In a loan secured by a specific laptop pledged as collateral, and the parties agree that the laptop shall be used to fully settle the loan, which statement is correct?

• A. The said agreement is pactum commissorium and therefore null and void.
• B. Ownership of the laptop was acquired by C and the contract of loan is fully extinguished by dacion en pago.
• C. Ownership of the laptop was acquired by C by reason of pactum commissorium.
• D. The contract of loan is extinguished only if the value of the laptop is equal to the amount of the loan.

Answer: (B)

The concept tested is dacion en pago—the extinguishment of an obligation when the debtor offers property to the creditor and the creditor accepts it as payment. Here, the loan is secured by a laptop pledged as collateral, and the parties agree that the laptop will fully settle the loan. If the creditor accepts that arrangement, ownership of the laptop passes to the creditor and the loan is extinguished. This is precisely how dacion en pago works: a voluntary transfer of the property to the creditor in satisfaction of the debt, with extinguishment of the obligation.

Pactum commissorium, by contrast, would be an automatic transfer of ownership to the creditor upon default, without such consent or payment, which is void. That’s why the idea that ownership shifts by pactum commissorium doesn’t fit this scenario. Also, dacion en pago does not require an exact value match; the property must be of value equal to or greater than the debt for extinguishment to occur, with any excess potentially handled by agreement or returned, rather than requiring an exact equality.