Professional Documents
Culture Documents
College of Law
CREDIT TRANSACTIONS
ATTY. ANTHONY B. PERALTA
Class:
Evaluation:
40% of the grade is based on a 2-hour final exam. 30% of the grade is based on
participation in class and the remaining 30% is based on quizzes/short writing
assignments.
Course Code
Type of Course
Credit
Total Hours
Term/Time/Room
I.
:
:
:
:
:
CRETRAN
regular Course
3 units
42 hours
Third Trimester 2013-2014
Course Description
Secured Transaction is a credit transaction in which the creditor is given an interest in property
(personal or real) to secure payment or performance of the obligation. There are two separate
obligations in secured transactions: (1) the underlying obligation to pay money back to the
creditor and the (2) security or collateral. The secured Part is the back-up. The primary
obligation to re-pay the loan (promissory note) on schedule. If all goes well, the Security Interest
is never triggered (lender will exercise it if something goes wrong).
A security interest arises when, in exchange for a loan, a borrower agrees in a security
agreement that the lender (the secured party) may take specified collateral owned by the
borrower if he or she should default on the loan. A security interest also provides the secured
party with the assurance that if the debtor bankrupts, he or she may be able to recover the value
of the loan by taking possession of specified collateral instead of receiving only a portion of the
borrower's property after it is divided among all creditor
This course seeks to examine the rationale, applicable laws, jurisprudence and actual case studies
relative to credit transactions.
INTRODUCTION
The Concept of Credit
A. Credit, Debt and Security
B. Credit and Credit Transactions Defined, Republic Act. No. 3765, Sec. 3. (2)
People v. Conception, G.R. No. L-19190, November 29, 1922, 44 Phil 126.
C. Commercial Credit Transactions, Code of Commerce, Art. 1 to 3
Loan
I. The Concept of Loan
A. General Concepts, Art1. 1933, Art. 1305
1
Unless otherwise indicated., Art. Refers to the Articles of the Civil Code
Opinion)
2. Interest on Interest, Art. 1959, Art. 2212.
3. Compensatory, Penalty or Indemnity Interest, Art. 1169, Art. 1226, Art. 2209, Art. 2213, Art. 2226,
Art. 2227.
Eastern Shipping Lines, Inc. v. CA, 234 SCRA 78 (1994) (Ration Decidendi only)
Ligutan v. CA, 376 SCRA 560 (2002)
Siga-an v. Villanueva, 576 SCRA 696 (2009)
Estores v. Spouses Supangan, 670 SCRA 95 (2012)
Nacar v. Gallery Frames and/or Bordey, G. R. No. 189871, August 13, 2013
4. Finance Charges, R.A. No. 3765, Sec. 4. Sec. 6
UCPB v. Samuel and Beluso, 530 SCRA 567 (2007).
5. Usury
A. General Concepts, Art. 1175, Art. 1957, Art. 1961, Act. No. 2655, Sec. 1-a, Sec. 4-b, Sec.
5, Sec. 9-a, Central Bank Circular No. 905, Series of 1982, Sec. 1
Advocates for Truth in Lending, Inc. and Olaguer v. Bangko Sentral Moneraty Board,
G.R. No. 192986, January 15, 2013
B. Usurious Acts, Act. No. 2655, Sec. 2 to 4
C. Remedies, Art. 1413, Act. No. 2655, Sec. 6 to 10
1) Remedy of Debtor
2) Remedy of Creditor
Deposit
I. The Concept of Deposit
Art. 1962, Art. 1964, Art. 1967
II. Voluntary Deposit
A. General Concepts, Art. 1963, Art. 1968, Art. 1969, Art. 1965, Art. 1966, Art. 1995
BPI v. IAC and Zshornack, 164 SCRA 630 (1988)
Triple-V Food Services, Inc. v. Filipino Merchants Insurance Company, Inc.,
G.R. No. 160544, February 21, 2005.
B. Obligation to Safekeep
1. Way of the Deposit, Art. 1974 to 1978, Art. 1981, Art. 1982
The Roman Catholic Bishop of Jaro v. De La Pena, 26 Phil 144 (1913).
