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Credit Transactions Reviewer

Credit Transactions Reviewer

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Published by Chapapa

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Published by: Chapapa on Jan 30, 2009
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11/23/2014

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INTRODUCTION
MEANING AND SCOPE OF CREDIT TRANSACTIONS
Credit transactions include all transactions involving the
purchase
or
loan
of 
goods, services, ormoney
in the present with a
promise to pay or deliver
in the future.
TWO TYPES OF CREDIT TRANSACTIONS/ CONTRACTS OF SECURITY
1.
Secured transactions or contracts of real securit
– supported by a
collateral
or anencumbrance of property
2.
Unsecured transactions or contracts of personal security 
– fulfillment by the debtor issupported only by a
promise to pay
or the
personal commitment
of another
EXAMPLES OF CREDIT TRANSACTIONS
1.Bailment contracts2.Contracts of guaranty and suretyship3.Mortgage4.Antichresis5.Concurrence and preference of credits
MEANING OF SECURITY
Security (def).
Something given, deposited, or serving as a
means to ensure the fulfillment orenforcement of an obligation
or of 
protecting some interest in property.KINDS OF SECURITY
1.
Personal Security
when
an individual
becomes a surety or a guarantor
2.
Property or Real Securit
– when
a mortgage, pledge, antichresis, charge, or lien
orother device used to have property held, out of which the person to be made secure can becompensated for loss.
BAILMENT
Bailment (def).
The
delivery of property
of one person to another in trust for a specific purpose,with a contract, that the trust shall be faithfully executed and the property returned or duly accountedfor when the special purpose is accomplished or kept until the bailor reclaims it.To be legally enforceable, a bailment must contain all the elements of a valid contract, which areconsent, object, and cause or consideration. However, a bailment may also be created by operationof law.
PARTIES IN BAILMENT
1.
Bailor 
the giver; the one who delivers the possession of the thing bailed
2.
Bailee 
– the recipient; the one who receives the possession or custody of the thing delivered
KINDS OF BAILMENT
1.For the sole benefit of the bailor 
Examples: gratuitous deposit and mandatum (bailment of goods where the bailee gratuitouslyundertakes to do some act with respect to the property)
Sheryl IID 2002PAGE 1
 
Ex. My tito from the States makes padala a balikbayan box filled with spam through anotherrelative who’s flying to the Philippines on vacation. It only benefits my tito (the bailor). Or,Helen deposits Polsci’s baby chair with the mysterious little guy who doesn’t smile in the bagdepository counter outside the lib. In this case, only Helen benefits (based on a true story).
2.For the sole benefit of the bailee 
Examples: commodatum and gratuitous simple loan or mutuum
Ex. Xilca borrows my white blouse because she forgot to bring clothes to change from herPasay City Jail outfit. Only Xilca is benefited, not me. Or, Xilca borrows P10 from me withoutinterest.
3.For the benefit of both partie
Examples: deposit for a compensation, involuntary deposit, pledge, bailments for hire
Ex. Ansky pawns her huge diamond earrings at Villarica Pawnshop. The pawnshop givesher P10,000 and a pawn ticket. Both parties benefit – Ansky gets fast cash, while thepawnshop gets to keep the huge diamond earrings to make sure that Ansky pays, and in caseshe doesn’t they can sell the earrings.1 and 2 are
gratuitous bailments.
There is no consideration because they are considered moreas a favor by one party to the other. Bailments under number 3 are
mutual-benefit bailments,
and they usually result from business transactions.
BAILMENT FOR HIRE
Bailment for hire 
arises when
goods are left with the bailee
for some use or service by him
always for some compensation.KINDS OF BAILMENT FOR HIRE
1.
Hire of things – 
goods are delivered for the temporary use of the hirer
2.
Hire of service – 
goods are delivered for some work or labor upon it by the bailee
3.
Hire for carriage of goods – 
goods are delivered either to a common carrier or to a privateperson for the purpose of being carried from place to place
4.
Hire of custody – 
goods are delivered for storage
I. LOANGENERAL PROVISIONS
Art. 1933. By the contract of loan, one of the parties delivers to another, either something notconsumable so that the latter may use the same for a certain time and return it, in which case thecontract is called a commodatum; or money or other consumable thing, upon condition that thesame amount of the same kind and quality shall be paid, in which case the contract is simply calleda loan or mutuum.Commodatum is essentially gratuitous.Simple loan may be gratuitous or with a stipulation to pay interest.In commodatum the bailor retains the ownership of the thing loaned, while in simple loan, ownershippasses to the borrower.Art. 1934. An accepted promise to deliver something by way of commodatum or simple loan isbinding upon the parties, but the commodatum or simple loan itself shall not be perfected until thedelivery of the object of the contract.
Sheryl IID 2002PAGE 2
 
ESSENTIAL ELEMENTS OF A CONTRACTIN THE CONTEXT OF A LOAN
Consent of the partiesBorrower and LenderObjectPropertyCause or ConsiderationFor the lender: right to demand the return of thethingFor the borrower: acquisition of the thing
CHARACTERISTICS OF THE CONTRACT OF LOAN
1.
A real contract – 
the delivery of the thing loaned is necessary for the perfection of thecontract
2.
A unilateral contract – 
once the subject matter has been delivered, it creates obligations onthe part of only one of the parties (the borrower)
CAUSE OR CONSIDERATION IN A CONTRACT OF LOAN
1.As to the borrower: the acquisition of the thing2.As to the lender: the right to demand its return or of its equivalent
KINDS OF LOAN
1.
Commodatum 
– where the lender delivers to the borrower a
non-consumable thing
so thatthe latter may use it for a certain time and
return the identical thing
2.
Simple loan or mutuum – 
where the lender delivers to the borrower
money or otherconsumable thing
upon the condition that the latter shall
pay the same amount of thesame kind and quality.LOANS DISTINGUISHED FROM CREDIT
Credit 
means the
ability of an individual to borrow
money or things by virtue of the confidence ortrust reposed by a lender that he will pay what he may promise within a specified period.
Loan 
means the
delivery by one party and the receipt by the other party of a given sum of money or other consumable thing
upon an agreement to repay the same amount of the same kindand quality, with or without interest.
The concession of a credit necessarily involves the granting of loans up to the limit of the amountfixed in the credit.As opposed to debt, credit is a debt considered from the creditor’s standpoint. It is that which is dueto any person.
Sheryl IID 2002PAGE 3

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