Answer
A pactum commissorium is a stipulation that lets the creditor automatically appropriate — or dispose of — the thing given as pledge or mortgage upon the debtor's default. Philippine law prohibits it: the creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of them, and any stipulation to the contrary is null and void (Civil Code Article 2088).
The Supreme Court identifies a prohibited pactum commissorium by two elements — a pledge or mortgage of property to secure a principal obligation, and a stipulation for the creditor's automatic appropriation of the property on non-payment. It is distinct from a valid dacion en pago, in which the debtor, after default, freely conveys the property to settle the debt; the prohibition targets the prior, automatic-forfeiture stipulation, not a later voluntary transfer.
Researching Philippine law? Intellegal brings Philippine case-law search, statute and issuance exploration, multi-dimension case comparison, document visualization, and cited deep-research reports into a single workflow — with every citation traced back to its original source, so you can verify each answer rather than take it on trust. Every authority it surfaces links back to its original provision or decision, so you can open the source and confirm the wording yourself, and save or export the questions and reports you reference most. See the full report for the statutes and cases behind this answer, or explore the related questions below.