LAW 221 SECTIONS M2 (WED & FRI), M3 AND M4

CREDIT TRANSACTIONS
ATTY. STEVE Y. DICDICAN
SECOND SEMESTER, SY. 2019-2020

Reference Books:
De Leon, Comments and Cases on Credit Transactions Paras,
Civil Code of the Philippines Annotated, Vol. V (Special Contracts)
I. Introduction
A. Scope and Coverage
Arts. 1933-2009, 2047-2141, 2236-2251 and other relevant NCC provisions
Chattel Mortgage Law
Act No. 3135
Land Registration Law
Rule 68 of the Revised Rules of Court
Insolvency Law
Other relevant laws
B. Origins of Credit

II. Principal Contracts of Credit

A. Loan
1. Commodatum
a. Characteristics
Republic vs. Bagtas, 6 SCRA 262
Republic vs. CA, 146 SCRA 15

b. Obligations

c. Extinguishment
Quintos vs. Beck, 69 Phil 108

2. Simple Loan or Mutuum

a. Characteristics

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Consolidated Bank and Trust Corporation vs. CA, 356 SCRA 671
Oscar Ramos vs. CA, 180 SCRA 635
Gopoco Grocery & Pacific Coast Biscuit Co., 65 Phil 443

b. Obligations
c. Interest
Central Bank Circular No. 416
BSP Circular No. 799 Series of 2013
UCPB vs. Sps. Beluso, 530 SCRA 567
Pilipinas Bank vs. CA, 225 SCRA 268
Reformina vs. Tomol, 139 SCRA 260
Overseas Bank of Manila vs. CA & Tapia, 105 SCRA 49
Overseas Bank of Manila vs. Cordero, 113 SCRA 303
Ramos vs. Central Bank, 137 SCRA 685
BPI vs. Sps. Yu, 610 SCRA 412
Asia Construction vs. Cathay Pacific, G.R. No. 167942, Jun 29, 2010
Toledo vs. Hyden, G.R. No. 172139, Dec. 8, 2010

d. Escalation Clause
Banco Filipino Savings & Mortgage Bank vs. Navarro, 152 SCRA 346
PNB vs. CA, 196 SCRA 535

e. Currency
Art. 1249 NCC, R.A. 529, R.A. 8183
Development Bank of the Phil. vs. CA, 494 SCRA 25

f. Penalties
Art. 2226-2228 NCC
Geniza vs. Henry Sy, 5 SCRA 754

g. Inflation/Deflation
Art. 1250 NCC
Nicolas vs. Matias, 97 Phil 795
Ang Lam vs. Peregrina, 92 Phil 506

h. Usury
Central Bank Circular No. 905: P.D. 1684: Act No. 2655
First Metro Investment Corp. vs. Este Del Sol, 369 SCRA 99
Verdejo vs. CA, 157 SCRA 743
Imperial vs. Juacian, 427 SCRA 517
Macalinao vs. BPI, G.R. No. 175490, September 17, 2009

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B. Deposit

1. Voluntary Deposit

a. Characteristics
Aquino vs. Deala, 63 Phil 582
Javellana vs. Lim, 11 Phil 141
BPI vs. IAC, 164 SCRA 630
Baron vs David, 51 Phil 1
Delgado vs. Bonnevie, 23 Phil 308

b. Obligations
Lizares vs. Hernaez, 40 Phil 981
La Sociedad Dalisay vs. De los Reyes, 55 Phil 452
Palacio vs. Sudario, 7 Phil 275
Roman Catholic Bishop of Jaro vs. De la Peña, 26 Phil 144
CA Agro-Industrial Dev. Corp vs. CA, 219 SCRA 426

2. Necessary Deposit

a. In compliance with a legal obligation

Examples - Art. 538, 586, 2104 NCC
b. On the occasion of any calamity
see provisions on Quasi-contracts
c. With hotels or inns
Art. 102 RPC
Elcox vs. Hill, 98 U.S. 218 (1878)
Ippolito vs. Hospitality Management, South Carolina C.A., No. 3586, 2003
d. With common carriers
Art. 1734-1754 NCC
3. Judicial Deposit or Sequestration
NPC vs De Veyra, 3 SCRA 646

