Credit Transactions

Credit Transactions Course Outline Stephanie Gomez-Somera The Concept of Credit A. Credit, Debt and Security Const. Art. III, Section 20, Bill of Rights B. Credit and Credit Transactions Defined Truth in Lending Act, Sec. 3. (2) People v. Concepcion, G.R. No. L-19190, November 29, 1922, 44 Phil 126.

C. Commercial Credit Transactions Code of Commerce, Art. 1, Art. 2, Art. 3 Part I. Loan The Concept of Loan A. General Concepts Civil Code, Art. 1933 B. Obligation to Deliver Art. 1934 Garcia v. Thio, G.R. No. 154878, March 16, 2007, 518 SCRA 433.

C. Kinds of Loan 1.

Object of a Loan Art. 1933, Art. 418 2.

Consideration of a Loan Art. 1933 3.

Obligation to Return or Pay Art. 1933, Art. 1232, Art. 1233 D. Contract to Loan Art. 1934 Saura Import & Export Co. Inc. v. Development Bank of the Philippines, G.R. No. L-24968, April 27, 1972, 44 SCRA 445.

BPI Investment Corporation v. Court of Appeals & ALS Management & Development Corporation, G.R. No. 133632, February 15, 2002, 377 SCRA 117.

Pantaleon v. American Express International, Inc., G.R. No. 174269, August 25, 2010, 629 SCRA 276.

Commodatum A. General Concepts Art. 1933 B. Object of Commodatum Art. 1937, Art. 1936 Producers Bank of the Philippines v. Court of Appeals, G.R. No. 115324, February 19, 2003, 397 SCRA 651.

C. Consideration in Commodatum Art. 1933, Art. 1935, Art. 1939 D. Parties to a Commodatum 1.

Ownership by Bailor Art. 1938, Art. 1933 2.

Use by Bailee Art. 1935, Art. 1940, Art. 1939 (2) 3.

Solidary Liability of Bailees Art. 1945 E. Liability for Expenses and Damages 1.

Ordinary Expenses Art. 1933, Art. 1935, Art. 1941, Art. 1943 Pajuyo v. Court of Appeals, G.R. No. 146364, June 3, 2004, 430 SCRA 492.

2.

Extraordinary Expenses

1

Credit Transactions Course Outline Stephanie Gomez-Somera Art. 1949 Other Expenses Art. 1950 4.

Abandonment by Bailor Art. 1952.

F. Liability for Loss Art. 1933, Art. 1942 Republic v. Bagtas, G.R. No. L-17474, October 25, 1962, 6 SCRA 262.

G. Obligation to Return 1.

General Concepts Art. 1946, Art. 1947, Art. 1948 Quintos & Ansaldo v. Beck, G.R. No. L-46240, November 3, 1939, 69 Phil 108.

2.

Right of Retention of Bailee Art. 1944, Art. 1951 Simple Loan A. General Concepts Art. 1933, Art. 1980 B. Object of Simple Loan Art. 1933, Art. 1953, Art. 1954 Act No. 2137 (1912), Sec. 58, definition of “fungible goods” People v. Puig & Porras, G.R. No. 173654-765, August 28, 2008, 563 SCRA 564.

BPI Family Bank v. Franco, G.R. No. 123498, November 23, 2007, 538 SCRA 184.

C. Obligation to Pay Civil Code, Art. 1955, Art. 1249, Art. 1250 D. Interest 1.

Conventional Interest a.

General Concepts Art. 1933, Art. 1956, Art. 1306, Art. 1253, Art. 1958, Art. 1960, Art. 2154, Art. 1423 b.

Monetary Interest Frias v. San Diego-Sison, G.R. No. 155223, April 3, 2007, 520 SCRA 244.

Siga-an v. Villanueva, G.R. No. 173227, January 20, 2009, 576 SCRA 696. c.

Interest Rate Usury Law, Sec. 1 d.

Escalation Clauses Civil Code, Art. 1308 Usury Law, Sec. 7, Sec. 7-a Spouses Juico v. China Banking Corporation, G.R. No. 187678, April 10, 2013, 695 SCRA 520.

Spouses Silos v. Philippine National Bank, G.R. No. 181045, July 2, 2014, 728 SCRA 617. e.

Interest on Interest Civil Code, Art. 1959, Art. 2212 Usury Law, Sec. 5.

2.

Compensatory Interest a.

General Concepts Civil Code, Art. 1169, Art. 2209, Art. 1226, Art. 2210, Art. 2213, Art. 2226, Art. 2227 Ligutan v. Court of Appeals, G.R. No. 138677, February 12, 2002, 376 SCRA 560. b.

