CAYTON VS ZEONNIXWHO MAY REDEEM A FORECLOSED PROPERTYSection 27, Rule 39 of the Rules of Court provides:Sec. 27. Who may redeem real property so sold.Real property sold as provided in the last preceding section, or any part thereof sold separately, may be redeemed in the manner hereinafter provided, by the following persons:(a) The judgment obligor, or his successor in interest in the whole or any part of the property;(b) A creditor having a lien by virtue of an attachment, judgment or mortgage on the property sold, or on some part thereof, subsequent to the lien under which the property was sold.(JUNIOR MORTGAGEE) Such redeeming creditor is termed a redemptioner.

IS ZEONNIX ENTITLED TO REDEEM? IN WHAT CAPACITY? YES. AS REDEMPTIONERARE THE CAYTONS SUCCESSOR IN INTEREST OF ORIGINAL DEBTOR?NO. BECAUSE THE COURT DID NOT RECOGNIZED THAT THEY ARE A SUCCESSOR IN INTEREST FOR THE REASON THAT THE CONTRACT THEY EXECUTED IS NOT REGISTERED.The successor-in-interest is someone to whom the debtor has transferred his statutory right of redemption; one to whom the debtor has conveyed his interest in the property for the purpose of redemption; one who succeeds to the interest of the debtor by operation of law; one or more joint debtors who were joint owners of the property sold; or his spouse or heirs.In the instant case, the Caytons aver that as successor-in-interest of the Maoscas by virtue of the deed of absolute sale with assumption of mortgage, they have a better right than Zeonnix to redeem the property. This stance deserves scant consideration.WHO IS A REDEMPTIONER?A redemptioner, on the other hand, is a creditor with *a lien subsequent to the judgment which was the basis of the execution sale. If the lien of the creditor is prior to the judgment under which the property was sold, he is not a redemptioner and, therefore, cannot redeem because his interests in his lien are fully protected, since any purchase at public auction of said property takes the same subject to such prior lien which he has to satisfy. Unlike the judgment debtor, a redemptioner must prove his right to redeem by producing the documents called for by Section 30, Rule 39[29] of the Rules of Court.IS ZEONNIX A REDEMPTIONER? WHAT CREATED THE LIEN?YES. Zeonnix has acquired by operation of law the right of redemption over the foreclosed properties. By virtue of the RTC decision in Civil Case No. 2173, it had the right to redeem the property. This is pursuant to Section 6 of Act No. 3135, as amended by Act No. 4118, which provides:SECTION 6. In all cases in which an extrajudicial sale is made under the special power hereinbefore referred to, the debtor, his successors in interest or any judicial creditor or judgment creditor of said debtor, or any person having a lien on the property subsequent to the mortgage or deed of trust under which the property is sold, may redeem the same at any time within the term of one year from and after the date of the sale; and such redemption shall be governed by the provisions of sections four hundred and sixty-four to four hundred and sixty-six, inclusive, of the Code of Civil Procedure, in so far as these are not inconsistent with the provisions of this Act.

