QUESTION NO. 3. EXPLAIN, BY WAY OF EXAMPLE, A CREDIT TRANSACTION THAT IS SECONDARY IN NATURE.

Credit transactions as defined include all transactions involving the loan or purchase of goods, services, or money in the present with a promise to pay or deliver in the future. Contracts involving such kind of transaction may be categorized into two categories. Firstly, are those contracts that are primary in nature such as a contract of loan and of a contract of deposit. And secondly, are those contracts that are secondary in nature such as a contract of mortgage which may either be a real or a chattel mortgage, and a contract of antichresis. A real estate mortgage is a contract whereby the debtor secures to the creditor the fulfillment of a principal obligation, specially subjecting to such security immovable property or real rights over immovable property which obligation shall be satisfied with the proceeds of the sale of said property or rights in case said obligation is not complied with at the time stipulated. The contract of mortgage is immovables and alienable real rights imposed upon immovables. A real right over real property is real property. Hence, a mortgage on real property is in itself a real property. A chattel mortgage on the other hand is that contract by virtue of which personal property is recorded in the Chattel Mortgage Register as a security for the performance of an obligation. Chattel mortgage is an accessory contract because it is for the purpose of securing the performance of a principal obligation. Its subject matter is always personal or movable property. In the contract of antichresis, the creditor acquires the right to receive the fruits of an immovable of his debtor, with the obligation to apply them to the payment of the interest, if owing, and thereafter to the principal of his credit. It is an accessory contract because it secures the performance of a principal obligation. Antichresis requires the delivery by the debtor of the property given as security to the creditor. But such delivery is required only in order that the creditor may receive the fruits and not that the contract shall be binding. Antichresis normally covers all the fruits of the encumbered property, but the laws give the parties the freedom to stipulate otherwise.