UNIVERSITY OF CEBU

College of Law
COURSE OUTLINE
JD 216 Credit Transactions
I. Recap of Pertinent Provisions of Obligations and Contracts
- Salient Provisions on Obligations
- Salient Provisions on Contracts
- Concept of legal delay
II. Introduction
A. Scope and Coverage
Arts. 1933-2009,, 2047-2141,2236-2251 and other relevant provisions of
the New Civil Code
Chattel Mortgage Law
Act No. 3135 ( An Act to Regulate the Sale of Property under Special
Powers Inserted in or Annexed to Real Estate Mortgages)
Land Registration Law
Rule 68 of the Revised Rules of Court
Insolvency Laws including
RA 10142 - FRIA "Financial Rehabilitation and Insolvency Act (FRIA) of 2010"
Other Relevant Laws
B. Origins of Credit ( Trace the origins and history of credit)-To be asked next
meeting.
III. General Provisions
A. Definition of Credit or Security Transactions
B. Concept of a Bailment and Parties to a Bailment Contract
C. Different Kinds of Bailment Contracts
D. Loan in General
Characteristics

Case : 1) People of the Philippines vs. Concepcion - G.R. No. L19190, November 29, 1922 (en banc case)

IV. Principal Contracts of Credit

A. LOAN

Kinds of Loan
1. Commodatum
a) Characteristics

2) Republic vs. Bagtas G.R. No. L-17474, October 25, 1962 (en banc
case)

b) Obligations of Bailor and Bailee

c) Extinguishment

3) Quintos vs. Beck G.R. No. L-46240 November 3, 1939 (en banc case)
4) Catholic Vicar Apostolic of the Mountain Province vs. Court of
Appeals G.R. No. 80294 March 23, 1990 (165 SCRA 515)
2. Simple Loan or Mutuum
a) Characteristics and distinction with lease

5) Consolidated Bank and Trust Corporationvs. CA, GRN 114286, 19

April 2001 (356 SCRA 671)
6) Gopoco Grocery vs Pacific Coast Biscuit Co. G.R. Nos. L-43697
and L-442200, Mar 31, 1938, 65 Phils., 443 (en banc case)

b) Obligations
c) Rules on Interest
Art. 1956 of the Civil Code
Art. 1959
Art. 2209
Art.2212
d) Central Bank Circular No.416 -74 (July 29, 1974 )
July 29, 1974CBP CIRCULAR NO. 416-74
By virtue of the authority granted to it under Section 1 of Act No. 2655,
as amended, otherwise known as the"Usury Law", the Monetary Board,
in its Resolution No. 1622 dated July 29, 1974, has prescribed t
hat therate of interest for the loan or forbearance of any money, goods or
credits and the rate allowed in judgments,in the absence of express
contract as to such rate of interest, shall be twelve per cent (12%) per
annum.
This Circular shall take effect immediately.
(SGD.) G. S.LICAROS BSP Governor

7) Francisco vs. Gorgonio, G.R. No. L-59519 July 20, 1982,115 SCRA
394
8) State Investment House vs. CA, G.R. No. 90676 June 19, 1991, 198
SCRA 390
9 ) Eastern Shipping Lines, Inc. vs. CA, G.R. No. 97412 July 12, 1994
(234 SCRA 78) en banc case
10) Ruiz vs. Caneba, G.R. No. 84884 : December 3, 1990.] 191 SCRA
865
11) Pilipinas Bank vs. Court of Appeals, G.R. No. 97873 August 12, 1993
225 SCRA 268
12) Reformina vs. Tomol, G.R. No. L-59096 October 11, 1985, 139 SCRA
(en banc)
13 The Overseas Bank of Manila vs. CA & Tapia, G.R. No. L-49353 June
11, 1981, 105 SCRA 49
14) The Overseas Bank of Manila vs. Cordero, G.R. No. L-33582 March 30,
1982, 113 SCRA 303
15) Ramos vs. Central Bank, GR. No. 42108 December 29, 1989 137
SCRA 685