Interest Rate Art. 2209 3.

2

Credit Transactions Course Outline Stephanie Gomez-Somera 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. L66826 August 19, 1988, 164 SCRA 630.

1.

Way of the Deposit Art. 1974, Art. 1975, Art. 1976, Art. 1977, Art. 1978, Art. 1981, Art. 1982 CA Agro-Industrial Development Corporation v. Court of Appeals & Security Bank & Trust Company, G.R. No. 90027, March 3, 1993, 219 SCRA 426.

3

Credit Transactions Course Outline Stephanie Gomez-Somera Roman Catholic Bishop of Jaro v. De La Peña, G.R. No. L-6913, November 21, 1913, 26 Phil 144.

2.

Liability for Loss and Damage Art. 1972, Art. 1973, Art. 1977, Art. 1981, Art. 1979, Art. 1990, Art. 1993 a.

Liability of Depositary b.

Liability of Depositor 3.

Liability for Expenses Art. 1992 G. Obligation to Return 1.

By Whom and To Whom Art. 1972, Art. 1970, Art. 1971, Art. 1984, Art. 1985, Art. 1212, Art. 1214, Art. 1986, Art. 1991 2.

What to Return Art. 1983, Art. 1896 3.

Where to Return Art. 1987 4.

When to Return Art. 1988, Art. 1989 5.

Right of Retention Art. 1994 Necessary Deposit A. General Concepts Art. 1967, Art. 1996, Art. 1966 B. Examples of Necessary Deposit 1.

Compliance with a Legal Obligation Art. 1996, Art. 1997 2.

On the Occasion of a Calamity Art. 1996, Art. 1997, Art. 2168 3.

Passenger Baggage with Common Carriers Art. 1754 4.

Hotels or Inns Art. 1998, Art. 1999, Art. 2000, Art. 2001, Art. 2002, Art. 2003, Art. 2004 Durban Apartments Corp. v. Pioneer Insurance and Surety Corp., G.R. No. 179419, January 12, 2011, 639 SCRA 441.

YHT Realty Corporation v. Court of Appeals, G.R. No. 126780, February 17, 2005, 451 SCRA 638.

Judicial Deposit Art. 1964, Art. 2005, Art. 2006, Art. 2007, Art. 2008, Art. 2009 Warehouse Receipts A. General Concepts Warehouse Receipts Law, Sec. 1 B. Form of Warehouse Receipts Sec. 2, Sec. 3, Sec. 6, Sec. 15, Sec. 4, Sec. 7, Sec. 5 C. Obligations and Rights of a Warehouseman 1.

Liability for Goods Sec. 20, Sec. 21, Sec. 22, Sec. 23, Sec. 24, Sec. 25, Sec. 26 2.

Obligation to Deliver 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.

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Credit Transactions Course Outline Stephanie Gomez-Somera 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 B. Form of Guaranty Art. 2055 C. Consideration of a Guaranty Art. 2048 D. Obligations Secured

5

Credit Transactions Course Outline Stephanie Gomez-Somera E. F.

G. H. I. J.

K.

Art. 2052, Art. 2053, Art. 2054 Parties to a Guaranty Art. 2056, Art. 2057, Art. 2049, Art. 2064, Art. 2065 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.

Right to Protection Art. 2071 Right to Indemnification Art. 2066 Art. 2050, Art. 1236, Art. 2069, Art. 2070, Art. 2072, Right to Subrogation Art. 2067, Art. 2050, Art. 1237, Art. 2068, Art. 2080 Rights of Co-Guarantors 1.

Benefit of Division Art. 2065, Art. 2078 2.

Right to Reimbursement Art. 2073, Art. 2075 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 Civil Code, Art. 2089, Art. 2090 F. Pactum Commissorium Art. 2087, Art. 2088 1.

Elements 2.

Effect on Pledge or Mortgage

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Credit Transactions Course Outline Stephanie Gomez-Somera

G.

Development Bank of the Philippines v. Court of Appeals, G.R. No. 118342, January 5, 1998, 284 SCRA 14.

Bustamante v. Rosel, G.R. No. 126800, November 29, 1999, 319 SCRA 413.

Ong v. Roban Lending Corporation, G.R. No. 172592, July 9, 2008, 557 SCRA 516.

Equitable Mortgage Art. 1602, Art. 1603, Art. 1604, Art. 1605

Pledge A. General Concepts Art. 2085, Art. 2087, Art. 2093, Art. 2123 B. Form of Pledge Art. 2096 C. Object of Pledge Art. 2094, Art. 2095 D. Obligations Secured E. Ownership of Collateral Art. 2103, Art. 2102, Art. 2101, Art. 1951 1.

