A stipulation in a contract which provides that the creditor or pledgee will automatically appropriate the thing mortgaged or pledged as security for a principal obligation when the debtor or pledgor did not pay within the stipulated period. This stipulation is void by virtue of Article 2088.
2 Elements of Pactum Commissorium
- (1) PLEDGE or MORTGAGE as SECURITY for PRINCIPAL OBLIGATION. that there should be a pledge or mortgage wherein a property is pledged or mortgaged by way of security for the payment of the principal obligation; and
- (2) AUTOMATIC APPROPRIATION if NO PAYMENT in a PERIOD. that there should be a stipulation for an automatic appropriation by the creditor of the thing pledged or mortgaged in the event of non-payment of the principal obligation within the stipulated period.