Dear students,

Covid-free day!
I want you to make a summary of the course, Credit Transactions, based on the Syllabus
provided. Define the terms necessary and require for definition. Enumerate or make a note
if it is important. Digest and get the gist of the case law provided as only applicable to the
subject matter. If you can additionally provide for recent jurisprudence for your study, it is
appreciated. No additional score.
I want you to submit it in my email address, [email protected] on or before
May 15, 2020.
Your grades will be computed in the same manner, Recitation/Quizzes - 50% and
Examination - 50%. This requirement stands as your recitation/quiz, aside from the quizzes
and recitation we had prior to the lockdown.
Our Examination will be announced soon after you submit the requirement.
Keep safe! God bless you all.

Yours,

Atty. Grace

BALDOSTAMON
SINENGGAYEN
MAGLINTE
BAWE
METAL
ROCHE
PALOMO
DACUTIN
LAO
GUINTA
DEL OESTE
GALLEGA
BALDOVE
BAGAYAO
SINDOL
 SYLLABUS FOR CREDIT TRANSACTIONS

Define Credit Transactions-

Parties to a Bailment
Bailor (Comodatario)
Bailee (Comodante)
What are the different kinds of Bailment Contract.
I. Loan
Define
Characteristics of Loan
Distinguish Commodatum from Mutuum
Characteristics of Commodatum
Characteristics of Mutuum
Distinctions between Mutuum and Lease

Case Law: Tolentino vs. Gonzales, 50 Phil. 558 - Baldostamon

Obligations of bailor and bailee

General Rule - Bailee is not liable for ordinary wear and tear due to use of the thing loaned..
What are the exceptions?
Take note of the Right of retention
Obligations of Bailor

C. Interest and the suspension of usury law

What are the Rules on Interest

Jurisprudence on Mutuum (Loan)

1. Federal Builders’ Inc vs Foundation Specialist, Inc. (734 SCRA 3792) - Baldostamon
2. Francisco vs. Gregorio (115 SCRA 394) - Baldostamon
3. State Investment House vs. Court of Appeals (198 SCRA 390) - Baldostamon
4. Tio Khe Chio vs. Court of Appeals (202 SCRA 119 - Baldostamon
5. Eastern Shipping Lines, Inc. vs. CA (234 SCRA 78)
GSIS VS. Court of Appeals (218 SCRA 233) - SINENGGAYEN
6. A. C. Enterprises, Inc. vs. Construction Industry Arbitration Commission (CIAC) (244
SCRA 55) - SINENGGAYEN
7. PNB vs. CA (236 SCRA 20) - SINENGGAYEN
8. Ruiz vs. Caneba (191 SCRA 865) - SINENGGAYEN
9. Sangrador vs. Villarama (168 SCRA 215) - SINENGGAYEN
Insular Bank of Asia and America Vs. Spouses Salazar (159 SCRA 133) - MAGLINTE
10. Banco Filipino vs. Navarro (152 SCRA 346) - MAGLINTE
11. PNB vs. Intermediate Appellate Court (183 SCRA 133) - MAGLINTE
12. Llorin vs. Court of Appeals (218 SCRA 436) - MAGLINTE
13. Almeda vs. Court of Appeals (256 SCRA 292) - MAGLINTE
14. Liam Lao vs. Olympic Sawmill (129 SCRA 439) - BAWE
15. Korean Airlines vs. Court of Appeals (234 SCRA 717) - BAWE

Note: BSP Circular No. 799, Series of 2013

II. Deposit
Define
Characteristics of Deposit
Distinctions between Deposit and Mutuum
Distinctions between Deposit and Commodatum
Voluntary deposit
- Define
Obligations of the Depositary
Persons to whom Return of Thing Deposited Must be Made
Place of Return of Thing Deposited
Time of Return of Thing Deposited
Right of Depositary to Return Thing Deposited
Alteration of Depositary’s Heir
Relation between Bank and Depositor

Jurisprudence:
1. Serrano vs. Central Bank (96 SCRA 96) - BAWE
2. Guingona vs. City Fiscal of Manila (126 SCRA 577) - BAWE
3. Overseas Bank of Manila vs. Court of Appeals (172 SCRA 521) - BAWE
Integrated Realty Corp. vs. Phil. National Bank (174 SCRA 295) - METAL
4. Fidelity Savings vs. Cenzon (184 SCRA 141) - METAL

