Professional Documents
Culture Documents
Additional information on course description, resources, materials, assignments, and timetables are
available on www.someralaw.org.
1
Law 107: Credit Transactions
Course Outline 2019-2020
Stephanie Gomez-Somera
2
Law 107: Credit Transactions
Course Outline 2019-2020
Stephanie Gomez-Somera
Ligutan v. Court of Appeals, G.R. No. 138677, February 12, 2002, 376 SCRA
560.
b. Interest Rate
Art. 2209
Usury Law, Sec. 1
Eastern Shipping Lines, Inc. v. Court of Appeals, G.R. No. 97412, July 12, 1994,
234 SCRA 78, restated in Nacar v. Gallery Frames, G.R. No. 189871, August
13, 2013, 703 SCRA 439.
Estores v. Spouses Supangan, G.R. No. 175139, April 18, 2012, 670 SCRA 95.
c. Interest on Interest
Civil Code, Art. 2212
3. Finance Charges
Truth in Lending Act, Sec. 4, Sec. 6
United Coconut Planters Bank v. Samuel & Beluso, G.R. No. 159912, August 17, 2007,
530 SCRA 567.
4. Usury
a. General Concepts
Civil Code, Art. 1175, Art. 1957, Art. 1961
Usury Law, Sec. 1, Sec. 1-a, Sec. 4-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. & Olaguer v. Bangko Sentral Monetary
Board, G.R. No. 192986, January 15, 2013, 688 SCRA 530.
b. Usurious Acts
Usury Law, Sec. 2, Sec. 3, Sec. 4
c. Remedies
Civil Code, Art. 1413
Usury Law, Sec. 6, Sec. 7, Sec. 8, Sec. 9, Sec. 10
1) Remedy of Debtor
2) Remedy of Creditor
Carpo v. Chua & Dy Ng, G.R. Nos. 150773, September 30, 2005, 471
SCRA 471.
Part II. Deposit
The Concept of Deposit
A. General Concepts
Art. 1962
B. Kinds of Deposit
Art. 1964, Art. 1967
Voluntary Deposit
A. General Concepts
Art. 1963, Art. 1968, Art. 1995
B. Form of Deposit
Art. 1969
C. Object of Deposit
Art. 1966
D. Consideration in Deposit
Art. 1965
E. Parties to a Deposit
Art. 1962
F. Obligation to Safekeep
Art. 1962
Bank of the Philippine Islands v. The Intermediate Appellate Court & Zshornack, G.R. No. L-
66826 August 19, 1988, 164 SCRA 630.
3
Law 107: Credit Transactions
Course Outline 2019-2020
Stephanie Gomez-Somera
4
Law 107: Credit Transactions
Course Outline 2019-2020
Stephanie Gomez-Somera
Sec. 16, Sec. 8, Sec. 9, Sec. 10, Sec. 11, Sec. 12, Sec. 13, Sec. 14, Sec. 17, Sec. 18, Sec. 19
3. Warehouseman’s Lien
Sec. 32, Sec. 27, Sec. 28, Sec. 29, Sec. 30, Sec. 31, Sec. 33, Sec. 34, Sec. 35, Sec. 36
Philippine National Bank v. Se, et al., G.R. No. 119231, April 18, 1996, 256 SCRA 380.
D. Negotiation and Transfer of Warehouse Receipts
1. Negotiation
Sec. 40, Sec. 37, Sec. 38, Sec. 45, Sec. 41, Sec. 44, Sec. 46, Sec. 47, Sec. 48, Sec. 49
2. Transfer
Sec. 39, Sec. 42, Sec. 43, Sec. 44
E. Criminal Liability
Sec. 50, Sec. 51, Sec. 52, Sec. 53, Sec. 54, Sec. 55
F. General Bonded Warehouses
General Bonded Warehouse Act, Sec. 2, Sec. 1, Sec. 3, Sec. 4
Part III. Secured Transactions
The Concept of Security
A. General Concepts
1. Distinguished from Securities
Securities Regulation Code, Sec. 3.1.
2. Distinguished from Securitization
B. Events of Default
C. Kinds of Secured Transactions
1. Personal Security
2. Real Security
3. In the Context of Insolvency
FRIA, Sec. 4 (p) (s) (ll) (kk) (jj) (qq) (pp) (t)
Letters of Credit
A. General Concepts
Code of Commerce, Art. 567, Art. 568, Art. 2
Transfield Philippines, Inc. v. Luzon Hydro Corporation Australia, et al., G.R. No. 146717,
November 22, 2004, 443 SCRA 307.
