GENERAL PROVISION

CREDIT TRANSACTION

- agreement based on the trust or belief of someone on the ability of another person to comply with his
obligations

- includes all transaction involving loans of money, goods or services extend to another either
gratuitously or onerously

Kinds of Credit Transaction

a) as CONTRACTS OF SURETY

1. Contracts of REAL SECURITY

(Mortgage; Pledge)

Transaction supported by a collateral or an encumberance of property

2. Contracts of PERSONAL SECURITY

(Surety; Guaranty)

Transaction supported only by a promise to pay or commitment of another such as guarantor or surety

b) as to THEIR EXISTENCE

1. PRINCIPAL CONTRACTS
(Commodatum; Mutuum)

Does not depend on the existence of another contract

2. ACCESSORY CONTRACTS
(Guaranty Proper; Suretyship; Pledge; Mortgage; Antichresis)

Depends on the existence of another contract

c) as to THEIR CONSIDERATION

1. ONEROUS
(Interest)

Contract where there is consideration or burden imposed

2. GRATIUTOUS
(Commudatum)

Contract where there is no consideration or burden imposed

SECURITY

Is something promised or delivered to ensure the fulfillment of an obligation

BAILMENT

The delivery of property of one person to another in trust for a specific purpose, with a contract (expressed
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

- Created 1) BY CONTRACT; and 2) BY OPERATION OF LAW

BAILOR (“COMODATARIO” / “COMMODANS”)

one who gives or delivers property bailed

BAILEE (“COMODANTE” / “COMMODOTARIUS”)

One who receives the things delivered or bailed

LETTER OF CREDIT

Trust receipt transaction arrangement, a bank extends to a borrower a loan covered by the letter of credit,
with receipt as a security of the loan

BRIDGE FINANCING

To obtain funds through an interim loan, while the main loan is not yet available

LOAN

CONTRACT OF LOAN

Contract where one of the partied delivers another, either something not consumable so that the latter
may use the same for a certain time and return it; or money, or other consumable things, upon the condition that
the same amount of the same kinds and quality shall be paid.

Characteristics:

1. REAL CONTRACTS

Delivery of the thing loaned is necessary for the perfection of the contract

2. UNILATERAL CONTRACTS

Once the subject matter has been delivered, it creates obligations on the part of only one of the parties