Nature. The mortgagerightofthemortgageeisa
right
is not entitled to recover the deficiency 2.03.02. property. The
stipulation to the contrary. notwithstanans thereal
additional
153 Art. 2115, NCC. 157Art. 2110, NC. 2014 Ed. for
158 Art. 2111, ibid. Commercial Law, NEWCIVILCODE,
154 Art. 2115, ibid. Reviewer on on the No.1508.
155 Art. 2121, ibid. 159 See Sundiang and. Aquino, Mortgagebased
99-10-05-0and Act
notes on Real Estate Mortgage andChattel
"CIRCULAR-A.M. No.
156 Art. 2122, ibid. ACT 3135, SUPREME COURT
 REVIEWER ON CIVIL LAW
CREDIT TRANSACTIONS
856 Security Transaction 857

follows the equipment attachedto the

in rem. The registered mortgage
even if there is a change of ownership. property be subject to the mortgage. 4 mortgaged property shall
a) Accession and
a) Security Interest.
acquired, the right to
Only security
possessioninterest
and is mortgage extendsaccessories. Note that "the
to the natural
accessions, to
disponendi is not included unless jus the improvements, growing fruits,
and the rents
stipulated.14o otherwise or income not yet received when the
obligation
becomes due, and to the amount of the
b) Junior Mortgagor. The first registered mort.
gagee has superior right over junior mortgagees
indemnity granted or owing to the proprietor
from the insurers of the property
or attaching creditors,161 mortgaged,
in virtue of expropriation for public or
use, with
Registration. A real estate mortgage must be the declarations, amplifications and limitations
c)
registered with the Register of Deeds where established by law, whether the estate remains
the subject property is located in order to in the possession of the mortgagor, or it passes
affect third persons. However, an unregistered into the hands of a third person"is (1999 Bar).
mortgage is valid between the parties (2000 and N2.03.05. After-Incurred or Future Obligations this may
2013 Bar). be covered by real estate mortgage if the same
Estate
expressly provided for. The Deed of Real secure
2.03.03. Mortgagee in Good Faith. In what is known as it may
the CURTAIN PRINCIPLE, one does not need to Mortgage may expressly state that
stipulation,
gobehind the certificate of title because it contains future advancements. In the absence of limited
must be
all the information about the title of its holde:14 the general rule is that the mortgage
the mortgage. 4
A mortgagee has the right to rely on the face of the 5 t othe amount merntioned in
Original or Transfer Certificate of Title. Amortgagee DragnetClause. Ablanket
Blanket Mortgage or
a) as a dragnet clause
without notice will not be affected by the claim of mortgage clause also known phrased tosubsume all
third persons. Exception: Banks cannot rely merely specifically
on the title. By the nature of their functions, barnks is one that is future origin.wItis acontinuing
debts ofpast or a dragnet clause
with without needs
are required to go beyond the title because they are security. A mortgage
future loans
required to exercise the highest degree of diligenc. makes available documents,#
ofsecurity
Ihey are required to investigate the title and the executing anotherset recover the
property (2001 Bar),143 mortgagee-creditor can not
is
2.03.04. After-Acquired Property. These may be included 2.03.06. Deficiency. The proceedsoftheforeclosuresale
ofthe
deficiency
by stipulation; the parties may stipulate that after-
acquired property are automatically included inthe
all
mortgage. Thus, the parties may stipulate thatand
improvements including buildings, machineries
lArt. 2127, NCC.
Corp, 676
l65 Art. 2127, ibid. Metro Gas
279 SCRA397(1997). NewDagupan
160Ramirez v. Court of Appeals,409 SCRA 133 lQuintanilla v. CA, Sweepstakes Office v. (2010);PNBv.
Heirsof
16Rizal Commercial Banking
16Angeles v. Domingo, 692 SCRACorp. . CA, 289 (2003).
SCRA 292 (1995). 167phi(2012).lippine
SCRA 156 Charity
ofthe
Pamplona, Inc.,
621SCRA
262

169Ursal v. CA, 473 SCRA 58 (2005).277 (2013). l6Tecklo v. Rural BankOctober 12, 2016.
Alonday, G.R.
No. 171865,