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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