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Automatic Appropriation by The Creditor of The Thing Pledged or Mortgaged Upon The Failure of The Debtor To Pay The Principal Obligation

This document defines and explains several legal concepts: 1) A possessory lien gives a creditor the right to keep possession of property until a debt is satisfied, such as goods sold on credit or where the credit term has expired. 2) A pactum commissorium allows automatic appropriation of pledged or mortgaged property by the creditor if the debtor fails to pay the principal obligation. 3) Foreclosure is the process where a creditor takes possession of mortgaged property if the mortgagor fails to make payments.

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110 views1 page

Automatic Appropriation by The Creditor of The Thing Pledged or Mortgaged Upon The Failure of The Debtor To Pay The Principal Obligation

This document defines and explains several legal concepts: 1) A possessory lien gives a creditor the right to keep possession of property until a debt is satisfied, such as goods sold on credit or where the credit term has expired. 2) A pactum commissorium allows automatic appropriation of pledged or mortgaged property by the creditor if the debtor fails to pay the principal obligation. 3) Foreclosure is the process where a creditor takes possession of mortgaged property if the mortgagor fails to make payments.

Uploaded by

YanaKarunungan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Possessory Lien Pactum Commissorium

- Creditor has the right to remain in - automatic appropriation by the creditor


possession of the property under the lien of the thing pledged or mortgaged upon
until debtor satisfied his/her debt. the failure of the debtor to pay the
o Goods – sold w/stipulation to principal obligation.
credit.
Grace Period
o Goods – sold on credit but term of
credit expired. - period of time after a payment
o Buyer = insolvent becomes due, as of a loan or life-
insurance premium, before one is
Redhibitory Action
subject to penalties or late
- Action to avoid sale on account of some charges or before the loan or
vice/defect in the thing sold w/c renders its policy is canceled.
use impossible – buyer not purchase if
known defect. Remedies under Recto Law

Barring Effect 1.) exact fulfillment by the purchaser of the


obligation
2.) Rescind or cancel sale
3.) Foreclose the mortgage on the
purchased personal prop
Unpaid Seller
Transactions excluded in the Maceda Law
- Whole of price = not paid
1.) Industrial lots
- BoE / Nego instrument = received as
2.) Commercial buildings
conditional payment &condition broken by
3.) Tenants under agrarian reform law
dishonor of instrument
Remedies (breach of sellers warranty)
Foreclosure
Page 2
- action of taking possession of a
mortgaged property when the mortgagor
fails to keep up their mortgage
payments.

Lease with option to purchase

- Agreement under which a lessee has


the right to purchase the leased item,
either at the end of the lease term or
within a specified period.

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