CREDIT TRANSACTIONS

Atty. Ann Marie M. Enad

Mondays; 6:00 to 9:00 pm
Outline

Grading System:
Attendance - 10%
Recitation / Quizzes - 20%
Midterms - 30%
Finals - 40%

I. Introduction
A. Concept of Credit
B. Meaning & Kinds Security
C. Credit Transactions

II. Loan
A. General Concepts / Principles
1. Art. 1933
2. Kinds
3. Characteristics
4. Contract to Loan v. Contract of Loan (Art. 1934)

Cases:
Garcia v. Thio, 518 SCRA 433 (2007)
Saura Import & Export Co., Inc. v. Development Bank of the Philippines,
44 SCRA 445 (1972)
BPI Investment Corporation v. Court of Appeals, 377 SCRA 117 (2002)
Pantaleon v American Express International, Inc. 629 SCRA 276

B. Commodatum
1. Object
2. Consideration
3. Parties
4. Obligations of Bailee
5. Obligations of Bailor
6. Liability for Expenses & Damages
7. Risk of Loss & Deterioration
8. Term & Extinguishment of Contract

Cases:
Producers Bank of the Philippines v Court of Appeals, 397 SCRA 351
(2003)
Pajuyo v Court of Appeals, 430 SCRA 492 (2004)
Republic v Bagtas, 6 SCRA 262 (1962)
Quintos v Beck, 69 Phil. 108 (1939)

C. Simple Loan or Mutuum

1. Object
2. Parties
3. Obligations of Borrower
a. Obligation to Pay
b. Obligation to Pay Interest
i) Conventional Interest
 ii) Compensatory Interest
iii) Finance Charges
4. Usury

Cases:
Chee Kiong Yam, et al v Hon. Malik, G.R. No. L-50550-52
People v Puig & Porras, 563 SCRA 564 (2008)
BPI Family Bank v Franco, 538 SCRA 184 (2007)
Frias v Court of Appeals, 520 SCRA 244 (2007)
Siga-an v Villanueva, 576 SCRA 696 (2009)
Sps. Juico v China Banking Corporation 695 SCRA 520 (2013)
Sps. Silos v Philippine National Bank, 728 SCRA 617 (2014)
Sps. Salvador Abella v Sps. Romeo Abella, G.R. No. 195166
Ligutan v Court of Appeals 376 SCRA 560 (2002)
Eastern Shipping Lines, Inc. v Court of Appeals 234 SCRA 78 (1994)
Nacar v Gallery Frames 703 SCRA 439 (2013)
Estores v Sps. Supangan, 670 SCRA 95
United Coconut Planters Bank v Samuel & Beluso 530 SCRA 567 (2007)
Advocates for Truth in Lending, Inc. & Olaguer v Bangko Sentral Monetary
Board 688 SCRA 530 (2013)
Carpo v Chua & Dy Ng, 471 SCRA 471 (2005)

III. Deposit
A. General Concepts
1. Definition (Art. 1962)
2. Kinds (Art. 1964, 1967)

B. Voluntary Deposit
1. Concept (Art. 1963, 1968, 1995)
2. Form of Deposit
3. Object of Deposit
4. Consideration
5. Parties
6. Obligations of the Depositary
7. Obligations of the Depositor
8. Risk of Loss & Deterioration
9. Extinguishment

C. Necessary Deposit
1. Concept (Art. 1967, 1966)
2. Examples of Necessary Deposit
a. Compliance with Legal Obligation
b. On the Occasion of a Calamity
c. Passenger Baggage with Common Carriers
d. Hotels or Inns

D. Judicial Deposit
1. Concept (Art. 2005, 2009)
2. Object of the Contract
3. Form of the Contract
4. Obligations of Depositary

Cases:
Bank of the Philippine Islands v IAC, 164 SCRA 630 (1988)
 Triple V Food Services, Inc. v Filipino Merchants Insurance Company, Inc., G.R.
No. 160544, February 21, 2005
CA Agro-Industrial Development Corporation v CA, 219 SCRA 426 (1993)
Roman Catholic Bishop of Jaro v Dela Pena, 26 Phil. 144 (1913)
Durban Apartments Corporation v Pioneer Insurance & Surety Corporation,
G.R. No. 179419, January 12, 2011
Chan v Maceda, G.R. No. 142591, April 30, 2003
YHT Realty Corporation v CA, 451 SCRA 638 (2005)