B. Kinds of Letters of Credit
1. Commercial Letters of Credit
2. Standby Letters of Credit
C. Rule of Strict Compliance
D. Independence Principle
Trust Receipts
A. General Concepts
Trust Receipts Law, Sec. 4
B. Form of Trust Receipts
Sec. 3 ( j), Sec. 5, Sec. 6
C. Rights of Entruster
Sec. 7, Sec. 8
D. Rights of Purchaser
Sec. 11
E. Obligations of Entrustee
Sec. 9, Sec. 10, Sec. 12, Sec. 13
Revised Penal Code, Art. 315.
Colinares & Veloso v. Court of Appeals, G.R. No. 90828, September 5, 2000, 339 SCRA 609.
Guaranty
A. General Concepts
Civil Code, Art. 2047, Art. 2051
5
Law 107: Credit Transactions
Course Outline 2019-2020
Stephanie Gomez-Somera
B. Form of Guaranty
Art. 2055
C. Consideration of a Guaranty
Art. 2048
D. Obligations Secured
Art. 2052, Art. 2053, Art. 2054
E. Parties to a Guaranty
Art. 2056, Art. 2057, Art. 2049, Art. 2064, Art. 2065
F. Benefit of Excussion
Art. 2062, Art. 2058, Art. 2059, Art. 2060, Art. 2061, Art. 2063, Art. 2064, Art. 2081
Tupaz IV & Tupaz v. Court of Appeals & Bank of the Philippine Islands, G.R. No. 145578,
November 18, 2005, 475 SCRA 398.
G. Right to Protection
Art. 2071
H. Right to Indemnification
Art. 2066 Art. 2050, Art. 1236, Art. 2069, Art. 2070, Art. 2072,
I. Right to Subrogation
Art. 2067, Art. 2050, Art. 1237, Art. 2068, Art. 2080
J. Rights of Co-Guarantors
1. Benefit of Division
Art. 2065, Art. 2078
2. Right to Reimbursement
Art. 2073, Art. 2075
K. Extinguishment and Right of Release
Art. 2076, Art. 2077, Art. 2079, Art. 2080
Surety
A. General Concepts
Art. 2047, Art. 1211, Art. 1216, Art. 2082, Art. 2056, Art. 2083, Art. 2084,
B. Form of Suretyship
C. Obligations Secured
Art. 2053
Security Bank & Trust Company v. Cuenca, G.R. No. 138544, October 3, 2000, 341 SCRA 781.
D. Distinguished from Standby Letter of Credit
E. Distinguished from Guaranty
Palmares v. Court of Appeals & M.B. Lending Corporation, G.R. No. 126490, March 31, 1998,
288 SCRA 422.
E. Zobel, Inc. v. Court of Appeals, G.R. No. 113931, May 6, 1998, 290 SCRA 1.
Philippine Blooming Mills, Inc. & Ching, v. Court of Appeals, G.R. No. 142381, October 15,
2003, 413 SCRA 445.
F. Distinguished from Joint and Solidary Obligations
Art. 2066, Art. 2067, Art. 1217
Escano & Silos v. Ortigas, Jr., G. R. No. 151953, June 29, 2007, 526 SCRA 26.
Pledge and Mortgage
A. General Concepts
Art. 2085, Art. 2087
B. Obligations Secured
Art. 2086, Art. 2052, Art. 2091
C. Contract to Pledge or to Mortgage
Art. 2092
Revised Penal Code, Art. 316
D. Remedies of Pledgee and Mortgagee
E. Indivisibility of a Pledge or Mortgage
6
Law 107: Credit Transactions
Course Outline 2019-2020
Stephanie Gomez-Somera
7
Law 107: Credit Transactions
Course Outline 2019-2020
Stephanie Gomez-Somera
8
Law 107: Credit Transactions
Course Outline 2019-2020
Stephanie Gomez-Somera
C. Obligations Secured
Art. 2139, Art. 2085, Art. 2089, Art. 2090, Art. 2091
D. Object of Antichresis
Art. 2132
E. Right of Retention
Art. 2136
F. Foreclosure of Antichresis
Art. 2137
Diego v. Fernando, G.R. No. L-15128, August 25, 1960, 109 Phil 143.