The writ of attachment entitled the attaching creditor to exercise the right to redeem the foreclosed properties. A writ of attachment that has been levied on real property or any interest therein belonging to the judgment debtor creates a lien which nothing can destroy but its dissolution.WHAT ARE THE MANNER OF REDEMPTION?Section 28, Rule 39 of the Rules of Court provides for the manner of payment in redemption: Section 28. Time and manner of, and amounts payable on, successive redemptions; notice to be given and filed. The judgment obligor, or redemptioner, may redeem the property from the purchaser, at any time within one (1) year from the date of the registration of the certificate of sale, by paying the purchaser the amount of his purchase, with one per centum per month interest thereon in addition, up to the time of redemption, together with the amount of any assessments or taxes which the purchaser may have paid thereon after purchase, and interest on such last named amount at the same rate; and if the purchaser be also a creditor having a prior lien to that of the redemptioner, other than the judgment under which such purchase was made, the amount of such lien, with interest. Property so redeemed may again be redeemed within sixty (60) days after the last redemption upon payment of the sum paid on the last redemption, with two per centum thereon in addition, and the amount of any assessments or taxes which the last redemptioner may have paid thereon after redemption by him, with interest on such last-named amount, and in addition, the amount of any liens held by said last redemptioner prior to his own, with interest. The property may be again, and as often as a redemptioner is so disposed, redeemed from any previous redemptioner within sixty (60) days after the last redemption, on paying the sum paid on the last previous redemption, with two per centum thereon in addition, and the amounts of any assessments or taxes which the last previous redemptioner paid after the redemption thereon, with interest thereon, and the amount of any liens held by the last redemptioner prior to his own, with interest. Written notice of any redemption must be given to the officer who made the sale and a duplicate filed with the registry of deeds of the place, and if any assessments or taxes are paid by the redemptioner or if he has or acquires any lien other than that upon which the redemption was made, notice thereof must in like manner be given to the officer and filed with the registry of deeds; if such notice be not filed, the property may be redeemed without paying such assessments, taxes, or liens. Accordingly, to constitute valid redemption, the amount tendered must comply with the following requirements: (1) it should constitute the full amount paid by the purchaser; (2) with one percent per month interest on the purchase price in addition, up to the time of redemption; (3) together with the amount of any assessments or taxes which the purchaser may have paid thereon after purchase; (4) interest on the taxes paid by the purchaser at the rate of one percent per month, up to the time of the redemption; and (5) if the purchaser be also a creditor having a prior lien to that of the redemptioner, other than the judgment under which such purchase was made, the amount of such other lien, with interest. In exercising the right of redemption, the tender of payment must be for the full amount of the purchase price. Otherwise, to allow payment by installments would be to allow the indefinite extension of the redemption period.[37] The amount tendered by Zeonnix may be considered sufficient for purposes of redemption, although it failed to include the amount of taxes paid by the Caytons. The payment of the full amount of the purchase price and interest thereon should be deemed as substantial compliance, considering that Zeonnix immediately paid the amount of taxes when apprised of the deficiency.NOTE1. redeem the property from the purchaser, at any time within one (1) year from the date of the registration of the certificate of sale2. Pay the purchase price, with one per centum per month interest thereon in addition, up to the time of redemption, together with the amount of any assessments or taxes which the purchaser may have paid thereon after purchase, and interest on such last named amount at the same rate; and if the purchaser be also a creditor having a prior lien to that of the redemptioner, other than the judgment under which such purchase was made, the amount of such lien, with interest.if the purchaser be also a creditor having a prior lien to that of the redemptioner, other than the judgment under which such purchase was made, the amount of such lien, with interest. WHAT DOES THIS MEAN?WHAT IS THE AMOUNT TO BE PAID TO BE MOUNT AS A PRIOR LIEN?NOTE:IN FORECLOSURE SALE THERE ARE TWO SITUATION: DEFIENCY AND SURPLUSA.IF THERE IS DEFICIENCY, THE MORTGAGEE CAN RECOVEREXCEPTION: IF THE THE MORTGAGEE HAS SETTLEMENT ON ESTATE WHERE THE ADMINISTRATOR CAN COLLECT THRU A CIVIL ACTION OR COLLECT THRU JUDICIAL FORECLOSURE OR EXTRAJUDICIAL SETTLEMENT. IF THE FORECLOSURE IS THRU EXTRAJUDICIAL SETTLEMENT, THE RIGHT TO CLAIM IS BARRED OR WAIVED.B. IF THERE IS A SURPLUS, THE MORTGAGEE HAS THE OBLIGATION TO APPLY THE SURPLUS TO THE SUBSEQUENT MORTGAGESS.

PERIOD TO REDEEM: 12 MOS FROM THE REGISTRATION OF CERTIFICATE OF SALEEXCEPTION: RA NO. 8791 PROVIDES THAT WHEN A REAL ESTATE MORTGAGE IS FORECLOSED EXTRAJUDICIALLY BY A BANK, QUASI-BANK OR TRUST ENTITY, JURIDICAL MORTGAGORS ARE GRANTED THE RIGHT TO REDEEM UNTIL, BUT NOT LATER THAN, THE REGISTRATION OF THE CERTIFICATE OF FORECLOSURE SALE, WHICH IN NO CASE SHALL BE MORE THAN 3 MOS AFTER FORECLOSURE.