16) Tio Khe Chio vs. CA,, G.R. No. 76101-02 September 30, 1991,
189 SCRA 390
17) GSIS VS. Court of Appeals, G.R. No. 103590 January 29, 1993
(218 SCRA 233)
18) A. C. Enterprises, Inc. vs. Construction Industry Arbitration
Commission (CIAC), G.R. No. 101444 May 9, 1995 (244 SCRA 55)
en banc case

e) Truth in Lending Act - Republic Act No. 3765

19) UCPB vs. Spouses Beluso, 530 SCRA 567, G.R. No. 159912,
Aug. 17, 2007
f) Escalation Clause

20) Insular Bank of Asia and America Vs. Spouses Salazar, G.R. No.
82082 March 25, 1988 (159 SCRA 133)
21) Banco Filipino Savings & Mortgage Bank vs. Navarro, G.R. No. L46591 July 28, 1987, 152 SCRA 346 (en banc case)
22) PNB vs. CA, GRN 88880, April 30, 1991, 196 SCRA 536
23) Llorin vs. CA, G.R. No. 103592 February 4, 1993(218 SCRA 436)
24) PNB vs. CA, [G.R. No. 109563. July 9, 1996, (258 SCRA 549)

g) Currency

Art. 1249 NCC,

RA 529
RA 8183

 25) DBP vs.CA, GRN. 138703, June 30, 2006, 494 SCRA 25
h) Penalties

Art. 2226-2228, New Civil Code

26) Geneza vs. Henry Sy, G.RN L-17165, Sept. 26, 1962. 5SCRA
754 (en banc case)

i) Inflation/Deflation
Art. 1250 NCC

27) Nicolas v. Matias, G.R. No. L-8093

October 29, 1955
97 Phil. 795 (en banc case)
28) Ang Lam vs. Peregrina, G.R. No. L-4871 January 26, 1953
92 Phil 506 (en banc case)
j) Usury

CB Circular No. 905

PD 1684
Act No. 2655

29) Liam Lao vs. Olympic Sawmill, 129 SCRA 439

30) First Metro Corp. vs. Este del Sol, 369 SCRA 99
31) Verdejo vs. CA, 157SCRA 743
32) Imperial v. Juacian, 427SCRA 517
33) Macalinao vs. BPI, GRN. 175490, Sept 17, 2009

B. DEPOSIT
1. Basics
Definition
Distinctions between deposit and mutuum
Distinctions between deposit and commodatum
Kinds of Deposit
a)
b)

Judicial Deposit
Extrajudicial Deposit
Voluntary
Necessary

2. Voluntary Deposit
Characteristics

34) Javellana vs. Lim, G.R. No. 4015 | 1908-08-24

11 Phil 141
35) BPI vs. IAC, Zshornack, GR# L-66826, August 19,
1988
36) Delgado v. Bonnevie, 23 Phil. 308

Obligations of Depositary and Depositor

37) Lizares vs. Hernaez, G.R. No. 14977 | 1920-03-3 ;

40 Phils. 981

38) Roman Catholic Bishop of Jaro vs. dela Pea, G.R.

No. 6913 | 1913-11-21 ; 26 Phil 144

39) CA Agro- Industrial Development Corp. vs. CA ; G.R. No.

90027 March 3, 1993; 219 SCRA 426

3. Necessary Deposit

In compliance with a legal obligation Arts. 538, 586, 2104 NCC and
those required in suits as provided in the Rules of Court
On the occasion of any calamity
- see provision on quasi-contracts
With hotels or inns
- Art. 102 RPC
40) Elcox vs. Hill, 98 U.S 218 (1878)
41) Ippolito vs. Hospitality Management, South Carolina, C.A,
No.3586, 2003
42) YHT Realty Corporation vs. CA, G.R. No. 126780 | 2005-0217, 451 SCRA 835
43) Triple V. Foods vs. Filipino Merchants, G.R. No. 160544.
February 21, 2005
With common carriers
- Arts. 1734 -1754 NCC

4. Judicial Deposit or Sequestration

Distinctions between judicial and extrajudicial deposit
44) NPC vs. De Veyra, 3 SCRA 646
5. Warehouse Receipts Law Act No 2137, as amended
45) BPI, et al. 047 Phils. 57 ; G.R. Nos. 21000, 21002-21004,
and 21006 | 1924-12-20
46) PNB vs. Benito Se, et.al., G.R. No. 119231 | 1996-04-18
47) Gonzales vs. Go Tiong and Luzon Surety Co., G.R. No. L11776 | 1958-08-30