Pledge
A. General Concepts
Art. 2085, Art. 2087, Art. 2093, Art. 2123
B. Object of Pledge
Art. 2094, Art. 2095
C. Legal Pledges
Art. 2121
1. Examples of Legal Pledges
Art. 1944, Art. 1951, Art. 1994, Art. 2004, Art. 546, Art. 1731
2. Possession and Care of the Object of Pledge
Art. 2110, Art. 2098, Art. 2109, Art. 2097, Art. 2099, Art. 2100, Art. 2104.
Art. 2105, Art. 2107, Art. 2108, Art. 2110
3. Foreclosure of Legal Pledge
Art. 2122, Art. 2121, Art. 2112, Art. 2119
a. Who May Bid
Art. 2113, Art. 2114
b. Effect of Notarial Sale
Art. 2115, Art. 2116
c. No Right of Redemption
Paray & Espeleta v. Rodriguez, et al., G.R. No. 132287, January 24, 2006, 479
SCRA 571.
d. Right to Surplus or Deficiency
Art. 2115, Art. 2121
Personal Property Security Agreement
A. Introduction and General Concepts
Civil Code Art. 2140
Republic Act No. 11057, Sec. 2. Sec. 66, Sec. 60-62, Sec. 67, Sec. 68, Sec. 65.
B. Scope of the PPSA
Sec. 4.
C. Security Interest
Sec. 3. (j), Sec. 3 (c) Sec. 3 (i)
Sec. 9, Sec. 8, Sec. 3 (f)
Civil Code, Art. 2126
1. Creation
R.A. No. 11057, Sec. 5
a. Object
Sec. 4, Sec. 5.
Civil Code, Art. 416, Art. 417
Makati Leasing & Finance Corporation v. Wearever Textile Mills, Inc. & Court
of Appeals, G.R. No. L-58469, May 16, 1983, 122 SCRA 296.
Manila Banking Corporation v. Teodoro, Jr. and Teodoro, G.R. No. 53955,
January 13, 1989, 169 SCRA 95.
9
Law 107: Credit Transactions
Course Outline 2019-2020
Stephanie Gomez-Somera
Yau Chu v. Court of Appeals et al., G.R. No. L-78519, September 26, 1989, 177
SCRA 793.
b. Form
Sec. 6, Sec. 3 (k), Sec. 7
c. Asset-Specific Rules - Accounts Receivable
Sec. 10
d. Disclosure of Information by Secured Creditor
Sec. 37
2. Perfection
Sec. 11, Sec. 25, Sec. 12, Sec. 15
Civil Code, Art. 2125.
R.A. No. 11057, Sec. 13, Sec. 3. (b)
a. Disposition of Perfected Security Interest
Sec. 9, Sec. 21, Sec. 14, Sec. 3 (f)
b. Assignment of Security Interest
Sec. 16.
D. The Registry
Sec. 26, Sec. 64, Sec. 38, Sec. 27
Sec. 35, Sec. 28-31, Sec. 44
Sec. 36.
Sec. 32-34
Sec. 39- 43
E. Priority of Security Interest
Sec. 17-22
Sec. 3 (g), Sec. 23
PCI Leasing & Finance, Inc. v. Trojan Metal Industries Inc., et al., G.R. No. 176381, December
15, 2010, 638 SCRA 615.
Sec. 24
F. Enforcement of Security Interest
Sec. 47, Sec. 63
Sec. 46, Sec. 48
Citibank, N.A. & Investors Finance Corporation v. Sabeniano, G.R. No. 156132, October 12,
2006, 504 SCRA 378.
Sec. 49-51
Sec. 45
Paray & Espeleta v. Rodriguez, et al., G.R. No. 132287, January 24, 2006, 479 SCRA 571.
Sec. 52-54
G. Transitional Provisions
Sec. 55-59
Part IV. Insolvency
The Concept of Insolvency
A. General Concepts
Art. 2236, Art. 2237
FRIA, Sec. 2, Sec. 146, Sec. 147, Sec. 148
FR Rules, Rule 1, Sec. 5(c)
B. Nature of Insolvency Proceedings
FRIA, Sec. 3, Sec. 7, Sec. 6
C. Civil and Criminal Liability in Insolvency Proceedings
Sec. 10, Sec. 145
D. Cross-Border Insolvency Proceedings
Sec. 139, Sec. 140, Sec. 141, Sec. 142
Concurrence & Preference of Credits
10
Law 107: Credit Transactions
Course Outline 2019-2020
Stephanie Gomez-Somera
A. General Concepts
FRIA, Sec. 62, Sec. 133
B. Classification of Credits
1. Special Preferred Credits
Civil Code, Art. 2241, Art. 2242, Art. 2243, Art. 2246, Art. 2247, Art. 2248, Art. 2249,
Art. 2250
FRIA, Sec. 136.