IV. Secured Transactions

A. Concept
B. Distinguished from Securities
C. Guaranty
1. Concept
2. Form of Guaranty Art. 2055
3. Consideration of a Guaranty Art. 2048
4. Obligations Secured
Art. 2052, Art. 2053, Art. 2054
5. Parties to a Guaranty
Art. 2056, Art. 2057, Art. 2049, Art. 2064, Art.
2065
6. Benefit of Excussion
Art. 2062, Art. 2058, Art. 2059, Art. 2060, Art.
2061, Art. 2063, Art. 2064, Art. 2081
7. Right to Protection Art. 2071
8. Right to Indemnification
Art. 2066 Art. 2050, Art. 1236, Art. 2069, Art.
2070, Art. 2072
9. Right to Subrogation
Art. 2067, Art. 2050, Art. 1237, Art. 2068, Art.
2080
10. Rights of Co-Guarantors
a. Benefit of Division 
Art. 2065, Art. 2078
b. Right to Reimbursement 
Art. 2073, Art. 2075
11. Extinguishment and Right of Release 
Art. 2076, Art. 2077, Art. 2079,
Art. 2080

Case:

 Tupaz IV & Tupaz v. Court of Appeals & Bank of the Philippine Islands,
G.R. No. 145578, November 18, 2005, 475 SCRA 398. 



D. Surety
1. General Concepts
Art. 2047, Art. 1211, Art. 1216, Art. 2082, Art. 2056,
Art. 2083, Art. 2084 

2. Form of Suretyship 

3. Obligations Secured 
Art. 2053 
 

4. Distinguished from Standby Letter of Credit 

5. Distinguished from Guaranty 
 
 

6. Distinguished from Joint and Solidary Obligations Art. 2066, Art.
2067, Art. 1217 


Cases:
Security Bank & Trust Company v. Cuenca, G.R. No. 138544, October
3, 2000, 341 SCRA 781
Palmares v. Court of Appeals & M.B. Lending Corporation, G.R. No.
126490, March 31, 1998, 288 SCRA 422.
E. Zobel, Inc. v. Court of Appeals, G.R. No. 113931, May 6, 1998, 290
SCRA 1.
Philippine Blooming Mills, Inc. & Ching, v. Court of Appeals, G.R. No.
 142381, October 15, 2003, 413 SCRA 445. 

Escano & Silos v. Ortigas, Jr., G. R. No. 151953, June 29, 2007, 526
SCRA 26 


E. Pledge and Mortgage

1. Introduction
a. General Concepts Art. 2085, Art. 2087 

b. Obligations Secured
Art. 2086, Art. 2052, Art. 2091 

c. Contract to Pledge or to Mortgage Art. 2092 

d. Remedies of Pledgee and Mortgagee 

e. Indivisibility of a Pledge or Mortgage
Civil Code, Art. 2089, Art. 2090
f. Pactum Commissorium 
Art. 2087, Art. 2088
i. Elements 

ii. Effect on Pledge or Mortgage 

g. Equitable Mortgage
Art. 1602, Art. 1603, Art. 1604, Art. 1605 


2. Real Estate Mortgage


a. General Concepts
Civil Code, Art. 2085, Art. 2087, Art. 2124, Art. 2125 

b. Form of Real Estate Mortgage Art. 2125, Art. 2131 

c. Obligations Secured

i. Dragnet or Blanket Mortgage Clause
ii. Reliance on Security Test 

d. Object of Real Estate Mortgage 
Art. 2124
i. After Acquired Properties 

ii. Effect and Extent 
Art. 2126, Art. 2127
e. Right to Alienate Mortgage Credit Art. 2128, Art. 1625, Art. 1627 

f. Right to Alienate Collateral Art. 2085, Art. 2130, Art. 2129 

g. Foreclosure of Real Estate Mortgage 

i. Judicial Foreclosure

- Complaint for Foreclosure Rules of Court, Rule 68,

Sec.1
- Judgment on Foreclosure 
Rules of Court, Rule 68,
Sec.2
- Equity of Redemption
Rules of Court, Rule 68, Sec. 2 

- Foreclosure Sale
Rules of Court, Rule 68, Sec. 3, Sec.
5., Sec. 7, Sec. 8 Rules of Court, Rule 39, Sec. 31, Sec.
32, Sec. 34 

- Right of Redemption
 

- Right to Surplus or Deficiency
Rules of Court, Rule 68,
Sec. 4, Sec. 6 


ii. Extrajudicial Foreclosure

- Special Powers
Act No. 3135, Sec. 1 


- Foreclosure Sale

1) Requirement of Notice 
Act No. 3135, Sec. 3
A.M.

No. 99-10-05-0, as amended, Sec. 1, Sec. 2, Sec. 3,
Sec. 4
 

2) Conduct of Sale
Act No. 3135, Sec. 2, Sec. 4 
A.M.
 No. 99-10-05-0, as amended, Sec. 5, Sec. 6, Sec. 8,
Sec. 9
3) Bid Price 
Act No. 3135, Sec. 5 
A.M. No. 99-10-
05-0, as amended, Sec. 5 


- Right of Redemption 
Act No. 3135, Sec. 6
General

Banking Law, Art. III, Sec. 47 A.M. No. 99-10-05-0, as
amended, Sec. 10.

