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Pactum Commissorium Explained

The document discusses the pactum commissorum, which is an automatic appropriation by the creditor of a pledged or mortgaged property if the debtor fails to pay the principal obligation. It notes that a pactum commissorum stipulation is null and void as it is contrary to public policy. For there to be a pactum commissorum, there must be a pledge, mortgage, or antichresis of property as security for a principal obligation, along with an automatic appropriation of the property to the creditor if the debtor defaults. Certain agreements like power of attorney, option contracts, dacion en pago, or assigned shares would not constitute a pactum commissorum.

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Mikko Ramira
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63 views1 page

Pactum Commissorium Explained

The document discusses the pactum commissorum, which is an automatic appropriation by the creditor of a pledged or mortgaged property if the debtor fails to pay the principal obligation. It notes that a pactum commissorum stipulation is null and void as it is contrary to public policy. For there to be a pactum commissorum, there must be a pledge, mortgage, or antichresis of property as security for a principal obligation, along with an automatic appropriation of the property to the creditor if the debtor defaults. Certain agreements like power of attorney, option contracts, dacion en pago, or assigned shares would not constitute a pactum commissorum.

Uploaded by

Mikko Ramira
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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PACTUM COMMISSORIUM

> Automatic appropriation by the creditor of the thing pledged


or mortgaged upon the failure of the debtor to pay the principal
obligation
> TEST IF THERE IS EXISTS PACTUM COMMISSORIUM is whether or not
there is no need for extra step to be taken by creditor
PROHIBITION AGAINST PACTUM COMMISSORIUM
1. Stipulation is null and void—
it is said to be contrary to good morals and public policy
2. Requisites
a. There should be a pledge, mortgage, antichresis of property by
way of security for the payment of the
principal obligation
b. Stipulation for the automatic appropriation of the property
in favor of the creditor upon default of the debtor/pledgor

3. Effect on the security contract—doesn’t affect substantially


the principal contract of pledge, mortgage or antichresis with
regard to its validity and efficacy
AGREEMENTS THAT WOULD NOT CONSTITUTE PACTUM COMMISSORIUM
1. Attorney in fact
2. Option contract. There would be another contract. There is a
risk of the courts to look at it as a PC.
3. Dacion en pago
4. Assigned shares. Creditor would only have legal title and
pledgor would still have beneficial ownership.

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