DEVELOPMENT BANK OF THE PHILIPPINES VS ENVIRONMENTAL AQUATICSTHE COURTS RULINGWe find Metrobanks petition meritorious.Procedural IssueSection 1, Rule 65 of the Rules, clearly provides that apetition forcertiorariis available only when there is no appeal, or any plain, speedy and adequate remedy in the ordinary course of law.A petition forcertioraricannot coexist with an appeal or any other adequate remedy.The existence and the availability of the right to appeal are antithetical to the availment of the special civil action forcertiorari. Aswe have long held, these two remedies are mutually exclusive.[7]Admittedly, Metrobanks petition forcertioraribefore the CA assails the dismissal order of the RTC and, under normal circumstances, Metrobank should have filed an appeal.However, where theexigencies of the case are such that the ordinary methods ofappeal may not prove adequate -- either in point of promptness or completeness, so that a partial if not a total failure of justice could result - a writ ofcertiorarimay still be issued.[8]Other exceptions, Justice Florenz D. Regalado listed are as follows:(1)where the appeal does not constitute a speedy and adequate remedy(Salvadades vs. Pajarillo, et al.,78 Phil. 77),as where 33 appeals were involved from orders issued in a single proceeding which will inevitably result in a proliferation of more appeals (PCIB vs. Escolin, et al.,L-27860 and 27896, Mar. 29, 1974);(2)where the orders were also issued either in excess of or without jurisdiction(Aguilar vs. Tan, L-23600, Jun 30, 1970, Cf. Bautista, et al. vs. Sarmiento, et al., L-45137, Sept. 231985);(3) for certain special consideration, as public welfare or public policy (SeeJose vs. Zulueta, et al. -16598, May 31, 1961andthe cases cited therein); (4) where in criminal actions, the court rejects rebuttal evidence for the prosecution as, in case of acquittal, there could be no remedy(People vs. Abalos, L029039, Nov. 28, 1968);(5)where the order is a patent nullity(Marcelo vs. De Guzman, et al., L-29077, June 29, 1982);and (6) where the decision in the certiorari case will avoid future litigations (St. Peter Memorial Park, Inc. vs. Campos, et al., L-38280, Mar. 21, 1975).[9][Emphasis supplied.]Grave abuse of discretion may arise when a lower court or tribunal violates or contravenes the Constitution, the law or existing jurisprudence.[10]As will be discussed in greater detail below, the RTC decision dismissing Metrobanks petition was patently erroneous and clearly contravened existing jurisprudence. For this reason, we cannot fault Metrobank for resorting to the filing of a petition forcertiorariwith the CA to remedy a patent legal error in the hope of obtaining a speedy and adequate remedy.Nature of a petition for a writ of possessionA writ of possession is defined as "a writ of execution employed to enforce a judgment to recover the possession of land. It commands the sheriff to enter the land and give its possessionto the person entitled under the judgment."[11]There are three instances when a writ of possession may be issued: (a) in land registration proceedings under Section 17 of Act No. 496; (b) in judicial foreclosure, provided the debtor is in possession of the mortgaged realty and no third person, not a party to the foreclosure suit, had intervened; and (c) in extrajudicial foreclosure of a real estate mortgage under Section 7 of Act No. 3135, as amended by Act No. 4118.[12]The present case falls under the third instance.The procedure for obtaining a writ of possession in extrajudicial foreclosure cases is found in Section 7 of Act No. 3135, as amended by Act No. 4118, which states:Section 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. Such petition shall be made under oath and filedin form of an ex parte motionin the registration or cadastral proceedings if the property is registered, or in special proceedings in the case of property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative Code, or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law, and in each case the clerk of the court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered Four hundred and ninety-six, as amended by Act Numbered Twenty-eight hundred and sixty-six, and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately.Based on this provision, a writ of possession may issue either (1) within the one year redemption period, upon the filing of a bond, or (2) after the lapse of the redemption period, without need of a bond.