A lent money to B in the amount of ₱3M and executed a mortgage over his house and lot to secure the payment of the obligation with a condition that if he fails to pay, A shall became the owner of the property. Is the stipulation valid?
A)Yes, because the contract is the law between the parties.
B)Yes, because of the doctrine of mutuality of contracts
C)No, because it is a case of pactum commissorium.
D)Yes, because of the liberty of contracts.

Question

Quizplus · Accepted Answer

The stipulation is not valid because it constitutes a pactum commissorium, which is prohibited by law. This occurs when a property automatically becomes the property of the creditor in the event of non-payment, without the need for any form of foreclosure or auction.

A Lent Money to B in the Amount of ₱3M