CA Agro-Industrial Development Corp. v. CA and Security Bank, 219 SCRA 426
(1993).
2. Liability for Loss and Damage, Art. 1972, Art. 1973, Art. 1977, Art. 1978, Art. 1981, Art.
1979, Art. 1990, Art. 1993.
a. Liability of Depositary
b. Liability of Depositor
3. Liability for Expenses, Art. 1992.
C. Obligation to Return
1. By Whom and To Whom, Art. 1972, Art. 1970, Art, 1971, Art. 1984, Art.
1212, Art. 1214, Art. 1986, Art. 1991.
1985, Art.
Philippine Blooming Mills, Inc. & Ching v. CA, 413 SCRA 445 (2003)
IFC v. Imperial Textile Mills, Inc., 475 SCRA 445 (2005).
F. Distinguished from Joint and Solidary Obligations, Art. 2047, Art. 2066, Art. 2067, Art. 1217
Escano & Silos v. Ortigas, Jr., 526 SCRA 26 (2007).
VI. Pledge and Mortgage
A. General Concepts, Art. 2058, Art. 2087
B. Obligations Secured, Art. 2086, Art. 2052, Art. 209
C. Contract to Pledge or to Mortgage, Art. 2092
D. Remedies of Pledgee and Mortgagee
E. Indivisibility of a Pledge or Mortgage, Art. 2089, Art. 2090
F. Pactum Commissorium, Art. 2087, Art. 2088
1. Elements
2. Effects on Pledge or Mortgage
DBP v. CA, 284 SCRA 14 (1998).
Bustamante v. Rosel, 319 SCRA 413 (1999)
Ong. V. Roban Lending Corporation, 557 SCRA 516 (2008)
G. Equitable Mortgage, Art. 1602 to 1605
VII. Pledge
A. General Concepts, Art. 2085, Art. 2087, Art. 2123
B. Form of Pledge, Art. 2096
C. Obligations Secured
D. Object of Pledge, Art. 2094, Art. 2095, Art. 416, Art. 417
E. Ownership of Collateral, Art. 2103, Art. 2102, Art. 2101, Art. 1951, Art. 2108, Art. 2112, Art. 2097
Estate of Litton v. Mendoza & CA, 163 SCRA 246 (1988)
F. Rights of Third Party Pledgor, Art.2120, Art. 2117, Art. 2066 to 2070, Art. 2079 to 2081
G. Rights to Possession, Art. 2093, Art. 2110
1. Right of Retention, Art. 2098, Art. 2109, Art. 2099, Art. 2100, Art. 2104, Art. 2106
2. Right to Payment, Art. 2102, Art. 2118
Manila Banking Corporation v. Teodoro, Jr. and Teodoro, 169 SCRA 95 (1989). (include
concurring opinion)
Chu v. Court of Appeals et al., G.R. No. L-78519, September 26, 1989
Citibank, N.A. & Investor Finance Corporation v. Sabeniano, 504 SCRA 378 (2006)
H. Return of Collateral, Art. 2105, Art. 2107, Art. 2108, Art. 2110, Art. 2111
I. Foreclosure of Pledge, Art. 2112, Art. 2119.
1. Who May Bid, Art. 2113, Art. 2114.
2. Effect of Notarial Sale
Examples of Legal Pledges, Art. 1944, Art. 1951, Art. 1994, Art. 2004, Art. 546, Art.
Foreclosure of Legal Pledge, Art. 2122, Art. 2121
Star Two (SPV-AMC), Inc. v. Paper City Corp. of the Phil., G.R. No. 169211, March 06,
2013.
E. Right to Alienate Real Estate Mortgage Credit, Art. 2128, Art. 1625, Art. 1627
F. Right to Alienate Collateral, Art. 2085, Art. 2130
Garcia v. Villar, 675 SCRA 80 (2012)
G. Foreclosure of Real Estate Mortgage
1. Judicial Foreclosure
a. Complaint for Foreclosure, Rule of Court, Rule 68, Sec. 1
b. Judgment on Foreclosure, Rules of Court, Rule 68, Sec. 2
Korea Exchange Bank v. Filkor Business Integrated, Inc., et al., 380 SCRA 381
(2002).
c. Equity of Redemption, Rules of Court, Rule 68, Sec. 2
d. Foreclosure Sale, Rules of Court, Rule 68, Sec. 3 to 5, Sec. 7, Sec. 8, Rule 39, Sec.