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III. Accessory Contracts of Credit
A. Personal Guaranty
1. Guaranty
a. Nature
Machetti vs. Hospicio de San Jose, 43 Phil 297
Severino vs. Severino, 56 Phil 185

b. Formalities - Art. 1403 NCC

Piczon vs. Piczon, 61 SCRA 67
Macondray & Co. vs Piñon, 2 SCRA 1110
Pacific Tobacco Corp. vs Lorenzana, 102 Phil 234

c. Right of Excussion
Southern Motors Inc. vs Barbosa, 99 Phil 263
Imperial Insurance Inc. vs De Los Angeles, 111 SCRA 24
Arroyo vs Jungsay, 34 Phil 589

d. Other effects
General Indemnity Co vs Alvarez, 100 Phil 1059

e. On Future Debts
Diño vs. CA, 216 SCRA 9

f. Extinguishment
McConn vs Haragan, 4 SCRA 251
Radio Corp. Of the Phil. vs Roa, 62 Phil 211
Cochingyan vs. R&B Surety & Ins., 151 SCRA 339
2. Surety
a. Nature
Luzon Surety Co., Inc. vs. City of Bacolod, 34 SCRA 509

b. On Future Debts
Atok Finance Corp. vs CA, 222 SCRA 232
RCBC vs. Arro, 115 SCRA 777

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 c. Liability
Pacific Banking Corp. vs. IAC, 203 SCRA 496
Vizconde vs. IAC, 149 SCRA 226
Gen. Ins. & Surety Corp vs Republic, 7 SCRA 4
Towers Assurance Corp. vs Ororama, 80 SCRA 262
Umali vs. CA, 189 SCRA 529

d. Extinguishment
PNB vs. CA, 147 SCRA 273
PNB vs. Macapanga Producers, Inc., 99 Phil 180

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)
Republic Act No. 4882
Act 3135
Rule 68 of the Revised Rules of Court
A.M No. 99-10-05-0, Jan 15, 2000, as amended on Feb. 20, 2007

ii. Subject Matter

Dilag vs. Heirs of Resurreccion, 76 Phil 650
People's Bank & Trust Co. vs. Dahican Lumber Co., 20 SCRA 84
Luzon Lumber & Hardware Co, Inc. vs Quiambao, 94 Phil 663
Ajax Marketing & Dev Corp. vs CA, 248 SCRA 222

iii. Formalities & Registration

Samanilla vs. Cajucom, 107 Phil 432
Gonzales vs. Basa, 73 Phil 704
Agri Credit Coop Assoc of Hinigaran vs. Yusay, 107 Phil 791
Ursal vs. CA. 473 SCRA 52
Rivera vs. Peña, 1 SCRA 747
PNB vs. CA, 187 SCRA 735
Baysa vs. Plantilla, 762 SCRA 433
United Overseas Bank vs. BOC-HLURB, 760 SCRA 300

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iv. Effects
DBP vs. CA, 249 SCRA 331
Carpo Vs. Chua, 471 SCRA 471
Tuason VS. Orozco, 5 Phil 596
Lagrosa vs. CA, 312 SCRA 298
Castro vs. CA, 250 SCRA 661
Litonjua vs. L&R Corp., 320 SCRA 405

v. Equitable Mortgage
Lanuza vs. De Leon, 20 SCRA 369
Guanzon vs. Argel, 33 SCRA 474
Ramirez vs. CA, 409 SCRA 133

vi. Foreclosure vs. Pactum Commissorium - Act 3135, Rule 68 RROC

Perez vs. Cortes, 15 Phil 211
Dalay vs. Aquiatin & Maximo, 47 Phil 951
Tambunting vs. CA, 167 SCRA 16
Langkaan Realty vs. UCPB, 347 SCRA 542
Agbada vs. Inter-Urban Developers, Inc, 389 SCRA 430
Philippine National Bank vs. Gonzales, 45 Phil 693
DBP vs Zaragoza, 84 SCRA 668
Ponce de Leon vs. Rehabilitation Finance Corp, 36 SCRA 289