[13]In order to obtain a writ of possession, the purchaser in a foreclosure sale must file a petition, in the form of anex partemotion, in the registration or cadastral proceedings of the registered property.The reason why this pleading, although denominated as a petition, is actually considered a motion is best explained inSps. Arquiza v. CA,[14]where we said:The certification against forum shopping is required only in a complaint or otherinitiatory pleading.Theex partepetition for the issuance of a writ of possession filed by the respondent is not an initiatory pleading. Although the private respondent denominated its pleading as a petition, it is, nonetheless, a motion. What distinguishes a motion from a petition or other pleading is not its form or the title given by the party executing it, but rather its purpose. The office of a motion is not to initiate new litigation, but to bring a material but incidental matter arising in the progress of the case in which the motion is filed.A motion is not an independent right or remedy, but is confined to incidental matters in the progress of a cause. It relates to some question that is collateral to the main object of the action and is connected with and dependent upon the principal remedy. An application for a writ of possession is a mere incident in the registration proceeding. Hence, although it was denominated as a petition, it was in substance merely a motion. Thus, the CA correctly made the following observations:Such petition for the issuance of a writ of possession is filed in the form of anex partemotion,inter alia, in the registration or cadastral proceedings if the property is registered.Apropos, as an incident or consequence of the original registration or cadastral proceedings, the motion or petition for the issuance of a writ of possession, not being an initiatory pleading, dispels the requirement of a forum-shopping certification. Axiomatic is that the petitioner need not file a certification of non-forum shopping since his claims are not initiatory in character (Ponciano vs. Parentela, Jr.,331 SCRA 605 [2000]) [Emphasis supplied.]The right to possess a property merely follows the right of ownership. Thus, after the consolidation of title in the buyers name for failure of the mortgagor to redeem, the writ of possession becomes a matter of right and its issuance to a purchaser in an extrajudicial foreclosure is merely a ministerial function.[15]Sps. Arquiza v. CAfurther tells us:[16]Indeed, it is well-settled that an ordinary action to acquire possession in favor of the purchaser at an extrajudicial foreclosure of real property is not necessary. There is no law in this jurisdiction whereby the purchaser at a sheriffs sale of real property is obliged to bring a separate and independent suit for possession after the one-year period for redemption has expired and after he has obtained the sheriffs final certificate of sale.The basis of this right to possession is the purchasers ownership of the property.The mere filing of anex partemotion for the issuance of the writ of possession would suffice, and no bond is required.[Emphasis supplied.]Since a petition for a writ of possession under Section 7 of Act No. 3135, as amended, is neither a complaint nor an initiatory pleading, a certificate against non-forum shopping is not required. The certificatethat Metrobank attachedto its petition isthus a superfluitythatthe lower court should have disregarded.No intervention allowed in ex parte proceedingsWe also find merit in Metrobanks contention that the lower court should not have allowed De Koning to intervene in the proceedings.A judicial proceeding, order, injunction, etc., isex partewhen it is taken or granted at the instance and for the benefit of one party only, and without notice to, or contestation by, any person adversely interested.[17]Given that the proceeding for a writ of possession, by the terms ofSection 7 of Act No. 3135, is undoubtedlyex partein nature, the lower court clearly erred not only when it notified De Koning of Metrobanksex partepetition for the writ of possession, but also when it allowed De Koning to participate in the proceedings andwhen it took cognizance and upheld De Konings motion to dismiss.

