Pactum Commissorium

Prohibition against pactumcommissorium?

The stipulation whereby the thing used as security shall automatically become the property of the creditor or there is the automatic transfer of ownership in the event of non-payment of the debt in due time.

As a general rule, PactumCommissorium is forbidden by law and is declared null and void except the pledgee may appropriate the thing pledged if after the first and second auctions, the thing is not sold as required by this article;

Art. 2112. The creditor to whom the credit has not been satisfied in due time, may proceed before a Notary Public to the sale of the thing pledged. This sale shall be made at a public auction, and with notification to the debtor and the owner of the thing pledged in a proper case, stating the amount for which the public sale is to be held. If at the first auction the thing is not sold, a second one with the same formalities shall be held; and if at the second auction there is no sale either, the creditor may appropriate the thing pledged. In this case he shall be obliged to give an acquittance for his entire claim. (1872a)

What is pacta non aliendo?

Pacta non aliendo refers to a stipulation in a mortgage which prohibits the mortgagor from alienating the mortgaged property subject to the mortgage within the mortgage period.

Paras, E. (2013). Civil Code Volume V (Special Contracts). Quezon City: Rex Printing Company, Inc.

Perez v. Cortez, 35 Phil. 211

The New Civil Code

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