vii. Right & Equity of Redemption

see Sec. 47.R.A. 8791 (General Banking Law of 2000)
Sta. Ignacia Rural Bank, Inc. vs CA, 230 SCRA 513
Pahang vs. Vestil, 434 SCRA 139
Medida vs. CA, 208 SCRA 887
Bodiongan vs. CA, 248 SCRA 496
DBP vs. West Negros College, Inc., 391 SCRA 330
Top-Rate International Services, Inc. vs IAC, 142 SCRA 467
Rosales vs. Suba, 408 SCRA 664
Limpin vs. IAC, 166 SCRA 87
Herrera vs. Arellano, 97 Phil 776

viii. Writ of Possession

Samson vs. Rivera, 428 SCRA 759
DBP vs. Gatal, 452 SCRA 697

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 b. Antichresis
Dizon vs. Gaborro, 83 SCRA 688
Adrid vs. Morga, 108 Phil. 927
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 (PD 1521)

ii. Subject Matter

Davao Saw Mill Co., Inc. vs Castillo, 61 Phil 709
Tsai vs. CA, 366 SCRA 324
Acme Shoe Rubber & Plastic Corp. vs CA, 260 SCRA 714
Jaca vs. Davao Lumber Co, 113 SCRA 107

iii. Formalities & Registration

Lilius vs. Manila Railroad Co., 62 Phil 56
Northern Motors, Inc. vs Coquia, 68 SCRA 374
Sison vs. Yap Tico & Avancena, 37 Phil 584
Rubiso & Gelito vs. Rivera, 37 Phil 72
Borlough vs. Fortune Enterprises, Inc., 100 Phil 1063

iv. Foreclosure
Esguerra vs. CA 173 SCRA I
PNB vs. Manila Investment & Construction, Inc., 38 SCRA 462
Cabral vs. Evangelista, 28 SCRA 1000

v. Redemption
Tizon vs. Valdez & Morales, 48 Phil 910

vi. Replevin
B.A. Finance Corp vs. CA, 258 SCRA 102

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

viii. Recovery of Deficiency

Bicol Savings & Loan Assoc vs Guinhawa, 188 SCRA 642
Pascual vs. Universal Motors, Inc., 61 SCRA 121

b. Pledge
i. Requirements
Betita vs. Ganzon, 49 Phil 87
Yuliongsui vs. PNB, 22 SCRA 585
Mision de San Vicente vs. Reyes, 19 Phil 524
Bachrach Motor Co. vs Lacson Ledesma, 64 Phil 681
Ocejo, Perez & Co. vs International Bank, 37 Phil 631

ii. Subject Matter

Pac. Com Co. vs PNB, 49 Phil 236

iii. Alienation by pledgor or owner

Estate of Litton vs Mendoza, 163 SCRA 246

iv. Right of Retention

Serrano vs. CA, 196 SCRA 107

v. Duties and Obligations

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

vi. Extinguishment
Tan Chun Tic vs. West Coast Life Ins. Co., 54 Phil 361
Manila Surety & Fidelity Co, Inc. vs. Velayo, 21 SCRA 515

vii. Pledges by operation of law

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III. Preference and Concurrence of Credits

A. Classification of Credits
Uy vs. Zamora, 13 SCRA 508

B. Concurrence of Credits
Carried Lumber Co. v. ACCFA, 63 SCRA 411
De Barretto vs. Villanueva, 1 SCRA 288
J.L Bernardo Construction vs. CA, 324 SCRA 24
DBP vs. CA, 363 SCRA 307

C. Order of Preference of Credits

Republic vs. Peralta, 150 SCRA 37
Banco Filipino vs. NLRC, 188 SCRA 700
DBP vs. Santos, 171 SCRA 138