WHAT CONSTITUTES THE REDEMPTION PRICE?REDEMPTION PRICE is equivalent to the remaining balance of the loan.Section 16 states that, Any mortgagor of the Bank whose property has been extrajudicially sold at public auction shall x x x have the right to redeem the real propertyby paying to the Bank all of the latter's claims against him, as determined by the Bank.METROBANK & TRUST CO. VS. SANTOSWHAT IS THE NATURE OF THE PROCEEDING IN ORDER FOR A MORTGAGEE TO RETAIN THE POSSESSION? EX PARTE MOTION (ONLY ONE PARTY IS PRESENT)NATURE OF DUTY OF THE COURT: MINISTERIAL (NO DISCRETION IS LEFT TO THE COURT)REMEDY OF THE PERSON WHO WANTS TO OPPOSE THE ISSUANCE OF WRIT OF POSSESSION: IN CASE OF EXTRA JUDICIAL FORECLOSURE, AN AGGRIEVED PARTY MAY FILE A PETITION TO SET ASIDE THE FORECLOSURE SALE AND TO CANCEL THE WRIT OF POSSESSION WAS REQUESTED FOR NOT LATER THAN 30 DAYS AFTER? . THE AGGRIEVED PARTY MAY THEREAFTER APPEAL FROM THE DISPOSITION BY THE COURT OF THE MATTER. HOWEVER, EVEN IF AN APPEAL IS INTERPOSED FROM AN ORDER GRANTING A PETITION FOR A WRIT OF POSSESSION, SUCH ORDER SHALL CONTINUE TO BE IN EFFECT DURING THE PENDENCY OF AN APPEAL.CONDITIONS UPON THE ISSUANCE OF WRIT OF POSSESSIONWHY BOND IS NOT NECESSARY AFTER THE LAPSE OF THE REDEMPTION PERIOD?PROCESS OF EXTRAJUDICIAL FORECLOSURE1. FILE AN APPLICATION FOR EXTRAJUDICIAL FORECLOSURE TO THE CLERK OF COURT OF THE RTC WHERE THE PROPERTY IS LOCATED (NOT IN BRANCH CLERK OF COURT)2. WHAT SHALL BE INDICATED IN THE NOTICE OF SALE? DESCRIPTION OF THE PROPERTY, DATE, TIME AND PLACE OF THE SALE3. WHERE SHALL BE THE NOTICE OF SALE BE POSTED? IN THREE PUBLIC PLACES WITHIN 20 DAYS4. HOW MANY DAYS SHALL THE NOTICE OF SALE BE PUBLISHED? WITHIN 3 CONSECUTIVE WEEKS.5. IN WHAT KIND OF NEWSPAPER? GENERAL CIRCULATION6. WHAT IS THE EFFECT IF THE POSTING WAS NOT COMPLIED WITH? AS LONG AS THERE WAS PUBLICATION IN THE NEWSPAPER OF GENERAL CIRCULATION THE SALE IS VALID.7. WHEN SHALL THE AUCTION BE CONDUCTED? 9:00 AM TO 4:00 PM8. WHO SHALL CONDUCT THE AUCTION? UNDER THE DIRECTION OF THE SHERIFF OR A NOTARY PUBLIC, OR THE JUSTICE OR AUXILIARY JUSTICE OF PEACE OF THE MUNICIPALITY IN WHICH SUCH SALE HAS MADE9. WHO SHALL BE THE BIDDERS? IN CASE OF FORECLOSURE BY BANK, THE BANK IS ENTITLED TO AUTOMATIC POSSESSION.RIGHTS OF JUNIOR MORTGAGEE:1. RIGHT TO SURPLUS

PLEDGE DEFINITION HOW CONSTITUTED? THRU DELIVERY PACTUM COMMISORIUMDEFINITION; NULL AND VOID; EXCEPTION: the creditor can collect and apply what was collected on the principal obligation. INDIVISIBILITY OF THE PLEDGE WHICH MEANS THAT THE PROPERTY MORTGAGED CANNOT BE PARTIALLY RELEASED. EXCEPTION: IF THERE ARE VARIOUS THING PLEDGED. AND ONE OF THOSE IS EQUIVALENT TO THE OTHER, SUCH EQUIVALENT THING PLEDGED CAN BE RELEASED IF A CERTAIN AMOUNT IS PAID. (DLN) TYPES OF OBLIGATION EFFECT OF PROMISE TO CONSTITUTE A PLEDGE (A2092) PERSONAL RIGHT MEANS ONLY A RIGHT OF ACTION TO COMPEL THE FULFILLMENT OF THE PROMISE BUT THERE IS NO PLEDGE OR MORTGAGE YET OBJECTS INCORPOREAL RIGHT- EX: WAREHOUSE RECEIPT MOVABLE OBJECTS PURPOSE OF THE FORM: TO BIND THIRD PARTIES. (2096) WHO IS A PLEDGEE? SOMEONE WHO RECEIVES THE THING PLEDGED WHILE THE CREDITOR IS SOMEONE WHO LENDS MONEY. PLEDGEE MUST EXERCISE DUE DILIGENCE OF A GOOD FATHER OF THE FAMILY GEN RULE: THE PLEDGEE CANNOT DEPOSIT THE THING PLEDGED TO THE THIRD PERSON UNLESS THERE IS CONTRARY STIPULATIONSONDAYON VS. PJ LHUILLER INCFACTS: NAWALA UNG WATCH THRU ROBBERY OF SECURITY GUARD.ISSUE:WON PJ LHUILLER FAILED TO INSURE THE ARTICLE PLEDGED AGAINST BURGLARYRULING:As to the causal connection between respondent companys violation of the legal obligation to insure the articles pledged and the heist-homicide committed by the security guard, the answer is simple: had respondent company insured the articles pledged against burglary, petitioner would have been compensated for the loss from the burglary. Respondent companys failure to insure the article is, therefore, a contributory cause to petitioners