I. INTRODUCTION

Question 1

What are credit transactions?

Answer 1

Credit transactions include all transactions involving the purchase or loan of goods, services, or money in the present with a promise to pay or deliver in the future. [De Leon]

Question 2

What are the two kinds of credit transactions?

Answer 2

Credit transactions are really contracts of security. They are two types:

• Secured transactions or contracts of real security – those supported by a collateral or an encumbrance of property; and
• Unsecured transactions or contracts of personal security – those the fulfillment of which by the principal debtor is secured or supported only by a promise to pay or the personal commitment of another such as a guarantor or surety.

Question 3

What is the meaning of security?

Answer 3

Security is something given, deposited, or serving as a means to ensure the fulfillment or enforcement of an obligation or of protecting some interest in property.

The security may be personal security, as when an individual becomes a surety or a guarantor; or a property or real security, as when a mortgage, pledge, antichresis, charge or lien or other device used to have property held, out of which the person to be made secure can be compensated for loss.

Question 4

What is the meaning of bailment?

Answer 4

Bailment, comes from the French word “bailler,’ which means to deliver. It may defined as the delivery of property of one person to another in trust for a specific purpose, with a contract, express or implied, that the trust shall be faithfully executed and the property returned or duly accounted for when the special purpose is accomplished or kept until the bailor reclaims it.

Question 5

How is bailment created?

Answer 5

Bailment may be said to be a contractual relation. To be legally enforceable, it must contain all the elements of a valid contract (see Art. 1318).

However, it does not necessarily mean that an agreement is always necessary to creat bailment. It may be created by operation of law.

Question 6

Who are the parties in a bailment?

Answer 6

1. Bailor (commodatario) - the giver; the party who delivers the possession or custody of the thing bailed; and
2. Bailee (comodante) - the recipient; the party who receives the possession or custody of the thing thus delivered.

Question 7

What are the three classifications of bailment?

Answer 7

1. Those for the sole benefit of the bailor - e.g. mandatum (see Art. 1965);
2. Those for the sole benefit of the bailee - e.g. commodatum, mutuum (see Art. 1933);
3. Those for the benefit of both parties - e.g. deposit for compensation (Art. 1965), including involuntary deposit (see Arts. 1966[2]. 1997), pledge (Arts. 2085, 2903), and bailments for hire.

Question 8

What are the kinds of bailments for hire?

Answer 8

1. Hire of things (locatio rei) - goods are delivered, for the temporary use of the hirer (ie. lease, Arts. 1642, 1643);
2. Hire of service (locatio operis faciendi) - where goods are delivered fro some work or labor upon it by the bailee (ie. contract for a piece of work Art. 1713);
3. Hire for carriage of goods (locatio operis mercium vehendarum) - goods are delivered either to a common carrier (Art. 1732) or to a private person for the purpose of being carried from place to place; and
4. Hire of custody (locatio custodiae) - where goods are delivered for storage. (Arts. 1507-1520; Act No. 2137 Warehouse Receipts Law).

Question 9

What it the meaning of a credit?

Answer 9

The credit of an individual means his ability to borrow money or things by virtue of the confidence or trust reposed by a lender that he will pay what he may promise within a specified period.

It is also a sum credited on the books of a company to a person who appears to be entitled to it. It presupposes a creditor-debtor relationship, an may be said to imply ability, by reason of property or estates, to make a promised payment.