De Barreto, et al. v. Villanueva, et al., G.R. No. L-14938, January 28, 1961, 1 SCRA 288.
J.L. Bernardo Construction v. Court of Appeals, G.R. No. 105827, January 31, 2000, 324
SCRA 24.
2. Ordinary Preferred Credits
Civil Code, Art. 2244
P. D. No. 442, Art. 110
FRIA, Sec. 133
Civil Code, Art. 2251
3. Common Credits
Art. 2245, Art. 2251
Cordova v. Reyes Daway Lim Bernardo Lindo Rosales Law Offices, et. al, G.R. No.
146555, July 3, 2007, 526 SCRA 300.
Suspension of Payments
A. General Concepts
FRIA, Sec. 2, Sec. 94
1. Suspension of Payments Order
Sec. 95, Sec. 96
a. Automatic Stay
b. Injunction Against Debtor
2. Order Suspending Execution
Sec. 96
B. Commissioner
Sec. 95
FLSP Rules, Rule 3 (A), Sec. 5
FRIA, Sec. 97
C. Creditors’ Meeting
Sec. 97, Sec. 99, Sec. 100
D. Proposed Agreement
Sec. 94, Sec. 101, Sec. 102
E. Treatment of Claims
1. General Concepts
Sec. 96, Sec. 98, Sec. 101
2. Secured Creditor Claims
3. Exempt Claims
Sec. 101
4. Excluded Claims
Sec. 101
Rehabilitation
A. General Concepts
FRIA, Sec. 2
1. Requirements for Rehabilitation
Viva Shipping Lines, Inc. v. Keppel Philippines Mining, Inc. G.R. No. 177382, February 17,
2016.
2. Modes of Rehabilitation
B. Court-Supervised Rehabilitation
11
Law 107: Credit Transactions
Course Outline 2019-2020
Stephanie Gomez-Somera
1. Voluntary Proceedings
Sec. 12
2. Involuntary Proceedings
Sec. 13, Sec. 14
3. Provisions Common to Voluntary and Involuntary Rehabilitation Proceedings
a. Commencement Order
Sec. 15, Sec. 16, Sec. 17, Sec. 21
Bureau of Internal Revenue, et al. v. Lepanto Ceramics, Inc., G.R. No. 224764,
April 24, 2017.
b. Stay or Suspension Order
1) General Concepts
Sec. 16 (q), Sec. 20
Rizal Commercial Banking Corporation v. Intermediate Appellate
Court, G.R. No. 74851, December 9, 1999, 320 SCRA 279.
2) Extent of the Stay or Suspension Order
Sobrejuanite v. ASB Development Corporation, G.R. No. 165675,
September 30, 2005, 471 SCRA 763.
Town and Country Enterprises, Inc. v. Quisumbing, et al., G.R. No.
173610 & 174132, October 01, 2012, 682 SCRA 128.
3) Exceptions to the Stay or Suspension Order
Sec. 18, Sec. 16
FR Rules, Rule 2, Sec. 8 (V)
Metropolitan Waterworks & Sewerage System v. Daway and
Maynilad Water Services, Inc., G.R. No. 160732, June 21, 2004, 432
SCRA 559.
Panlilio, et al. v. Regional Trial Court, Branch 51, City of Manila, G.R.
No. 173846, February 2, 2011, 641 SCRA 438.
c. Subsequent Actions
FRIA, Sec. 22, Sec. 24, Sec. 25, Sec. 26, Sec. 27
d. Rehabilitation Receiver
1) General Concepts
Sec. 28, Sec. 29, Sec. 30, Sec. 32, Sec. 33, Sec. 34, Sec. 35, Sec. 40
2) Powers, Duties and Responsibilities
Sec. 47, Sec. 24, Sec. 31, Sec. 39, Sec. 41
Philippine Asset Growth Two, Inc. & Planters Development Bank v.