31, Sec. 32 Sec. 34
e. Right of Redemption
Huerta Alba Resort, Inc. v. Court of Appeals, 339 SCRA 534 (2000)
f. Right to Surplus or Deficiency, Rules of Court, Rule 68, Sec. 4, Sec. 6, Rule 86, Sec
7
2. Extrajudicial Foreclosure
a. Special Powers, Act. No. 3135, Sec. 1
b. Foreclosure Sale, Act. No. 3135, Sec. 2, AM No. 99-10-05-0 as amended
1.
Requirement of Notice
Grand Farms, Inc. v. CA, 193 SCRA 748 (1991)
2.
Conduct of Sale, Act. No. 3135, Sec. 4, Sec. 5, A.M. No. 99-10-05-0
Spouses Rabat v. PNB, G.R. No. 158755, June 18, 2012.
2011.
d. Right to Deficiency, Rules of Court, Rule 86, Sec. 7.
Heirs of the Late Spouses Maglasang v. Manila Banking Corp., G.R. No. 171206
September 23,
2013.
e. Right to Surplus
Suico v. PNB, 531SCRA 514 (2007)
f. Right to Possesion
1. During Redemption Period, Act No. 3135, Sec. 7 to 9
2. After Consolidation of Ownership, Rules of Court, Rule 39, Sec. 33
Chu, et al., v. Lacqui & PBComm., G.R. No. 169190 February 11, 2010
3. When Held by a Third Party, Rules of Court, Rule 39, Sec. 33, Sec. 16
BPI Family Savings Bank, Inc. v. Golden Power Diesel Sales Center, Inc.
639 SCRA 405 (2011)
Nagtalon v. United Coconut Planters Bank, G.R. No. 172504, July 31, 2013.
X. Antichresis
A. General Concepts, Art. 2132. Art. 2133, Art. 2138. art. 2139, Art. 2085, Art. 2089, Art. 2090,
Art. 2091
B. Form of Antichresis, Art. 2134
C. Right of Retention , Art. 2136
D. Foreclosure of Antichresis, Art. 2137
Diego v. Fernando, 109 Phil 143 (1960).
Insolvency
I. The Concept of Insolvency
Art. 2236, Art. 2237, R.A. No. 10142, Sec. 2, Sec. 4, Sec. 146, to Sec. 148
A. Nature of Insolvency Proceedings, R.A. No. 10142, Sec. 3, Sec. 7, Sec. 6
B. Civil and Criminal Liability in Insolvency Proceedings, R.A. No. 10142, Sec. 10, Sec.
145
II. Concurrence & Preference of Credits
A. General Concepts, R.A. No. 10142, Sec. 62, Sec. 133
B. Classification of Credits
1. Special Preferred Credits, Art. 2241, Art. 2242, R. A. No. 10142, Sec. 136, Art. 2243, Art. 2246
to 2250
De Barreto, et al. v. Villanueva, et al., 1 SCRA 288 (1961)
Resolution on Motion to Consider, 6 SCRA 929 (1962).
DBP v. CA, 363 SCRA 307 (2001)
J.L. Bernardo Construction v. CA, 324 SCRA 24 (2000)
2. Ordinary Preferred Credits, Art. 2244, P.D. No. 442, Art. 1110, R.A. No. 10142, Sec. 133 Art.
2251
3. Common Credits, Art. 2245, Art. 2251
Cordova v. Reyes Daway Lim Bernardo Lindo Rosales Law Offices, et al., 526 SCRA 300
(2007)
III. Suspension of Payments
A. General Concepts, R.A. No. 10142, Sec. 2, Sec. 94, Sec. 95
1. Automatic Stay, Sec. 96
2. Suspension Order, Sec. 96
3. Injunction Against Debtor, Sec. 95
B. Commissioner, Sec. 95, Sec. 97
C. Creditors Meeting, Sec. 97, Sec. 99, Sec. 100
D. Proposed Agreement, Sec. 94, Sec. 101, Sec. 102
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