Antichresis 2 cases only

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-36821 June 22, 1978
JOSE P. DIZON, petitioner,
vs.
ALFREDO G. GABORRO (Substituted by PACITA DE GUZMAN GABORRO as
Judicial Administratrix of the Estate of Alfredo G. Gaborro) and the
DEVELOPMENT BANK OF THE PHILIPPINES, respondents.
Leonardo Abola for petitioner.
Carlos J. Antiporda for respondents.

GUERRERO, J.:
Petition for review on certiorari of the decision of the Court Appeals 1 in CA-G.R. No.
46975-R entitled "Jose P. Dizon, Plaintiff-Appellant, vs. Alfredo G. Gaborro (substituted
by Pacita de Guzman Gaborro as Judicial Administratrix of the Estate of Alfredo G,
Gaborro) trial the Development Bank of the Philippines, Defendants-Appellees,"
affirming with modification the decision of the Court of First Instance of Pampanga,
Branch II in Civil Case No. 2184.
The dispositive portion of the decision sought to be reviewed reads:
IN VIEW OF THE FOREGOING, the judgment appealed therefrom is
hereby affirmed with modification that the plaintiff-appellant has the right to
refund or reimburse the defendant- appellees he sum of P131,831.91 with
interest at 8% per annum from October 6, 1959 until full payment, said
right to be exercised within one year from the date this judgment becomes
final, with the understanding that, if he fails to do so within the said period,
then he is deemed to have lost his right over the lands forever. With costs
against the appellant. 2
MODIFIED.
The basic issue to be resolved in this case is whether the 'Deed of Sale with
Assumption of Mortgage', trial Option to Purchase Real Estate". two instruments
executed by trial between Petitioner Jose P. Dizon trial Alfredo G. Gaborro (defendant
below) on the same day, October 6, 1959 constitute in truth trial in fact an absolute sale
of the three parcels of land therein described or merely an equitable mortgage or
conveyance thereof by way of security for reimbursement, refund or repayment by
petitioner Jose P. Dizon of any trial all sums which may have been paid to the
Development Bank of the Philippines trial the Philippine National Bank by Alfredo G.
Gaborro (later substituted herein by his wife Pacita de Guzman Gaborro as
administratrix of the estate of Alfredo G. Gaborro) who had died during the pendency of
the case.

A supplementary issue raised is whether or not Gaborro or the respondent

administratrix of the estate should account for all the fruits produced trial income
received by them from the lands mentioned trial described in the aforesaid "Deed of
Sale with Assumption of Mortgage."
The antecedent facts established in the record are not disputed. Petitioner Jose P.
Dizon was the owner of the three (3) parcels of land, subject matter of this litigation,
situated in Mabalacat, Pampanga with an aggregate area of 130.58 hectares, as
evidenced by Transfer Certificate of Title No. 15679. He constituted a first mortgage lien
in favor of the Develop. ment Bank of the Philippines in order to secure a loan in the
sum of P38,000.00 trial a second mortgage lien in favor of the Philippine National Bank
to cure his indebtedness to said bank in the amount of P93,831.91.
Petitioner Dizon having defaulted in the payment of his debt, the Development Bank of
the Philippines foreclosed the mortgage extrajudicially pursuant to the provisions of Act
No. 3135. On May 26, 1959, the hinds were sold to the DBP for- P31,459.21, which
amount covered the loan, interest trial expenses, trial the corresponding "Certificate of
Sale," (Exhibit A-2, Exhibit 1b was executed in favor of the said On November 12, 1959,
Dizon himself executed the deed of sale (Exhibit Al over the properties in favor of the
DBP which deed was recorded in the Office of the Register of Deeds on October 6,
1960.
Sometime prior to October 6, 1959 Alfredo G. Gaborro trial Jose P. Dizon met. Gaborro
became interested in the lands of Dizon. Dizon originally intended to lease to Gaborro
the property which had been lying idle for some time. But as the mortgage was already
foreclosed by the DPB trial the bank in fact purchased the lands at the foreclosure sale
on May 26, 1959, they abandoned the projected lease. They then entered into the
following contract on October 6, 1959 captioned trial quoted, to wit:
DEED OF SALE WITH ASSUMPTION
OF MORTGAGE
KNOW ALL MEN BY THESE PRESENTS:
This DEED OF SALE WITH ASSUMPTION OF MORTGAGE, made trial
executed at the City of Manila, Philippines, on this 6th day of October,
1959 by trial between
JOSE P. DIZON, of legal age, Filipino, married to Norberta Torres, with
residence trial postal address at Mabalacat, Pampanga, hereinafter
referred to as the VENDOR.
ALFREDO G. GABORRO, likewise of legal age, Filipino, married to Pacita
de Guzman, with residence trial postal address at 46, 7th St., Gilmore
Avenue, Quezon City, hereinafter referred to as the VENDEE,
W I T N E S S E T H: That
WHEREAS, the VENDOR is the registered owner of three (3) parcels of
land covered by Transfer Certificate of Title No. 15679 of the land records
of Pampanga. situated in the Municipality of Mabalacat, Province of
Pampanga, trial more particularly described trial bounded as follows:
1. A parcel of land (Lot No. 188 of the Cadastral Survey of Mabalacat),
with the improvements thereon, situated in the Municipality of Mabalacat,
Bounded on the NE by Lot No 187: on the SE., by Lots Nos. 183, 189, 191