Obligations of Depositor
B. Necessary deposit
-Define
The keepers of hotels or inns responsible as depositaries
The act of a thief or robbers not deemed force majeure, EXCEPT: done with the use of arms
or through an irresistible force
What are void stipulations in hotels or inns
Hotelkeeper’ s right to retain the things of guests as security for unpaid lodging expenses
and supplies.
C. Judicial deposit (Sequestration)
Responsibility of Depositary in Judicial Deposit
Distinctions between Extrajudicial and Judicial Deposits

III. THE WAREHOUSE RECEIPTS LAW (ACT 2137, as amended)

Scope of Act 2137
Applicable laws:
Act 2137 - warehouse receipts issued by warehouseman
Civil Code - where the receipts are not issued by the warehousseman
Document of title
Warehouseman

CaseLaw: National BAnk vs. Producer’s Warehouse Association, 42 Phil 609 (192) - METAL

Warehouse Receipt
Form of Warehouse Receipt

Case Law: Gonzales vs. Go Tiong and Luzon Surety Co., 104 Phil 492 [1958] - METAL

Kinds of Warehouse Receipt - Negotiable and Non-Negotiable Receipt

Duplicate Warehouse receipt

Case Law: Roman vs Asia Banking Corporation, 46 Phil 705 - METAL

Obligations of Warehouseman
Instances where Delivery of Wareouseman is Justified
Liability of Warehouseman - In case of:
1. Misdelivery
2. Alteration
3. Lost or Destroyed Receipts
4. Several claimants
Interpleader, when proper
What is reasonable time
5. Non-existence or Misdescription
6. Failure to take due care
“diligence of a good father of a family”
7. Commingled Fungible Goods
8. Attachment or Levy upon goods
9. Failure to give notice in case of sale of goods to satisfy lien orin case of hazardous or
persihable goods
10. Failure to stamp duplicate on copies of negotiable receipts
11. Failure to maarked “ non-negotiable or not negotiable” on a non-negotiable receipt
12. Failure to effect cancelaltion of negotiable receit upon delivery of the goods
Warehouseman’s lien
Loss and Waiver of Warehouseman’ s Liens
Satisfaction of Warehouseman’s Liens by Sale
How negotiable Warehouse Receipt negotiated and by whom
Warranties on Sale of Negotiable Receipt
Indorser of receipt
Negotiation of warehouse receipt.
Criminal offenses concerning Warehouse Receipt Law

IV. Guaranty and Suretyship

Definition
A. Nature and extent of guaranty

Case Law: Garcia, Jr. vs. Court of Appeals (191 SCRA 493) - ROCHE

Qualifications of a guarantor
B. Effects of guaranty
Effects of Guaranty between the Guarantor and the Creditor

Jurisprudence:
1. Willex Plastic Industries Corporation vs. Court of Appeals (256 SCRA 478) - ROCHE
2. El Vencedor vs. Canlas (44 Phil. 699) - ROCHE
3. Diño vs. Court of Appeals (216 SCRA 91) - ROCHE
4. Bank of the Philippine Islands vs. Foerster (49 Phil. 843) - ROCHE

Effects of Guaranty between the Debtor and the Guarantor

Effects of Guaranty as Between Co-guarantors
C. Extinguishment of guaranty

Case Law : NASCO vs. Torrento, 20 SCRA 427 [1967] - PALOMO

D. Legal and judicial bonds

Distinctions between Guaranty and Suretyship

Jurisprudence on Suretyship
1. Inciong, Jr. vs. Court of Appeals (257 SCRA 578) - PALOMO
2. Philippine National Bank vs. Court of Appeals (198 SCRA 767) - PALOMO
3. Philippine National Bank vs. Pineda (197 SCRA 1) - PALOMO
4. Finman General Assurance Corp. vs. Salik (188 SCRA 740) - PALOMO

V. Pledge
A. Definition
Characteristics
B. Kinds
C. Essential requirements
D. Obligation of pledgee
E. Rights of pledgor
F. Perfection (Arts. 2093, 2096)
G. Foreclosure (Arts. 2112, 2115)

Instance where creditor may appropriate

EFFECT OF SALE: (as consequence of foreclosure)
REDEEM/REDEMPTION
Rules in case two or more things pledged
H. Pledge by operation of law (Art. 2121-2122)
1) possessor in good faith not been reimbursed for expenses who retains the thing
2) one who executed work not yet paid upon a movable who retains it
3) depositary not been paid of what may be due him by reason of the deposit who retain the
thing
I. Distinguished from chattel mortgage (Arts. 2140, 1484)