V. ACCESSORY CONTRACTS OF CREDIT/SECURITY DEVICES

1. Guaranty and Suretyship (Articles 2047 2084)
A. Personal Guaranty

Definition of Guaranty
Characteristics of Guaranty

Formalities Art. 1403 NCC

50) Piczon vs. Piczon, G.R. No. L-29139 | 1974-11-15; 61

SCRA 67

48) Machetti vs. Hospicio de San Jose, G.R. No. L-16666 |

1922-04-10; 43 Phil 297
49) Severino vs. Severino, G.R. No. 34642 | 1931-09-24;
56 Phil 185

51) Macondray & Company, G.R. No. L-13817, August 31,

1961, 2 SCRA 1110

Right of Excussion
52) JN Development Corp., et. al vs. Philippine Export
and Foreign Loan Guarantee Corporation, G.R. No.
151060 | 2005-08-31
53) Arroyo vs.Jungsay, GRN 10168, Jul.2, 1916; 34
Phil. 589b
Distinctions between Guaranty and Suretyship

54) E. Zobel, Inc. vs. Court of Appeals; G.R. No.

113931 | 1998-05-06; 290 SCRA 1
55) Phil. Blooming Mills Inc. vs. CA, G.R. No. 142381 |
2003-10-15; 413 SCRA 445
56) Inciong Jr. vs. Court of Appeals, G.R. No. 96405 |
1996-06-26; 257 SCRA 578
57) IFC vs. Imperial Textile Mills, Inc., G.R. No. 160324
| 2005-11-15, 475 SCRA 149

Effects and Extent of Guaranty

Effects of Guaranty between Guarantor and the Creditor; between
guarantor and debtor;

58) Garcia Jr., vs. Court of Appeals, G.R. No. 80201 |

1990-11-20; 191 SCRA 493
59) Willex Plastic Industries Corp. vs. CA, G.R. No.
103066 | 1996-04-25; 256 SCRA 478
60) Dio vs. CA, G.R. No. 89775 | 1992-11-26,

236 SCRA 9

Extinguishment

B. Real Guaranty
1. Involving real property
a. Real Mortgage
i.

Laws
- Land Registration Act (Act No. 496)
- Sec. 194 of the Revised Administrative Code
- Property Registration Decree (PD No. 1529)
- RA No. 4882
- Rule 68 of the Rules of Court
- A. M. No. 99-10-05-0, Jan. 15, 2000 as amended on Feb. 20, 2007

ii.

Subject Matter
Definition
Characteristics

61) Dilag vs. Heirs of Resurrecion, 76 Phil. 650

62) Ajax Marketing & Dev. Corp vs. CA, 248 SCRA 222

iii.

Formalities and Registration

63) Samanilla Cajucom, GRN-L 13683, Mar. 28, 1960
64) Gatioan vs. Gaffud, 24 SCRA 708 (1969)

iv.

Effects of Mortgage

65) Tuazon vs. Orozco, 5 Phil 596 (1905)

66) DBP vs. Court of Appeals 284 SCRA 14

67)Reyes vs. Sierra, 93 SCRA 472 (1979)

v.

vi.

Equitable Mortgage
68) Guanzon vs. Argel, 33 SCRA 474 (1970)
69) Ramirez vs. Court of Appeals, 219 SCRA 598
Foreclosure of Mortgage vs. Pactum Commissorium
70) Gabonseng vs. Court of Appeals, 246 SCRA 472
71) Filinvest Credit Corp vs. Court of Appeals, 248 SCRA 549
72) Bustamante vs. Rosel, 319 SCRA 413
73) Tarnate vs. Court of Appeals, 241 SCRA 254
74) Olea vs. Court of Appeals, 247 SCRA 274

vii.

75) Ong V. Roban Lending Corporation, 557 SCRA 516

76) Perez vs. Cortes, 15 Phil 121

Right and Equity of Redemption

Sec. 47 of RA 8791 (General Banking Law)

viii.

