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CREDIT TRANSACTIONS

First Semester, 2014-2015

Prof. William M. Varias

Brief course description: This course will cover the law on deposits, loans, pledge, mortgage,

antichresis, the contracts of guaranty and suretyship, and concurrence and preference of credits,

among others.

Class format: recitation and discussion.

Grading Percentages: 40% Final Exam, 35% Midterm Exam, 25% Recitation.

Miscellaneous:

Additional reading materials and cases may be assigned during the term.

Always bring your copy of the Civil Code with you to class.

The abbreviation Arts. appearing in this syllabus refers to the Articles in the Civil Code.

All mobile phones shall be switched to silent mode during class hours. Any violation of this

rule will merit a grade of 5.0 for that days recitation.

I. LOANS

a. In general (Arts. 1933-1934, cf. Arts 1156, 1305, 1306)

Saura Import & Export Co., Inc. v. Development Bank of the Philippines, 44 SCRA 445 (1972)

Bonnevie v. Court of Appeals, G.R. No. L-49101, 24 October 1983, 125 SCRA 123

BPI Investment Corp. v. Court of Appeals, G.R. No. 133632, 15 Feb. 2002, 377 SCRA 117

Naguiat v. Court of Appeals, G.R. No. 118375, 3 October 2003, 412 SCRA 591

Garcia v. Thio, G.R. No. 154878, 16 March 2007, 518 SCRA 433

Pantaleon v. American Express Intl, Inc., GR No. 174269, August 25, 2010

b. Commodatum (Arts. 1935-1952)

Arts. 1935-1940 (nature) Mina v. Pascual, 25 Phil. 540 (1913) Quintos v. Beck, 69 Phil. 108 (1939) Republic v. Court of Appeals, 146 SCRA 15 (1986) Producers Bank of the Philippines v. Court of Appeals, G.R. No. 115324, 19 February 2003, 397 SCRA 651

Arts. 1941-1945 (obligations of the bailee)

Delos Santos v. Jarra, G.R. No. L-4150, 10 February 1910, 15 Phil. 147

Catholic Vicar Apostolic v. Court of Appeals, G.R. No. 80294-95, 21 September 1988, 165 SCRA

515

Pajuyo v. Court of Appeals, G.R. No. 146364, 3 June 2004, 430 SCRA 492

Arts. 1946-1952 (obligations of the bailor)

Republic v. Bagtas, 6 SCRA 262 (1962)

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c. Simple Loan or Mutuum (Arts. 1953-1955, 1980)

People v. Puig Porras, GR No. 173654-765, August 28, 2008

BPI Family Bank v. Franco, GR No. 123498, Nov. 23, 2007

Cebu International Finance Corporation v. Court of Appeals, GR No. 123031, 12 Oct. 1999

Commissioner of Public Highways v. Burgos, 96 SCRA 831 (1980)

Telengtan Brothers & Sons, Inc. v. United States Lines, Inc., GR No. 132284, 28 Feb. 2006

Equitable PCI Bank v. Ng Sheung Ngor, G.R. No. 171545, 19 December 2007

Almeda v. Bathala Marketing Industries Inc., G.R. No. 150806, 28 January 2008

II. INTEREST AND THE USURY LAW (Arts. 1956-1961, 2209, 2212, 2213, Central Bank Circular No.

416, Act No. 2655)

Recommended readings:

Any accounting or finance reference book on the time value of money

Wikipedia entry on Usury [http://en.wikipedia.org/wiki/Usury]

Mahmoud Amin El-Gamal, A Basic Guide to Contemporary Islamic Banking and Finance (available

online)

Cases:

GSIS v. Court of Appeals, 145 SCRA 311

Advocates for Truth in Lending, Inc. & Olaguer v. Bangko Sentral Monetary Board,

GR No. 192986, Jan. 15, 2013

Tan v. Court of Appeals, 367 SCRA 571

RCBC v. Court of Appeals, 289 SCRA 292

First Fil-Sin Lending Corp. v. Padillo, G.R. No. 160533, 12 January 2005, 448 SCRA 71

