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Syllabus

Course Title : CREDIT TRANSACTIONS

Course Credit : Three (3) units
Pre-requisites : Obligations & Contracts
Pre-requisites to : None
Type of Course : Major Subject
Faculty :  Atty. Crisostomo A. Uribe

Course
Course Descrip
Descriptio
tion
n :

Credit Transactions basically is covered by Book IV, Titles XI, XII, XV, XVI & XIX of the Civil Code of 
the Philippines. It deals with the basic principles, rights and obligations of the parties to transactions
invo
involv
lvin
ingg credit
credit includ
including
ing the acces
accessor
soryy contra
contracts
cts;; and the modes
modes of extin
extingui
guish
shmen
mentt of these
these
transactions.

Cour
Course
se Obje
Object
ctiv
ives
es :

1. Understand the basic principles applicable to transactions involving credit.

2. Identify the rights and obligations of parties to these transactions.
3. Appreciate and apply these fundamental principles to actual business transactions.
transactions.
4. Encourage diligence and the observance of honesty and fair dealings at all times.
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Course Outline

I. Credit Transactions

A. Credit, defined
B. Credit Transactions, defined
C. Distinguished from Bailments, Secured Transactions
D. Scope of Credit Transactions

II. Loan
Arts. 1933-1961, 765, 1175, 1980, 1413 NCC
Act No. 2655, Usury Law
CB Circulars 416 and 905
Art. 1249-1250 NCC, RA 529, RA 8183

A. Definition

B. Kinds of Loan
1. Commodatum
2. Mutuum or Simple Loan

C. Nature/Characteris
Nature/Characteristics
tics

Catholic Vicar Apostolic v. CA, 165 SCRA 515 (1988)

Republic v. Bagtas, 6 SCRA 262 (1962)
Saura Import & Export v. DBP (1972)
Herrera v. Petrophil Corp., 146 SCRA 385
Integrated Realty Corp v. PNB, 174 SCRA 295 (1989)

D. Subject Matter

Republic v. CA, 146 SCRA 15 (1986)

Quintos v. Beck, 69 Phil 108 (1939)
Republic v. Grijaldo, 15 SCRA 638 (L-20240, Dec. 31, 1965)

E. Rights & Obligations of Bailor & Bailee (Lender & Borrower)

De los Santos v. Jarra, 15 Phil 147 (1910)

Mina v. Pascual, 25 Phil 540 (1913)
Briones v. Cammayo, 41 SCRA 404 (1971)
Lopez v. del Rosario, 44 Phil 98 (1922)
Zobel v. City of Manila, 47 Phil 169 (1925)
Reformina v. Tomol, 139 SCRA 260 (1985)
Liam Law v. Olympic Sawmill Co., 129 SCRA 439 (1984)
Banco Filipino v. Navarro, 152 SCRA 346 (1987)
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PNB v. IAC and Maglasang, 183 SCRA 133 (1990)
PNB v. CA and Padilla, 196b SCRA 536 (1991)
PNB v. CA and Fernandez, 238 SCRA 80 (1994)
Florendo v. CA, 265 SCRA 678 (1996)

F. Modes of
of Extinguishment
Extinguishment

III. Deposit
Arts. 1962-2009 NCC
Act No. 2137, Warehouse Receipts Law
Act No. 3893, Bonded Warehouse Act
PD NO. 115, Trust Receipts Law

A. Definition

BPI v. IAC, 164 SCRA 630 (1988)

B. Kinds of Deposit

C. Nature/Characteris
Nature/Characteristics
tics

BPI v. CA, 232 SCRA 302 (1994)

Serrano v. CB, 96 SCRA 96 (1980)
Lua Kian v. Manila Railroad, 19 SCRA 5 (1967)

D. Subject Matter

E. Rights & Obligations of Depositor and Depositary

 Javellana
 Javellana v.
v. Lim, 11 Phil 141
141 (1908)
Baron v. David, 51 Phil 2 (1927)
Vintola v. IBAA, 150 SCRA 578, G.R. # 73721 May 29, 1987
Sia v. People, 121 SCRA 661 (1983)
Gonzales v. Go Tiong and Luzon Surety, 104 Phil 492 (1958)
Consolidated Terminals v. Artex Development Co., 63 SCRA 46 (1975)

F. Modes of
of Extinguishment
Extinguishment

Roman Catholic Bishop v. de la Pena, 26 Phil 144 (1913)

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IV. Guaranty and Suretyship
Arts. 2047-2084

A. Definition

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

Machetti v. Hospicio de San Jose, 43 Phil 297 (1922)
Castellvi v. Sellner, 41 Phil 142 (1920)

B. Nature/Characteris
Nature/Characteristics/Exte
tics/Extent
nt

Severino v. Severino, 56 Phil 187 (1931)

Wise & Co. v. Tanglao, 63 Phil 372 (1936)
Manila Surety & Fidelity v. Almeda, 34 SCRA 136
RCBC v. Arro, 115 SCRA 777 (1982)
Republic v. Pal-Fox Lumber Co., 43 SCRA 365 (1972)

C. Effects of Guaranty
1. Between the Guarantor and the Creditor
2. Between the Guarantor and the Debtor
3. Between Co-Guarantors

