UNIVERSITY OF CEBU

College of Law

COURSE OUTLINEJD 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 CodeChattel Mortgage LawAct No. 3135 ( An Act to Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real Estate Mortgages) Land Registration LawRule 68 of the Revised Rules of CourtInsolvency Laws includingRA 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 ContractsD. Loan in General

Characteristics

Case : 1) People of the Philippines vs. Concepcion - G.R. No. L- 19190,   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 Baileec) 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 CodeArt. 1959Art. 2209Art.2212

d) Central Bank Circular No.416 -74 (July 29, 1974 )  

July 29, 1974CBP CIRCULAR NO. 416-74By 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 that 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, 1993225 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. L-46591 July 28, 1987, 152 SCRA 346 (en banc case)

22) PNB vs. CA, GRN 88880, April 30, 1991, 196 SCRA 53623) 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 529RA 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. 905PD 1684Act No. 2655

29) Liam Lao vs. Olympic Sawmill, 129 SCRA 43930) First Metro Corp. vs. Este del Sol, 369 SCRA 9931) Verdejo vs. CA, 157SCRA 74332) Imperial v. Juacian, 427SCRA 51733) Macalinao vs. BPI, GRN. 175490, Sept 17, 2009

B. DEPOSIT

1. Basics DefinitionDistinctions between deposit and mutuumDistinctions between deposit and commodatumKinds of Deposit

a) Judicial Depositb) Extrajudicial Deposit

Voluntary Necessary

2. Voluntary DepositCharacteristics

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 Peña, 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 CourtOn the occasion of any calamity- see provision on quasi-contractsWith 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 | 2005-02-17, 451 SCRA 83543) Triple V. Foods vs. Filipino Merchants, G.R. No. 160544. 

February 21, 2005

With common carriers- Arts. 1734 -1754 NCC

4. Judicial Deposit or SequestrationDistinctions 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 | 1924-12-2046) PNB vs. Benito Se, et.al., G.R. No. 119231 | 1996-04-1847) Gonzales vs. Go Tiong and Luzon Surety Co., G.R. No. L-11776 | 1958-08-30

V. ACCESSORY CONTRACTS OF CREDIT/SECURITY DEVICES1. Guaranty and Suretyship (Articles 2047 – 2084) A. Personal Guaranty

Definition of GuarantyCharacteristics of Guaranty

48) Machetti vs. Hospicio de San Jose, G.R. No. L-16666 | 1922-04-10; 43 Phil 29749) Severino vs. Severino, G.R. No. 34642 | 1931-09-24;56 Phil 185

Formalities – Art. 1403 NCC50) Piczon vs. Piczon, G.R. No. L-29139 | 1974-11-15; 61 SCRA 67

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 | 2005-08-3153) 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 44556) Inciong Jr. vs. Court of Appeals, G.R. No. 96405 | 1996-06-26; 257 SCRA 57857) IFC vs. Imperial Textile Mills, Inc., G.R. No. 160324 | 2005-11-15, 475 SCRA 149

Effects and Extent of GuarantyEffects 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 49359) Willex Plastic Industries Corp. vs. CA, G.R. No. 103066 | 1996-04-25; 256 SCRA 47860) Diño 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 MatterDefinitionCharacteristics 61) Dilag vs. Heirs of Resurrecion, 76 Phil. 65062) Ajax Marketing & Dev. Corp vs. CA, 248 SCRA 222

iii. Formalities and Registration

63) Samanilla Cajucom, GRN-L 13683, Mar. 28, 196064) Gatioan vs. Gaffud, 24 SCRA 708 (1969)

iv. Effects of Mortgage65) Tuazon vs. Orozco, 5 Phil 596 (1905)66) DBP vs. Court of Appeals 284 SCRA 1467)Reyes vs. Sierra, 93 SCRA 472 (1979)

v. Equitable Mortgage68) Guanzon vs. Argel, 33 SCRA 474 (1970)69) Ramirez vs. Court of Appeals, 219 SCRA 598