Fastech Synergy Philippines, Inc., et. al, G.R. No. 206528, June 28,
2016.
e. Creditors’ Committees
Sec. 63, Sec. 42, Sec. 43, Sec. 8, Sec. 9
f. Management Committee
Sec. 36, Sec. 37, Sec. 38
g. Treatment of Claims
1) General Concepts
Sec. 4(c), Sec. 16, Sec. 44, Sec. 45, Sec. 46
2) Secured Creditor Claims
Sec. 60, Sec. 61
3) Employee Claims
Sec. 56, Sec. 16, Sec. 133
4) Taxes
Sec. 19, Sec. 62
5) Excluded Claims
Sec. 23
12
Law 107: Credit Transactions
Course Outline 2019-2020
Stephanie Gomez-Somera
h. Treatment of Assets
1) General Concepts
Sec. 47
2) Unencumbered Assets
Sec. 48, Sec. 49, Sec. 52
3) Encumbered Assets
Sec. 17, Sec. 50, Sec. 51, Sec. 53
i. Treatment of Contracts
1) Confirmation or Termination of Contracts
Sec. 57
2) Avoidance Proceedings
Sec. 58, Sec. 59
j. Rehabilitation Plan
1) General Concepts
Sec. 4 (ii), Sec. 62, Sec. 54, Sec. 55
2) Cram Down Effect
Sec. 64, Sec. 65, Sec. 66, Sec. 67, Sec. 68, Sec. 69, Sec. 70, Sec. 71, Sec. 72,
Sec. 73
Pryce Corporation v. China Banking Corporation, G.R. No. 172302,
February 18, 2014, 716 SCRA 207.
k. Termination of Proceedings
Sec. 74, Sec. 75
l. Conversion to Liquidation Proceedings
Sec. 92
C. Pre-negotiated Rehabilitation
Sec. 76, Sec. 77, Sec. 78, Sec. 79, Sec. 80, Sec. 81, Sec. 82, Sec. 92
D. Out-of-Court Rehabilitation
1. General Concepts
Sec. 83, Sec. 84
2. Benefits of Out-of-Court Rehabilitation
Sec. 85, Sec. 86, Sec. 87, Sec. 88, Sec. 89
3. Annulment of the Standstill Agreement or OCRA
Liquidation
A. General Concepts
Civil Code, Art. 2236, Art. 2238, Art. 2239, Art. 2240
FRIA, Sec. 2
B. Liquidation of Insolvent Individual Debtor
1. Voluntary Liquidation
Sec. 103, Sec. 104
2. Involuntary Liquidation
a. Acts of Insolvency
Sec. 105
b. Show Cause Order
Sec. 106
c. Injunction Order
Sec. 106, Sec. 107
d. Custody of Property; Sale of Property
Sec. 108, Sec. 109, Sec. 110
C. Liquidation of Insolvent Juridical Debtors
1. General Concepts
Sec. 93
2. Voluntary Liquidation
13
Law 107: Credit Transactions
Course Outline 2019-2020
Stephanie Gomez-Somera
Sec. 90
3. Involuntary Liquidation
Sec. 91
FLSP Rules, Rule 2 (B), Sec. 5
D. Provisions Common to Liquidation of Individual and Juridical Debtors
FRIA, Sec. 111.
1. Liquidation Order
Sec. 112, Sec. 113
2. Liquidator
a. General Concepts
Sec. 115, Sec. 116, Sec. 117, Sec. 118, Sec. 29, Sec. 120, Sec. 122
b. Powers, Duties and Responsibilities
Sec. 119, Sec. 113, Sec. 123, Sec. 126, Sec. 129, Sec. 131, Sec. 132, Sec. 121
3. Claims
a. General Concepts
Sec. 4 (c)
b. Determination of Claims
Sec. 112, Sec. 123, Sec. 124, Sec. 125, Sec. 126
c. Treatment of Claims
1) Secured Creditor Claims
Sec. 113, Sec. 114
Consuelo Metal Corporation v. Planters Development Bank &
Maningas, G.R. No. 152580, June 26, 2008, 555 SCRA 465.
Yngson v. Philippine National Bank, G.R. No. 171132, August 15,
2012, 678 SCRA 447.
2) Unsecured Creditor Claims
Sec. 123, Sec. 113
4. Treatment of Contracts
a. Termination or Breach of Contracts
Sec. 113
b. Avoidance Proceedings
Sec. 127, Sec. 128
5. Liquidation Plan
Sec. 129, Sec. 130, Sec. 131, Sec. 132, Sec. 133
6. Termination of Proceedings
Sec. 121, Sec. 134, Sec. 135
FLSP Rules, Rule 4 (F), Sec. 29
E. Ancillary Proceedings
1. Securities Market Participant
FRIA, Sec. 136
2. Banks and Other Financial Institutions Under Rehabilitation Receivership Pursuant to a
State-funded or State-mandated Insurance System.
Sec. 137, Sec. 138
14