Integrated Realty Corp. v. PNB, supra

Bataan Seedling Association v. Republic, 383 SCRA 590

Catungal v. Hao, 355 SCRA 29

Banco Filipino v. Court of Appeals, 332 SCRA 241

Consolidated Bank & Trust Co. v. Court of Appeals, 356 SCRA 671

Mendoza v. Court of Appeals, 359 SCRA 438

First Metro Investment Corp. v. Este del Sol Mountain, 369 SCRA 99

Frias v. San Diego-Sison, G.R. No. 155223, 3 April 2007, 520 SCRA 244

Carpo v. Chua, G.R. Nos. 150773 & 153599, 30 September 2005, 471 SCRA 471

Ligutan v. Court of Appeals, 376 SCRA 560

Eastern Shipping Lines v. Court of Appeals, 234 SCRA 78 (1994)

Siga-an v. Villanueva, G.R. No. 173227, 20 January 2009, 576 SCRA 696

Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013

Estores v. Spouses Supangan, GR No. 175139, April 18, 2012

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III. TRUTH IN LENDING ACT [REPUBLIC ACT NO. 3765 (1963)]

United Coconut Planters Bank v. Spouses Beluso, G.R. No. 159912, 17 August 2007, 530

SCRA 567

IV. DEPOSITS

a. In general (Arts. 1962-1967)

b. Voluntary Deposits (Arts. 1968-1995)

c. Necessary Deposits (Arts. 1996-2004)

d. Judicial Deposits (Arts. 2005-2009)

Cases:

Bank of the Philippine Islands v. Intermediate Appellate Court, G.R. No. 66826, 19 August 1988,

164 SCRA 630

Roman Catholic Bishop of Jaro v. de la Pena, G.R. No. L-6913, 21 Nov. 1913, 26 Phil. 144

CA Agro-Industrial Dev. Corp. v. Court of Appeals, 219 SCRA 426 (1993)

YHT Realty Corp. v. Court of Appeals, G.R. No. 126780, 17 Feb. 2005, 451 SCRA 638

e. Warehouse Receipts Law (Act No. 2137, as amended)

PNB v. Noahs Ark Sugar Refinery, G.R. No. 107243, 1 September 1993, 226 SCRA 36

PNB v. Benito Se, Jr., et al., G.R. No. 119231, 18 April 1996, 326 Phil. 401

V. GUARANTY AND SURETYSHIP (Arts. 2047-2084)

a. In general; nature and extent (Arts. 2047-2057)

Castellvi v. Sellner, 41 Phil. 142 (1920)

Machetti v. Hospicio de San Jose, 43 Phil. 297 (1922)

Severino v. Severino, 56 Phil. 185 (1931)

Gateway Electronics Corp. v. Asianbank Corp., G.R. No. 172041, 18 Dec. 2008, 574 S 698

E. Zobel, Inc. v. Court of Appeals, G.R. No. 113931, 6 May 1998, 290 SCRA 1

Philippine Export and Foreign Loan Guarantee Corporation v. V.P. Eusebio Construction, Inc.,

G.R. No. 140047, 13 July 2004, 434 SCRA 202

Ong v. PCIB, G.R. No. 160466, 17 January 2005, 448 SCRA 705

International Finance Corporation v. Imperial Textile Mills, Inc., G.R. No. 160324, 15 November

2005, 475 SCRA 149

Escao v. Ortigas, Jr., G.R. No. 151953, 29 June 2007, 526 SCRA 26

Rizal Commercial Banking Corp. v. Arro, 115 SCRA 777 (1982)

Dio v. Court of Appeals, 216 SCRA 9 (1992)

Willex Plastic Industries, Corp. v. Court of Appeals, G.R. No. 103066, 25 April 1996, 256 SCRA 478