trial 192; on the SW by Lot No. 192 trial on the NW by the unimproved
provincial road to Magalang. Containing an area of TWO HUNDRED AND
TWENTY ONE THOUSAND ONE HUNDRED SEVENTY TWO SQUARE
METERS (221,172), more or less.
2. A parcel of land (Lot No. 193 of the Cadastral Survey of Mabalacat),
with the improvements thereon, situated in the Municipality of Mabalacat.
Bounded on the NE., by a road trial Lots Nos. 569,570 trial 571; on the
SE., by Lot No. 571 trial the unimproved road to Magalang, on the SW by
a road; trial on the NE., by a road trial the Sapang Pritil Containing an area
of NINE HUNDRED SEVENTY EIGHT THOUSAND SEVEN HUNDRED
AND SEVENTEEN SQUARE METERS (978,717), more or less.
3. A parcel of land (Lot No. 568 of the Cadastral Survey of Mabalacat),
with the improvements thereon, situated in the Municipality of Mabalacat.
Bounded on the NE., by Lot No. 570, on the SE SW trial NW by roads.
Containing an area of ONE HUNDRED FIVE THOUSAND NINE
HUNDRED AND TWENTY ONE SQUARE METERS (105,921), more or
less,
WHEREAS, the above-described properties are presently mortgaged (first
mortgage) to the Development Bank of the Philippines (,formerly
Rehabilitation Finance Corporation) to secure the payment of a loan, plus
interest, of THIRTY EIGHT THOUSAND PESOS ONLY (P38,000.00),
Philippine currency, as evidenced by a deed of mortgage for- P... dated ...
which deed was ratified trial acknowledged before Notary Public of Manila,
Mr. ... as Doc. No. Page No. Reg. No. Series of 196 ... ;
WHEREAS, the aforesaid properties are likewise mortgage (second
mortgage) to the Philippine National Bank to secure the payment of a loan
of NINETY THREE THOUSAND EIGHT HUNDRED THIRTY ONE
PESOS & 91/100 (P93,831.91), Philippine Currency, plus interest up to
August 13, 1957, as evidenced by deed of Mortgage for P.............
dated................... which deed was ratified trial acknowledged before
Notary Public of Manila, Mr, I . I as Doc. No............ Page No.......... Reg.
No. Series of 196........... ; WHEREAS, the VENDOR, has offered to sell
trial the VENDEE is willing to purchase the above-described properties for
ONE HUNDRED THIRTY ONE THOUSAND EIGHT HUNDRED THIRTY
ONE PESOS & 91 /100 (P131,831.91), Philippine Currency, under the
terms trial conditions herein below set forth;
NOW, THEREFORE, for- trial in consideration of the above premises trial
the amount of ONE HUNDRED THIRTY ONE THOUSAND EIGHT
HUNDRED THIRTY ONE PESOS & 91/100 (P131,831.91), Philippine
Currency, in hand paid in cash by the VENDEE unto the VENDOR, receipt
whereof is hereby acknowledged by the VENDOR to his entire trial full
satisfaction, trial the assumption by the VENDEE of the entire mortgage
indebtedness, both with the Development Bank of the Philippines trial the
Philippine National Bank above mentioned, the VENDOR does by these
presents, sell, transfer trial convey, as he had sold, transferred, trial
conveyed, by way of absolute sale, perpetually trial forever, unto the
VENDEE, his heirs, successors trial assigns. above-described properties,
with all the improvements thereon, free from all liens trial encumbrances of
whatever nature. except the pre- existing mortgage obligations with the
Development Bank of the Philippines trial the Philippine National Bank
aforementioned. The VENDOR does hereby warrant title, ownership trial