1) Who may Redeem 
Act No. 3135, Sec. 6
Rules of

Court, Rule 39, Sec. 27
 

2) How to Redeem
Rules of Court, Rule 39, Sec. 28,
Sec. 29, Sec. 30
 


- Right to Deficiency
Rules of Court, Rule 86, Sec. 7 


- Right to Surplus
 

- Right to Possession

1) During Redemption Period 
Act No. 3135, Sec. 7,

Sec. 8, Sec. 9 

2) After Consolidation of Ownership 
Rules of
Court, Rule 39, Sec. 33
 

3) Exceptions
Rules of Court, Rule 39, Sec. 33, Sec.
16
 

Cases:
Development Bank of the Philippines v. Court of Appeals, G.R. No.
118342, January 5, 1998, 284 SCRA 14
Bustamante v. Rosel, G.R. No. 126800, November 29, 1999, 319 SCRA
413
Ong v. Roban Lending Corporation, G.R. No. 172592, July 9, 2008, 557
SCRA 516
Prudential Bank v. Alviar & Alviar, G.R. No. 150197, July 28, 2005, 464
SCRA 353
People’s Bank & Trust Company & Atlantic Gulf and Pacific Co. of
Manila v. Dahican Lumber Company, et al., G.R. No. L-17500, May 16,
1967
Star Two (SPV-AMC), Inc. v. Paper City Corp. of the Phil. , G.R. No.
169211, March 06, 2013
Garcia v. Villar, G.R. No. 158891, June 27, 2012
Korea Exchange Bank v. Filkor Business Integrated, Inc., et al., G.R. No.
138292, April 10, 2002, 380 SCRA 381

Huerta Alba Resort, Inc. v. Court of Appeals, G.R. No. 128567,
September 1, 2000, 339 SCRA 534
Grand Farms, Inc. & Philippine Shares Corporation v. Court of Appeals,
et al., G.R. No. 91779, February 7, 1991, 193 SCRA 748
Medida, et al. v. Court of Appeals, et al., G.R. No. 98334, May 8, 1992,
208 SCRA 887
Spouses Yap v. Spouses Dy, et al., G.R. No. 171991 and 171868, July 27,
2011, 654 SCRA 593
Suico v. Philippine National Bank, G.R. No. 170215, August 28, 2007, 531
SCRA 514
Cua Lai Chu, et al. v. Lacqui & Philippine Bank of Communications, G.R.
No. 169190, February 11, 2010, 612 SCRA 227
 Spouses Tolosa v. United Coconut Planters Bank, G.R. No. 183058, April
03, 2013, 695 SCRA 138
BPI Family Savings Bank, Inc. v. Golden Power Diesel Sales Center, Inc.,
G.R. No. 176019, January 12, 2011, 639 SCRA 405

F. Antichresis
1. General Concepts
Civil Code, Art. 2132, Art. 2133, Art. 2135, Art. 2138 

2. Form of Antichresis Art. 2134 

3. Obligations Secured
Art. 2139, Art. 2085, Art. 2089, Art. 2090, Art. 2091
4. Object of Antichresis Art. 2132 

5. Right of Retention Art. 2136 

6. Foreclosure of Antichresis Art. 2137

Case: Diego v. Fernando, G.R. No. L-15128, August 25, 1960, 109 Phil 143 


G. Pledge
1. General Concepts
Art. 2085, Art. 2087, Art. 2093, Art. 2123 

2. Object of Pledge Art. 2094, Art. 2095 

3. Legal Pledges Art. 2121
i. Examples of Legal Pledges
Art. 1944, Art. 1951, Art. 1994, Art. 2004,
Art. 546, Art. 1731 

ii. Possession and Care of the Object of Pledge
Art. 2110, Art. 2098, Art.
2109, Art. 2097, Art. 2099, Art. 2100, Art. 2104. Art. 2105, Art. 2107, Art.
2108, Art. 2110 

iii. Foreclosure of Legal Pledge
Art. 2122, Art. 2121, Art. 2112, Art. 2119
- Who May Bid 
Art. 2113, Art. 2114 

- Effect of Notarial Sale 
Art. 2115, Art. 2116 

- No Right of Redemption 
Paray & Espeleta v. Rodriguez, et al.,
G.R. No. 132287, January 24, 2006, 479 
SCRA 571. 

- Right to Surplus or Deficiency 
Art. 2115, Art. 2121 


H. Personal Property Security Act

1. Introduction and General Concepts Civil Code Art. 2140 
Republic Act No.
11057, Sec. 2. Sec. 66, Sec. 60-62, Sec. 67, Sec. 68, Sec. 65. 