Fortune Motors (Phils.) Corporation v. Court of Appeals, G.R. No. 112191, 7 February 1997, 267

SCRA 653

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b. Effects

Between guarantor and creditor (Arts. 2058-2065)

Southern Motors, Inc. v. Barbosa, 98 Phil. 263 (1956)

Wise & Co. v. Tanglao, 63 Phil. 372 (1936)

Prudential v. IAC, 216 SCRA 257 (1992)

Imperial Insurance, Inc. v. De los Angeles, 111 SCRA 24 (1982)

Arroyo v. Jungsay, 34 Phil. 590 (1916)

Luzon Steel Corp. v. Sia, 28 SCRA 58 (1969)

Mira Hermanos v. Manila Tobacconists, Inc., 74 Phil. 367 (1943)

Syquia v. Jacinto, 60 Phil. 861 (1934)

JN Development Corp. v. Philippine Export and Foreign Loan Guarantee Corporation, G.R. No.

151060, 31 August 2005, 468 SCRA 555

Bitanga v. Pyramid Construction Engineering Corp., G.R. No. 173526, 28 August 2008, 563 SCRA

544

Between debtor and guarantor (Arts. 2066-2072)

Saenz v. Yap Chuan, 16 Phil. 76 (1910)

Tuason v. Machuca, 46 Phil. 561 (1924)

Kuenzle & Streiff v. Sunco, 16 Phil. 670 (1909)

Cochingyan, Jr. v. R&B Surety and Insurance Co., 151 SCRA 339 (1987)

Mercantile Insurance Co., Inc. v. Ysmael, 169 SCRA 66 (1989)

Escao v. Ortigas, Jr., supra

As between co-guarantors (Arts. 2073-2075)

c. Extinguishment (Arts. 2076-2081)

Asiatic Petroleum Co. v. Hizon, 45 Phil. 532 (1923)

Radio Corp. of the Phil. V. Roa, 62 Phil. 211 (1935)

Peoples Bank & Trust Co. v. Tambunting, 42 SCRA 119 (1971)

Phil. National Bank v. Manila Surety & Fidelity Co., 14 SCRA 776 (1965)

Spouses Toh v. Solid Bank, G.R. No. 154183, 7 August 2003, 408 SCRA 544

Autocorp Group v. Intra Strata Assurance Corporation, G.R. No. 166662, 27 June 2008, 556 SCRA

250

Stronghold Insurance Insurance Company, Inc. v. Republic-Asahi Glass Corporation, G.R. No.

147561, June 22, 2006

VI. PLEDGE, MORTGAGE AND ANTICHRESIS

a. Common Provisions (Arts. 2085-2092)

A. Francisco Realty & Devt Corp. v. Court of Appeals, 298 SCRA 349 (1998)

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Reyes v. Sierra, 93 SCRA 472 (1979)

Spouses Uy Tong v. Court of Appeals, 161 SCRA 383 (1988)

Olea v. Court of Appeals, 247 SCRA 274 (1995)

Dayrit v. Court of Appeals, 36 SCRA 548 (1970)

Belo v. PNB, 353 SCRA 359, G.R. No. 134330, 1 March 2001

b. Pledge (Arts. 2093-2123)

Yuliongsiu v. PNB, 22 SCRA 587 (1968)

Caltex Phils., Inc. v. Court of Appeals, 212 SCRA 448 (1992)

Chu v. Court of Appeals, GR No. L-78519, Sept. 26, 1989

Spouses Paray v. Dra. Rodriguez, G.R. No. 132287, 24 January 2006, 479 SCRA 571

c. Real Estate Mortgage

(i) Arts. 2124-2131

(ii) Act 3135, as amended (Extrajudicial Foreclosure of Real Estate Mortgage)