Expropriation of the collateral.

2.

Sale by public auction Art. 2108, Art. 2112 3.

Voluntary sale Art. 2097.

Estate of Litton v. Mendoza & Court of Appeals, G.R. No. L-49120, June 30, 1988, 163 SCRA 246.

F. Rights of Third Party Pledgor Art. 2120, Art. 2117, Art. 2066, Art. 2067, Art. 2068, Art. 2069, Art. 2070, Art. 2077, Art. 2078, Art. 2079, Art. 2080, Art. 2081 G. Right 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 Manila Banking Corporation v. Teodoro, Jr. and Teodoro, G.R. No. 53955, January 13, 1989, 169 SCRA 95.

Yau Chu v. Court of Appeals et al., G.R. No. L-78519, September 26, 1989, 177 SCRA 793.

Citibank, N.A. & Investors Finance Corporation v. Sabeniano, G.R. No. 156132, October 12, 2006, 504 SCRA 378.

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 a.

Extinction of Principal Obligation Art. 2115, Art. 2116 b.

No Right of Redemption Paray & Espeleta v. Rodriguez, et al., G.R. No. 132287, January 24, 2006, 479 SCRA 571. c.

Right to Surplus or Deficiency Art. 2115

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Credit Transactions Course Outline Stephanie Gomez-Somera J.

Legal Pledges Art. 2121 1.

Examples of Legal Pledges Art. 1944, Art. 1951, Art. 1994, Art. 2004, Art. 546, Art. 1731 2.

Foreclosure of Legal Pledge Art. 2122, Art. 2121 Chattel Mortgage A. General Concepts Art. 2085, Art. 2087, Art. 2140, Art. 2141 PCI Leasing & Finance, Inc. v. Trojan Metal Industries Inc., et al., G.R. No. 176381, December 15, 2010, 638 SCRA 615.

B. Form of Chattel Mortgage Chattel Mortgage Law, Sec. 4, Sec. 5, Sec. 6 C. Obligations Secured Sec. 5 ACME Shoe, Rubber & Plastic Corporation v. Court of Appeals, G.R. No. 103576, August 22, 1996, 260 SCRA 714.

D. Object of Chattel Mortgage Civil Code, Art. 2124 Makati Leasing & Finance Corporation v. Wearever Textile Mills, Inc. & Court of Appeals, G.R. No. L-58469, May 16, 1983, 122 SCRA 296.

1.

Reasonable Description Rule Chattel Mortgage Law, Sec. 7 2.

After Acquired Properties Sec. 7 E. Ownership of Collateral Revised Penal Code, Art. 319 Dy v. Court of Appeals, G.R. No. 92989, July 8, 1991, 198 SCRA 826.

Servicewide Specialists, Inc. v. Court of Appeals, G.R. No. 116363, December 10, 1999, 320 SCRA 478.

F. Foreclosure of Chattel Mortgage Chattel Mortgage Law, Sec. 8, Sec. 14 A.M. No. 99-10-05-0, Sec. 1, Sec. 2, Sec. 3, Sec. 4, Sec. 5, Sec. 6, Sec. 7, Sec. 8, Sec. 9 1.

Equity of Redemption Chattel Mortgage Law, Sec. 13, Sec. 14 2.

No Right of Redemption Rizal Commercial Banking Corporation v. Royal Cargo Corporation, G.R. No. 179756, October 2, 2009, 602 SCRA 545.

3.

Right to Possession Servicewide Specialists, Inc. v. Court of Appeals, G.R. No. 110048, November 19, 1999, 318 SCRA 493.

4.

Right to Surplus or Deficiency Chattel Mortgage Law, Sec. 14 Civil Code, Art. 1484 PAMECA Wood Treatment Plant, Inc. v. Court of Appeals, G.R. No. 106435, July 14, 1999, 310 SCRA 281.

Real Estate Mortgage A. General Concepts Civil Code, Art. 2085, Art. 2087, Art. 2124, Art. 2125 B. Form of Real Estate Mortgage Art. 2125, Art. 2131 C. Obligations Secured

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Credit Transactions Course Outline Stephanie Gomez-Somera 1.

2.

D.

E. F. G.

Dragnet or Blanket Mortgage Clause Reliance on Security Test Prudential Bank v. Alviar & Alviar, G.R. No. 150197, July 28, 2005, 464 SCRA 353.

Object of Real Estate Mortgage Art. 2124 1.

After Acquired Properties People’s Bank & Trust Company & Atlantic Gulf and Pacific Co. of Manila v.

Dahican Lumber Company, et al., G.R. No. L-17500, May 16, 1967, 20 SCRA 84.