vi. Foreclosure of Mortgage vs. Pactum Commissorium70) Gabonseng vs. Court of Appeals, 246 SCRA 472 71) Filinvest Credit Corp vs. Court of Appeals, 248 SCRA 54972) Bustamante vs. Rosel, 319 SCRA 41373) Tarnate vs. Court of Appeals, 241 SCRA 25474) Olea vs. Court of Appeals, 247 SCRA 27475) Ong V. Roban Lending Corporation, 557 SCRA 51676) Perez vs. Cortes, 15 Phil 121

vii. Right and Equity of Redemption

Sec. 47 of RA 8791 (General Banking Law)

77) Reyes vs. Tolentino 42 SCRA 36578) Paray & Espeleta v. Rodriguez et al., 479 SCRA 57179) Medida v. CA, 208 SCRA 88780) Suico v. PNB, 531 SCRA 51481) Huerta Alba Resort, Inc. v. CA, 339 SCRA 534

viii. Writ of Possession82) Samson vs. Rivera, 428 SCRA 759

83) DBP vs. Gatal 452 SCRA 697

b. Antichresis

84) Dizon vs. Gaborro, 83 SCRA 68885) Adrid vs. Morga, 108 Phil 92786) Tavera vs. El Hogar Filipino, Inc. 68 Phil. 712

2. Involving Personal Property

a. Chattel Mortgage

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

ii. Subject Matter86) 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)

iii. Formalities and Registration89) 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. Foreclosure92) Mahoney vs. Tuason , 39 Phil 951 (1919)93) . Makati Leasing & Finance Corp. v. Wearever Textile Mills, 122 SCRA 29694) Pameca Wood Treatment Plant v. CA, 310 SCRA 281

v. Redemption95) Tizon vs. Valdez and Morales, 48 Phil. 910

vi. Replevin96) BA. Finance Corp. vs. Court of Appeals, 258 SCRA 102

vii. Effect of Separate Action97) Movido vs. Rehabilitation Finance Corp., 105 Phil 886

viii. Recovery of Deficiency98) Bicol Savings & Loan Assoc. vs. Guinhawa, 188 SCRA 64299) Pascual vs. Universal Motors, Inc., 61 SCRA 121

b. Pledge

i. Requirements100) Betita vs. Ganzon, 49 Phil. 87101) Yuliongsui vs. PNB, 22 SCRA 585102) Duran vs. IAC, 138 491 (19680103) Ocejo Perez & Co., vs. International Bank, 37 Phil 631

ii. Subject Matter104) Pac. Com Co. vs PNB, 49 Phil 236

iii. Alienation by pledgor or owner104) Estate of Litton vs. Mendoza, 163 SCRA 246105) Paray & Espeleta v. Rodriguez et al., 479 SCRA 571

iv. Right of Retention106)Serrano vs. Court of Appeals 196 SCRA 107

v. Duties and Obligations107) Cruz & Serrano vs. Chua A. H. Lee 54 Phil. 10

vi. Extinguishment108) 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 288110) J. L. Bernardo Construction v. CA, 324 SCRA 24111) DBP v. CA, 363 SCRA 307112) Ruby Industrial Corp. v. CA, 284 SCRA 445113) Rubberworld (Phils.), Inc. v. NLRC et al., 305 SCRA 721114) LECA Realty Corp. v. Manuela Corporation, 534 SCRA 97115) Chas Realty & Development Corporation v. Talavera, 397

SCRA 84116) RCBC v. Intermediate Appellate Court, 320 SCRA 279117) Sobrejuanite v. ASB Development Corporation, 471 SCRA 763

118) Metrobank v. SLGT Holdings, Inc., et al., 533 SCRA 516119) PAL v. CA, 566 SCRA 124120 . Sy Chim v. Sy Siy Ho & Sons, Inc., 480 SCRA 465121) Metrobank v. ASB Holdings, Inc. 517 SCRA 1