(iii) Rule 68 of the Rules of Court

(iv) A.M. No. 99-10-05-0 (Re: Procedure in the Extra-Judicial Foreclosure of Mortgages)

dated 14 December 1999 and further amended by the Resolutions of 30 January 2001,

7 August 2001, 26 February 2002 and 20 February 2007

(v) Supreme Court Circular No. 7-2002 (Guidelines on AM No. 99-10-05-0)

(vi) RA 8791 (General Banking of Law of 2000), Sec. 47

Isaguirre v. de Lara, G.R. No. 138053, 31 May 2000, 332 SCRA 803

Samanilla v. Cajucom, 107 Phil. 432, G.R. No. L-13683, 28 March 1960

Mobil Oil Philippines, Inc. v. Diocares, G.R. No. L-26371, 30 September 1969, 29 S 656

Cruz v. Bancom Finance Corporation, G.R. No. 147788, 19 March 2002, 379 SCRA 490

Medida v. Court of Appeals, G.R. No. 98334, 8 May 1992, 208 SCRA 887

DBP v. Court of Appeals, G.R. No. 118342, 5 January 1998, 284 SCRA 14

Peoples Bank and Trust Co. v. Dahican Lumber Company, G.R. No. L-17500, 16 May 1967, 20

SCRA 84

Mojica v. Court of Appeals, G.R. No. 94247, 11 September 1991, 201 SCRA 517

Santiago v. Pioneer Savings and Loan Bank, 157 S 100, G.R. No. 77502, 15 January 1988

Prudential Bank v. Alviar, G.R. No. 150197, 28 July 2005, 464 SCRA 353

PNB v. Spouses Cabatingan, G.R. No. 167058, 9 July 2008

Metropolitan Bank & Trust Company v. SLGT Holdings, Inc., G.R. Nos. 175181-82, 14 September

2007

Spouses Yap v. Spouses Dy, GR No. 171991 & 171868, July 27, 2011

Spouses Rabat v. PNB, GR No. 158755, June 18, 2012

Goldenway Merchandising Corp. v. Equitable PCI Bank, GR No. 195540, March 13, 2013

d. Chattel Mortgage (Act No. 1508; Arts. 2140-2141; Supreme Court A.M. No. 99-10-05-0

dated 7 August 2001)

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PCI Leasing & Finance Inc. v. Trojan Metal Industries, Inc., GR No. 176381, Dec. 15, 2010

Makati Leasing v. Wearever Textile, 122 SCRA 296 (1983)

Torres v. Limjap, 56 Phil. 141, GR No. 34385, 21 Sept. 1931

Acme Shoe, Rubber & Plastic v. Court of Appeals, 260 SCRA 714

Servicewide Specialist, Inc. v. Court of Appeals, 318 SCRA 493, GR 116363, Dec. 10, 1999

Dy v. Court of Appeals, 198 SCRA 826

Pameca Wood Treatment Plant v. Court of Appeals, GR No. 106435, July 14, 1999

Magna Financial Services Group, Inc. v. Colarina, G.R. No. 158635, 9 December 2005, 477 SCRA

245

Ta-octa v. Sheriff Eguia, A.M. No. P-02-1568, 25 April 2002

e. Antichresis (Arts. 2132-2139)

Pando v. Gimenez, 54 Phil. 459

VII. CONCURRENCE AND PREFERENCE OF CREDITS

a. In general (Arts. 2235-2240)

b. Classification (Arts. 2241-2245)

c. Order of Preference (Arts. 2246-2251)

DBP v. NLRC, G.R. No. 86227, 19 January 1994, 229 SCRA 350

Atlantic Erectors, Inc. v. Herbal Cove Realty Corp., G.R. No. 148568, 20 March 2003, 399 SCRA

409

DBP v. Court of Appeals, GR No. 126200, August 16, 2001

Cordova v. Reyes Daway Lim Bernardo Lindo Rosales Law Offices, et al., GR No. 146555, July 3,

2007