VI. Real Mortgage

A. Definition and characteristics

Jurisprudence:
1. Bonnevie vs. Court of Appeals, 125 SCRA 122 [1983]) - DACUTIN
2. Phil. National Bank & Trust Corp. vs. Court of Appeals, 193 SCRA 158 [1991] -
DACUTIN
3. Philippine National Bank vs. Court of Appeals, 187 SCRA 735 [1990]) - DACUTIN

PACTO DE RETRO – EQUITABLE MORTGAGE: Requisites:

Distinctions: Real Mortgage and Chattel Mortgage
C. Essential requisites of Real Mortgage
D. Foreclosure of Mortgage: Kinds and Procedure

Jurisprudence:

1. Bonnevie vs. Court of Appeals, 125 SCRA 122 [1983]; - DACUTIN

 2. GSIS vs. Court of Appeals, 170 SCRA 533 [1989]) - DACUTIN
3. Jose vs. Blue, 42 SCRA 351, [1971]; - LAO
4. Gorospe vs. Santos, 69 SCRA 191 [1976]; - LAO
5. General vs. Barrameda, 60 SCRA 162 [1976]. - LAO
6. Tupas vs. Damasco, 132 SCRA 593 [1984]). - LAO

Effect of Mortgage

Jurisprudence:
1. Guanzon vs. Argel, 33 SCRA 474 [1970]) - LAO
2. Reyes vs. Sierra, 93 SCRA 472 [1979]). - GUINTA

Extent of Mortgage
RIGHT OF REDEMPTION

Case Law: Cerna vs. CA (220 SCRA 517) - GUINTA

EXECUTION & REGISTRATION

Subject Matter of Real Mortgage
Forms of RM
SUBSEQUENT DEALINGS IN MORTGAGED PROPERTY
WHEN MORTGAGOR DIES: WHAT ARE THE MORTGAGEE’S REMEDIES
Right of Mortgagee to Recover Deficiency

Case Law: State Investment vs. Court of Appeals (217 SCRA 32 [1993] - GUINTA
Development Bank of the Philippines vs. Tomeldan, 101 SCRA 171 [1980] - GUINTA

Waiver of Security by Creditor

Case Law: Hijos de I. de la Rama vs. Sajo, 45 Phil. 703 [1924]; - GUINTA
Solomon and Lachica vs. Dantes, 63 Phil. 522 [1937]). – DEL OESTE
Caltex Phils. Vs. Intermediate Appellate Court, 176 SRCA 741 [1989]) – DEL
OESTE

Kinds of Redemption

Jurisprudence:
1. Top-Rate International Services, Inc. vs. Intermediate Appellate Court, 142 SCRA
467 [1986]). – DEL OESTE
2. Limpin vs. Intermediate Appellate Court, 166 SCRA 87 [1988]). – DEL OESTE
3. Reyes vs. Tolentino 42 SCRA 365 [1971]). – DEL OESTE
4. Anderson vs. Reyes, 54 Phil 944) - GALLEGA
5. Lonzome vs. Amores, 134 SCRA 380 [1985] - GALLEGA
6. Ramirez vs. Court of Appeals (219 SCRA 598) - GALLEGA
7. Noel vs. Court of Appeals, (240 SCRA 78) - GALLEGA
8. Mercado vs. Court of Appeals, (240 SCRA 616) - GALLEGA
9. Tarnate vs. Court of Appeals, (241 SCRA 254) - BALDOVE
10. Olea vs. Court of Appeals, (247 SCRA 274) - BALDOVE
11. DBP vs. Court of Appeals, (249 SCRA 331) - BALDOVE
12. Gabonseng vs. Court of Appeals, (246 SCRA 472) - BALDOVE
 13. Ajax Marketing & Development Corporation Vs. Court of Appeals, (248 SCRA 222)
- BALDOVE
14. Filinvest Credit Corporation vs. Court of Appeals, (248 SCRA 549) - BAGAYAO
15. Philippine Bank of Communications vs. Court of Appeals, (253 SCRA 241) -
BAGAYAO
16. DBP vs. Court of Appeals, (253 SCRA 414) - BAGAYAO
17. State Investment House, Inc. vs. Court of Appeals (254 SCRA 368) - BAGAYAO

VII. Antichresis
A. Definition and characteristics

Case Law: Javier vs. Valliser, (CA) N. 2648-R, April 29, 1950; Sta. Rosa vs. Noble, 35 O.G.
27241). - BAGAYAO

Distinctions between Antichresis and Pledge

Distinctions between Antichresis and Real Mortgage
B. Obligations of antichretic creditor