Southern Motors, Inc. v. Barbosa, 99 Phil 263 (1956)

Central Surety and Insurance v. Ubay, 135 SCRA 58 (1985)
Manila Surety & Fidelity v. Almeda, 34 SCRA 136 (1970)
Associated Insurance & Surety Co., Inc. v. Bacolod, 105 Phil 246 (1959)

D. Modes of Extinguishment

V. Provisions common to Pledge and Mortgage

Arts. 2085-2092

Rural Bank of Caloocan, Inc. v. CA, 104 SCRA 151 (1981)

Vda. De Bautista v. Marcos, 3 SCRA 434 (1961)
Dayrit v. CA, 36 SCRA 549 (1970)

VI. Pledge
Arts. 2093-2123 NCC

A. In general
1. Definition & Purpose
2. Kinds of Pledge
3. Characteristics of Pledge
4. Extent of the Pledge
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B. Essential Requisites
Formal Requisite

Yuliongsiu v. PNB, 22 SCRA 585 (1968)

Manila Surety & Fidelity v. Velayo, 21 SCRA 515 (1967)

C. Rights and Obligations

Obligations of the Pledgor [Debtor or Third Person]
Person]
Pactum Commissorium

D.Rights and Obligations of the Pledgee [Creditor]

Indivisibility of Pledge

E. Modes of Extinguishment

VII. Chattel Mortgage

Arts. 2140-2141, 1484-1485 NCC
Act No. 1508, Chattel Mortgage Law (1906)
Art. 319, RPC

A. In general
1. Definition & Purpose
2. Characteristics of CM
3. Extent of the Mortgage

B. Essential Requisites
Formal Requisite; Affidavit of Good Faith

Piansay v. David, 12 SCRA 227 (1964)

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

C. Rights and Obligations of the Mortgagor [Debtor or Third Person]

Pactum Commissorium

D. Rights and Obligations of the Mortgagee [Creditor]

Indivisibility of Mortgage

Northern Motors, Inc. v. Coquia, 68 SCRA 374 (1975)

E. Modes of Extinguishment
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VIII. Real Estate Mortgage
Arts. 2124-2131 NCC
Rule 68, Rules of Court (Foreclosure of REM)
Act. No. 3135, as amended by Act No. 4118 [Extra-judicial Foreclosure of Mortgage]
PD 694, The PNB Act
RA 85, as amended, The DBP Act
PD 1529, Sec. 63

A. In general
1. Definition & Purpoose
2. Kinds of REM

Lanuza v. de Leon, 20 SCRA 369 (1967)

Bundalian v. CA, 129 SCRA 645 (1984)

3. Characteristics of REM
4. Effects of mortgage

B. Essential Requisites
Formal Requisite

C. Rights and Obligations of the Mortgagor [Debtor or Third Person]

Pactum Commissorium
Redemption

Rosales v. Yboa, 120 SCRA 869 (1983)

Tioseco v. CA, 143 SCRA 705 (1986)
Dulay v. Cariaga, 123 SCRA 794 (1983)
PNB v. CA, 140 SCRA 360 (1985)

D. Rights and Obligations of the Mortgagee [Creditor/Junior Mortgagee]

Indivisibility of Mortgage
Foreclosure

DBP v. Mirang, 66 SCRA 141 (1975)

Co v. PNB, 114 SCRA 842 (1982)
Alpha Insurance and Surety v. Reyes, 106 SCRA 274 (1981)

E. Rights and Obligations of the Purchaser

Marcelo Steel Corp. v. CA, 54 SCRA 89 (1973)

PNB v. Adil, 118 SCRA 110 (1982)
Ocampo v. Domalanta, 20 SCRA 1136 (1967)

F. Modes of
of Extinguishment
Extinguishment
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IX. Antichresis
Arts. 2132-2139 NCC

A. Nature and Characteristics

B. Rights and Obligations of the Debtor and Creditor
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← Samonte v. CA, 141 SCRA 189 (1986)

← Ramirez v. CA, 144 SCRA 292 (1986)
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IX. Concurrence and Preference of Credit

Arts. 2236-2251 NCC
Act No. 1956, as amended, Insolvency Law

A. General Provisions
B. Classification of Credits
C. Order of Preference of Credits
←

← Roman v. Asia Banking Corp., 46 Phil 705 (1922)

← Central Bank v. Morfe, 63 SCRA 114 (1975)
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Presribed Textbook:

Hector S. De Leon, Comments and Cases on Credit Transactions , Eighth Edition, Rex Printing Company,
Inc. 2010

References:

1. Arturo M. Tolentino, Commentaries & Jurisprudence on the Civil Code of the Philippines , Vol. 5, Central
LawBook Pub., 1987

Teaching Methods/Strategies

A question-and-answer format will basically be employed to determine whether the student read and
understood the provisions of the law and the decisions of the Supreme Court. Quizzes will also be
administered to check knowledge, understanding and the analyzing skills of the students. Lectures,
group discussions and visual aids may be used when applicable.

Grading Criteria:

MidTerm Exam 20%

Recitation & Quizzes 30%
Final Exam 50%
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