2. Scope of the PPSA 
Sec. 4. 

3. Security Interest 
Sec. 3. (j), Sec. 3 (c) Sec. 3 (i) Sec. 9, Sec. 8, Sec. 3 (f)

Civil Code, Art. 2126 

i. Creation
R.A. No. 11057, Sec. 5
- Object
Sec. 4, Sec. 5.
Civil Code, Art. 416, Art. 417

- Form 
Sec. 6, Sec. 3 (k), Sec. 7 

- Asset-Specific Rules - Accounts Receivable 
Sec. 10 

- Disclosure of Information by Secured Creditor 
Sec. 37 

ii. Perfection
Sec. 11, Sec. 25, Sec. 12, Sec. 15 Civil Code, Art. 2125.
R.A. No.
11057, Sec. 13, Sec. 3. (b)

- Disposition of Perfected Security Interest 
Sec. 9, Sec.

21, Sec. 14, Sec. 3 (f) 

- Assignment of Security Interest 
Sec. 16. 


4. The Registry 
Sec. 26, Sec. 64, Sec. 38, Sec. 27 Sec. 35, Sec. 28-31, Sec. 44
 
Sec. 36.
Sec. 32-34 
Sec. 39- 43 

5. Priority of Security Interest 
Sec. 17-22
Sec. 3 (g), Sec. 23, Sec. 24
 

6. Enforcement of Security Interest Sec. 47, Sec. 63 
Sec. 46, Sec. 48, Sec.
49-51, Sec. 45, Sec. 52-54

7. Transitional Provisions Sec. 55-59 


Cases:
Makati Leasing & Finance Corporation v. Wearever Textile Mills, Inc. &
Court of Appeals, G.R. No. L-58469, May 16, 1983, 122 SCRA 296
Manila Banking Corporation v. Teodoro, Jr. and Teodoro, G.R. No. 53955,
January 13, 1989, 169 SCRA 95
Yau Chu v. Court of Appeals et al., G.R. No. L-78519, September 26, 1989
PCI Leasing & Finance, Inc. v. Trojan Metal Industries Inc., et al., G.R. No.
176381, December 15, 2010, 638 SCRA 615

Citibank, N.A. & Investors Finance Corporation v. Sabeniano, G.R. No.
156132, October 12, 2006, 504 SCRA 378
Paray & Espeleta v. Rodriguez, et al., G.R. No. 132287, January 24, 2006

V. Insolvency
A. Concepts
1. 
General Concept Art. 2236, Art. 2237
FRIA, Sec. 2, Sec. 146, Sec. 147,
Sec. 148 FR Rules, Rule 1, Sec. 5(c) 

2. Nature of Insolvency Proceedings FRIA, Sec. 3, Sec. 7, Sec. 6 

3. Civil and Criminal Liability in Insolvency Proceedings Sec. 10, Sec. 145
4. Cross-Border Insolvency Proceedings
Sec. 139, Sec. 140, Sec. 141, Sec. 142 


B. Concurrence and Preference of Credits

Civil Code Art. 2241- 2251

C. Suspension of Payments

D. Rehabilitation

E. Liquidation

Cases:

De Barreto, et al. v. Villanueva, et al., G.R. No. L-14938, January 28, 1961, 1
SCRA 288
J.L. Bernardo Construction v. Court of Appeals, G.R. No. 105827, January 31,
2000, 324 SCRA 24 

Cordova v. Reyes Daway Lim Bernardo Lindo Rosales Law Offices, et. al,
G.R. No. 146555, July 3, 2007, 526 SCRA 300 

Viva Shipping Lines, Inc. v. Keppel Philippines Mining, Inc. G.R. No. 177382,
February 17, 2016 

Rizal Commercial Banking Corporation v. Intermediate Appellate 
Court,
G.R. No. 74851, December 9, 1999, 

Sobrejuanite v. ASB Development Corporation, G.R. No. 165675,
September 30, 2005, 471 SCRA 763
Town and Country Enterprises, Inc. v. Quisumbing, et al., G.R. No. 173610 &
174132, October 01, 2012, 682 SCRA 128
Metropolitan Waterworks & Sewerage System v . Daway and Maynilad
Water Services, Inc., G.R. No. 160732, June 21, 2004, 432 SCRA 559
Panlilio, et al. v. Regional Trial Court, Branch 51, City of Manila, G.R. No.
173846, February 2, 2011, 641 SCRA 438
Philippine Asset Growth Two, Inc. & Planters Development Bank v.
Fastech Synergy Philippines, Inc., et. al, G.R. No. 206528, June 28, 2016. 

Pryce Corporation v. China Banking Corporation, G.R. No. 172302, February
18, 2014, 716 SCRA 207 

Consuelo Metal Corporation v Planters Development Bank &
Maningas,
G.R. No. 152580, June 26, 2008, 555 SCRA 465
Yngson v. Philippine National Bank, G.R. No. 171132, August 15, 2012, 678
SCRA 447.