77) Reyes vs. Tolentino 42 SCRA 365

78) Paray & Espeleta v. Rodriguez et al., 479 SCRA 571
79) Medida v. CA, 208 SCRA 887
80) Suico v. PNB, 531 SCRA 514
81) Huerta Alba Resort, Inc. v. CA, 339 SCRA 534

Writ of Possession
82) Samson vs. Rivera, 428 SCRA 759
83) DBP vs. Gatal 452 SCRA 697

b. Antichresis

84) Dizon vs. Gaborro, 83 SCRA 688

85) Adrid vs. Morga, 108 Phil 927

86) Tavera vs. El Hogar Filipino, Inc. 68 Phil. 712

2. Involving Personal Property

a. Chattel Mortgage
i.

ii.

iii.

Laws
- Chattel Mortgage Law (Act No. 1506)
- Revised Administrative Code
-Art 319 Revised Penal Code
- Ship Mortgage Decree of 1978
Subject Matter

86) Makati Leasing and Finance Corp. vs. Weaver Textile Mills,
Inc., 122 SCRA 296 91983)

87) Saldana vs. Phil Guaranty Co., Inc., 106 Phili. 919, (1990)

88) Filipinas Marble Corp. vs. IAC 142 SCRA 180 (1986)
Formalities and Registration
89) Northern Motors Inc., vs. Coquia, 68 SCRA 374 (1975)

 90) BA Finance Corp vs. Court of Appeals, 201 SCRA, 157 (1991)
91) Jaca vs. Davao Lumber Co., 113 SCRA 107 (1982)
iv.

Foreclosure
92) Mahoney vs. Tuason , 39 Phil 951 (1919)
93) . Makati Leasing & Finance Corp. v. Wearever Textile Mills, 122
SCRA 296
94) Pameca Wood Treatment Plant v. CA, 310 SCRA 281

v.

Redemption
95) Tizon vs. Valdez and Morales, 48 Phil. 910

vi.

Replevin
96) BA. Finance Corp. vs. Court of Appeals, 258 SCRA 102

vii.

Effect of Separate Action

97) Movido vs. Rehabilitation Finance Corp., 105 Phil 886

viii.

Recovery of Deficiency
98) Bicol Savings & Loan Assoc. vs. Guinhawa, 188 SCRA 642
99) Pascual vs. Universal Motors, Inc., 61 SCRA 121

b. Pledge
i.

Requirements
100) Betita vs. Ganzon, 49 Phil. 87
101) Yuliongsui vs. PNB, 22 SCRA 585
102) Duran vs. IAC, 138 491 (19680
103) Ocejo Perez & Co., vs. International Bank, 37 Phil 631

ii.

Subject Matter
104) Pac. Com Co. vs PNB, 49 Phil 236

iii.

Alienation by pledgor or owner

104) Estate of Litton vs. Mendoza, 163 SCRA 246
105) Paray & Espeleta v. Rodriguez et al., 479 SCRA 571

iv.

Right of Retention
106)Serrano vs. Court of Appeals 196 SCRA 107

v.

Duties and Obligations

107) Cruz & Serrano vs. Chua A. H. Lee 54 Phil. 10

vi.

Extinguishment
108) Tan Chun Tic vs. West Coast Life Ins. Co., 54 Phil. 361

vii.

Pledges by operation of law

VI. CONCURRENCE AND PREFERENCE OF CREDITS

Financial Rehabilitation and Insolvency Act

109) De Barreto v. Villanueva, 1 SCRA 288

110) J. L. Bernardo Construction v. CA, 324 SCRA 24
111) DBP v. CA, 363 SCRA 307
112) Ruby Industrial Corp. v. CA, 284 SCRA 445
113) Rubberworld (Phils.), Inc. v. NLRC et al., 305 SCRA 721
114) LECA Realty Corp. v. Manuela Corporation, 534 SCRA 97
115) Chas Realty & Development Corporation v. Talavera, 397
SCRA 84
116) RCBC v. Intermediate Appellate Court, 320 SCRA 279
117) Sobrejuanite v. ASB Development Corporation, 471 SCRA 763
118) Metrobank v. SLGT Holdings, Inc., et al., 533 SCRA 516
119) PAL v. CA, 566 SCRA 124
120 . Sy Chim v. Sy Siy Ho & Sons, Inc., 480 SCRA 465
121) Metrobank v. ASB Holdings, Inc. 517 SCRA 1