2.

Effect and Extent Art. 2126, Art. 2127 Star Two (SPV-AMC), Inc. v. Paper City Corp. of the Phil. , G.R. No. 169211, March 06, 2013, 692 SCRA 438.

Right to Alienate Mortgage Credit Art. 2128, Art. 1625, Art. 1627 Right to Alienate Collateral Art. 2085, Art. 2130, Art. 2129 Garcia v. Villar, G.R. No. 158891, June 27, 2012, 675 SCRA 80.

Foreclosure of Real Estate Mortgage 1.

Judicial Foreclosure a.

Complaint for Foreclosure Rules 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., G.R. No. 138292, April 10, 2002, 380 SCRA 381. c.

Equity of Redemption Rules of Court, Rule 68, Sec. 2 d.

Foreclosure Sale Rules of Court, Rule 68, Sec. 3, Sec. 5., Sec. 7, Sec. 8 Rules of Court, Rule 39, Sec. 31, Sec. 32, Sec. 34 e.

Right of Redemption Huerta Alba Resort, Inc. v. Court of Appeals, G.R. No. 128567, September 1, 2000, 339 SCRA 534. f.

Right to Surplus or Deficiency Rules of Court, Rule 68, Sec. 4, Sec. 6 Rules of Court, Rule 86, Sec. 7 2.

Extrajudicial Foreclosure a.

Special Powers Act No. 3135, Sec. 1 b.

Foreclosure Sale 1) Requirement of Notice Act No. 3135, Sec. 3 A.M. No. 99-10-05-0, as amended, Sec. 1, Sec. 2, Sec. 3, Sec. 4 Grand Farms, Inc. & Philippine Shares Corporation v. Court of Appeals, et al., G.R. No. 91779, February 7, 1991, 193 SCRA 748.

2) Conduct of Sale Act No. 3135, Sec. 2, Sec. 4 A.M. No. 99-10-05-0, as amended, Sec. 5, Sec. 6, Sec. 8, Sec. 9 3) Bid Price Act No. 3135, Sec. 5 A.M. No. 99-10-05-0, as amended, Sec. 5 c.

Right of Redemption

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Credit Transactions Course Outline Stephanie Gomez-Somera

d. e. f.

Act No. 3135, Sec. 6 General Banking Law, Art. III, Sec. 47 A.M. No. 99-10-05-0, as amended, Sec. 10.

1) Who may Redeem Act No. 3135, Sec. 6 Rules of Court, Rule 39, Sec. 27 Medida, et al. v. Court of Appeals, et al., G.R. No. 98334, May 8, 1992, 208 SCRA 887.

2) How to Redeem Rules of Court, Rule 39, Sec. 28, Sec. 29, Sec. 30 Spouses Yap v. Spouses Dy, et al., G.R. No. 171991 and 171868, July 27, 2011, 654 SCRA 593.

Right to Deficiency Rules of Court, Rule 86, Sec. 7 Right to Surplus Suico v. Philippine National Bank, G.R. No. 170215, August 28, 2007, 531 SCRA 514.

Right to Possession 1) During Redemption Period Act No. 3135, Sec. 7, Sec. 8, Sec. 9 2) After Consolidation of Ownership Rules of Court, Rule 39, Sec. 33 Cua Lai Chu, et al. v. Lacqui & Philippine Bank of Communications, G.R. No. 169190, February 11, 2010, 612 SCRA 227.

3) Exceptions Rules of Court, Rule 39, Sec. 33, Sec. 16 Spouses Tolosa v. United Coconut Planters Bank, G.R. No. 183058, April 03, 2013, 695 SCRA 138.

BPI Family Savings Bank, Inc. v. Golden Power Diesel Sales Center, Inc., G.R. No. 176019, January 12, 2011, 639 SCRA 405.

Antichresis A. General Concepts Civil Code, Art. 2132, Art. 2133, Art. 2135, Art. 2138 B. Form of Antichresis Art. 2134 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.

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

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Credit Transactions Course Outline Stephanie Gomez-Somera 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 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

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Credit Transactions Course Outline Stephanie Gomez-Somera

B.

1.

Requirements for Rehabilitation 2.

Modes of Rehabilitation Court-Supervised Rehabilitation 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 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 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 h.

Treatment of Assets 1) General Concepts

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Credit Transactions Course Outline Stephanie Gomez-Somera Sec. 47 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 Sec. 90 3.

Involuntary Liquidation 2)

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Credit Transactions Course Outline Stephanie Gomez-Somera

D.

E.

Sec. 91 FLSP Rules, Rule 2 (B), Sec. 5 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 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

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