loss. Considering, however, that petitioner agreed to a valuation of P15,000 for the article pledged in case of a loss, the replacement value for failure to insure is likewise limited to P15,000. Nevertheless, this Court, taking into account all the circumstances of this case, deems it fair and just to award exemplary damages against respondent company for its failure to comply with the rule and regulation requiring it to insure the articles pledged against fire and burglary, in the amount of Twenty Five Thousand (P25,000) Pesos.WHAT THE LAWYER COULD HAVE FILED? FILE FOR DAMAGES. WHO WOULD BE RESPONSIBLE IF THE THING PLEDGED HAS HIDDEN DEFECTS? PLEDGOR. EXCEPTION: IF THE DEFECT IS KNOWN TO THE PLEDGEE. (1951) IF THE THING PLEDGED IS AN ANIMAL, THEREAFTER, IT PRODUCES AN OFFSPRING. WHO IS THE OWNER (A2102) EFFECT OF PLEDGE ON THE OWNERSHIP OF THE THING: THE OWNERSHIP IS NOT TRANSFERRED TO THE PLEDGEE EXCEPTION: EXPROPRIATION OF THE COLLATERAL SALE BY PUBLIC AUCTION: VOLUNTARY SALE GEN RULE: THE PLEDGEE CANNOT USE THE THING PLEDGED. EXCEPT: WHEN THE NATURE OF THE THING REQUIRES SUCH USE. WHEN CAN PLEDGOR DEMAND THE RETURN OF THE THING? ONLY UPON THE PERFORMANCE OF THE PRINCIPAL OBLIGATION. IF THE THING GIVEN BY WAY OF PLEDGE IS IN DANGER OF LOSS OR IMPAIRMENT FAULT OF PLEDGEE: THE REMEDY OF THE PLEDGOR IS TO REQUIRE THE THING PLEDGED TO BE DEPOSITED WITH THIRD PERSON W/O FAULT OF PLEDGEE A2107-A2108 IN CASE OF A2108, CAN THE PLEDGEE QUESTION THE CONDUCT OF PUBLIC AUCTION? A2115FORT BONIFACIO vs YLAS Section 22. Lien on the Properties of the Lessee Upon the termination of this Contract or the expiration of the Lease Period without the rentals, charges and/or damages, if any, being fully paid or settled, the LESSOR shall have the right to retain possession of the properties of the LESSEE used or situated in the Leased Premises and the LESSEE hereby authorizes the LESSOR to offset the prevailing value thereof as appraised by the LESSOR against any unpaid rentals, charges and/or damages. If the LESSOR does not want to use said properties, it may instead sell the same to third parties and apply the proceeds thereof against any unpaid rentals, charges and/or damages. Respondents, as well as the trial court, contend that Section 22 constitutes a pactum commissorium, a void stipulation in a pledge contract. FBDC, on the other hand, states that Section 22 is merely a dacion en pago. Articles 2085 and 2093 of the Civil Code enumerate the requisites essential to a contract of pledge: (1) the pledge is constituted to secure the fulfillment of a principal obligation; (2) the pledgor is the absolute owner of the thing pledged; (3) the persons constituting the pledge have the free disposal of their property or have legal authorization for the purpose; and (4) the thing pledged is placed in the possession of the creditor, or of a third person by common agreement. Article 2088 of the Civil Code prohibits the creditor from appropriating or disposing the things pledged, and any contrary stipulation is void. On the other hand, Article 1245 of the Civil Code defines dacion en pago, or dation in payment, as the alienation of property to the creditor in satisfaction of a debt in money. Dacion en pago is governed by the law on sales. Philippine National Bank v. Pineda[13] held that dation in payment requires delivery and transmission of ownership of a thing owned by the debtor to the creditor as an accepted equivalent of the performance of the obligation. There is no dation in payment when there is no transfer of ownership in the creditors favor, as when the possession of the thing is merely given to the creditor by way of security. Section 22, as worded, gives FBDC a means to collect payment from Tirreno in case of termination of the lease contract or the expiration of the lease period and there are unpaid rentals, charges, or damages. The existence of a contract of pledge, however, does not arise just because FBDC has means of collecting past due