Jurisprudence:
1. Pando vs. Gimenez, 54 Phil. 459 [1930]). - SINDOL
2. Barretto vs. Barretto, 37 Phil. 234 [1917]; - SINDOL
3. Diaz and Rubillos vs. De Mendezona, 48 Phil. 666 [1926]; - SINDOL
4. Macapilac vs. Gutierrez Recipe 43 Phil. 770 [1922]). - SINDOL

Remedy of Creditor in Case of Default

Case Law: Tavera vs. El Hogar Filipino, Inc. 68 Phil. 712 [1939]). - SINDOL

VIII. Chattel Mortgage

A. Definition and characteristics
B. Registration
EFFECT OF REGISTRATION
ASSIGNMENT OF MORTGAGE
Registration of Assignment and Mortgage Optional

Case Law: BA Finance Corporation vs. Court of Appeals, 201 SCRA 157 [1991]).

SALE OF CHATTEL WITHOUT CONSENT OF MORTGAGEE – VOID; criminal act

EFFECTS OF FAILURE TO REGISTER
AFFIDAVIT OF GOOD FAITH: Contents

Jurisprudence:
1. Lilius vs. Manila Railroad Co., 62 Phil. 50 [1935];
2. Phil. Refining Co. vs. Jarque, 61 Phil. 229 [1935];
3. Giberson vs. A. N. Jurreidini Bros., 44 Phil. 216 [1922]).
4. Jaca vs. Davao Lumber Co., 113 SCRA 107 [1982])

EFFECT OF ABSENCE OF AFFIDAVIT OF GOOD FAITH

Dragnet Clause
CANCELLATION OF CHATTEL MORTGAGE
Foreclosure of Chattel Mortgage
 Case Law: Cabral vs. Evangelista, 28 SCRA 1000 [1969]

PROCEDURE IN FORECLOSURE
Creation of Chattel Mortgage

Case Law: Filipinas Marble Corporation vs. Intermediate Appellate Court, 142 SCRA 180
[1986]; Article 2125).

RECOVERY OF DEFICIENCY
Right of Mortgagee to Recover Deficiency

Jurisprudence:
1. Ablaza vs. Ignacio, (unrep) 103 Phil. 1151 [1958];
2. Garrido vs. Tuason, 24 SCRA 727 [1968]’
3. Bank of the Philippine Isalnd vs. Olutanga Lumber Co., 47 Phil. 20 [1924])

Note: RECTO LAW

Criminal Acts
Pactum Commissorium on Chattel Mortgage.

IX. Concurrence and Preference of Credits

A. Meaning of concurrence and preference
Liability for Obligations
B. Preferred credits on specific movables
Summary:
1.) taxes
2.) malversation by public officials
3.) vendor’s lien
4.) pledge, chattel mortgage
5.) mechanic’s lien
6.) laborer’s wages
7.) salvage
8.) tenancy
9.) carrier’s lien
10.) hotel’s lien
11.) crop loan
12.) rentals - one year
13.) deposit
C. Exempt property
D. Classification of credits
E. Order of preference of credits
Preferred Credits with Respect to Specific Immovable Property
Order of Preference with Respect to Other Properties of the Debtor (Art 2244)

Jurisprudence on Concurrence and Preference of Credits

1. Development Bank of the Philippines vs. National Labor Relations Commissions,
186 SCRA 841 [1990])
2. Development Bank of the Philippines vs. Santos, 171 SCRA 138 [1989]).
3. DBP vs. NLRC, (236 SCRA 117)
4. BPI vs. Court of Appeals, (229 SCRA 223)
 5. DBP vs. NLRC, (229 SCRA 350)

X. Insolvency Law
A. Definition of insolvency
B. Suspension of payments
CREDITORS HOLDING OF A MEETING - Incidental Motion
GROUNDS FOR OBJECTION
C. Voluntary insolvency
D. Involuntary insolvency
GROUNDS
DISTINCTIONS:
1. Suspension of Payment
2. Insolvency
Fraudulent Preference
Effect on Actions Upon Adjudication of Insolvency
a. suits pending in court
b. suit not yet filed
Debts and Obligations not Affected by Discharge of Insolvent

XI. RA No. 10142 (FRIA of 2010)

Bankruptcy vs. Insolvency
Debtors covered by FRIA
Claims covered by FRIA
Remedies
Suspension of Payment
Prohibited Transactions
Rehabilitation
Court-supervised Rehabilitation
Commencement Order
Suspension Order
Cram Down Power
Out-of-Court Restrucuring Agreements (OCRA)
Standstill Period
Liquidation
Kinds:
a. voluntary
involuntary
Liquidator’s Qualification