rent from Tirreno other than direct payment. The trial court concluded that Section 22 constitutes a pledge because of the presence of the first three requisites of a pledge: Tirrenos properties in the leased premises secure Tirrenos lease payments; Tirreno is the absolute owner of the said properties; and the persons representing Tirreno have legal authority to constitute the pledge. However, the fourth requisite, that the thing pledged is placed in the possession of the creditor, is absent. There is non-compliance with the fourth requisite even if Tirrenos personal properties are found in FBDCs real property. Tirrenos personal properties are in FBDCs real property because of the Contract of Lease, which gives Tirreno possession of the personal properties. Since Section 22 is not a contract of pledge, there is no pactum commissorium. FBDC admits that it took Tirrenos properties from the leased premises without judicial intervention after terminating the Contract of Lease in accordance with Section 20.2. FBDC further justifies its action by stating that Section 22 is a forfeiture clause in the Contract of Lease and that Section 22 gives FBDC a remedy against Tirrenos failure to comply with its obligations. FBDC claims that Section 22 authorizes FBDC to take whatever properties that Tirreno left to pay off Tirrenos obligations. We agree with FBDC. A lease contract may be terminated without judicial intervention. Consing v. Jamandre upheld the validity of a contractually-stipulated termination clause: This stipulation is in the nature of a resolutory condition, for upon the exercise by the [lessor] of his right to take possession of the leased property, the contract is deemed terminated. This kind of contractual stipulation is not illegal, there being nothing in the law proscribing such kind of agreement. x x x Judicial permission to cancel the agreement was not, therefore necessary because of the express stipulation in the contract of [lease] that the [lessor], in case of failure of the [lessee] to comply with the terms and conditions thereof, can take-over the possession of the leased premises, thereby cancelling the contract of sub-lease. Resort to judicial action is necessary only in the absence of a special provision granting the power of cancellation.[14] A lease contract may contain a forfeiture clause. Country Bankers Insurance Corp. v. Court of Appeals upheld the validity of a forfeiture clause as follows: A provision which calls for the forfeiture of the remaining deposit still in the possession of the lessor, without prejudice to any other obligation still owing, in the event of the termination or cancellation of the agreement by reason of the lessees violation of any of the terms and conditions of the agreement is a penal clause that may be validly entered into. A penal clause is an accessory obligation which the parties attach to a principal obligation for the purpose of insuring the performance thereof by imposing on the debtor a special prestation (generally consisting in the payment of a sum of money) in case the obligation is not fulfilled or is irregularly or inadequately fulfilled.[15]In Country Bankers, we allowed the forfeiture of the lessees advance deposit of lease payment. Such a deposit may also be construed as a guarantee of payment, and thus answerable for any unpaid rent or charges still outstanding at any termination of the lease. In the same manner, we allow FBDCs forfeiture of Tirrenos properties in the leased premises. By agreement between FBDC and Tirreno, the properties are answerable for any unpaid rent or charges at any termination of the lease. Such agreement is not contrary to law, morals, good customs, or public policy. Forfeiture of the properties is the only security that FBDC may apply in case of Tirrenos default in its obligations. FORT BONIFACIO SAID THAT THE CONTRACT IS DACION EN PAGO WHILE YLAS SAID THAT IT IS A PLEDGE. HENCE, NO PACTUM COMMISSORIUM; ELEMENTS OF PLEDGE.