possession over the properties herein sold trial conveyed, trial binds
himself to defend the same from any trial all claimants.
That the VENDEE, does by these presents, assume as he has assumed,
under the same terms trial conditions of the mortgage contracts dated ...
and ... of the mortgage indebtedness of the VENDOR in favor of the
Development Bank of the Philippines trial the Philippine National Bank,
respectively, as if the aforesaid documents were personally executed by
the VENDEE trial states trial reiterates all the terms trial conditions
stipulated in said both documents, making them to all intent trial purposes,
parts hereof by reference.
IN WITNESS WHEREOF, the VENDOR and the VENDEE together with
their instrumental witnesses, have signed this deed of the place, date,
month trial year first above written.
(Sgd.) JOSE P. DIZON (Sgd.) ALFREDO G. GABORRO
Vendor Vendee
Signed in the Presence of:
(Sgd.) (Illegible) (Sgd.) (Illegible)
(Acknowledgment Omitted)
The second contract executed the same day, October 6, 1959 is called Option to
Purchase Real Estate, trial is in the following wise trial manner:
OPTION TO PURCHASE REAL ESTATE
KNOW ALL MEN BY THESE PRESENTS:
That 1, ALFREDO G. GABORRO, of legal age, Filipino, married to Pacita
de Guzman, with residence trial postal address at 46, 7th St., Gilmore
Ave., Quezon City, for- valuable consideration, do hereby give to JOSE P.
DIZON, of legal age, Filipino, married to Norberta Torres, resident of
Mabalacat, Pampanga, his heirs, successors and assigns, the option of
repurchasing the following described properties:
TRANSFER CERTIFICATE OF TITLE
NO. 15679, PROVINCE OF PAMPANGA
1. A parcel of land (Lot No. 188 of Cadastral Survey of Mabalacat,
Pampanga containing an area of (211,172) more or less.
2. A parcel of land (Lot No. 193 of the Cadastral Survey of Mabalacat,
Pampanga), containing an area of (978,172) more or less.
3. A parcel of land (Lot No. 568 of the Cadastral Survey of Mabalacat,
Pampanga containing an area of (105,921), more or less. which I acquired
from the said Jose P. Dizon by purchase by virtue of that document
entitled "Deed of Sale with Assumption of Mortgage" dated October 6,
1959, acknowledged by both of us before Notary Public of Manila
GREGORIO SUMBILIO as DOC. No. 342, Page No. 70, Reg. No. VII
Series of 1959.

Said option shall be valid trial effective within the period comprises from
January, 1965 to December 31, 1970, inclusive, upon payment of the
amount of ONE HUNDRED THIRTY ONE THOUSAND EIGHT
HUNDRED THIRTY ONE PESOS & 91/100 (?131,831.91), Philippine
Currency, plus an interest of eight per centum (8%) thereof, per annum.
This is without prejudice at any time to the payment by Mr. Dizon of any
partial amount to be applied to the principal obligation, without any way
disturbing the possession and/or ownership of the above properties since
only full payment can effect the necessary change.
In the event that Mr. Jose P. Dizon may be able to find a purchaser forthe foregoing properties on or the fifth year from the date the execution of
this document, the GRANTEE, Mr. JOSE P. DIZON, may do so provided
that the aggregate amount which was Paid to Development Bank of the
Philippines trial to the Philippine National Bank together with the interests
thereon at the rate of 8% shall be refunded to the undersigned.
Furthermore, in case Mr. Jose P. Dizon shall be able to find a purchaser
for- the said properties, it shall be his duty to first notify the undersigned of
the contemplated sale, naming the price trial the purchaser therefor, trial
awarding the first preference in the sale hereof to the undersigned.
IN WITNESS WHEREOF, I have hereunto signed these presents at the
City of Manila, on this 6th day of October, 1959.
(Sgd.) ALFREDO G. GABORRO
CONFORME:
(Sgd.) JOSE P. DIZON
SIGNED IN THE PRESENCE OF:
(Acknowledgment Omit)
The sum of P131,813.91 which purports to be the consideration of the sale was not
actually paid by Alfredo G. Gaborro to the petitioner. The said amount represents the
aggregate debts of the petitioner with the Development Bank of the Philippines trial the
Philippine National Bank.
After the execution of said contracts, Alfredo G. Gaborro took possession of the three
parcels of land in question.
On October 7, 1959, Gaborro wrote the Development Bank of the Philippines a letter
(Exh. J), as follows:
Sir:
This is with reference to your mortgage lien of P38,000.00 more or less
over the properties more particularly described in TCT No. 15679 of the
land records of Pampanga in the name of Jose P. Dizon. In this
connection, we have the honor to inform you that pursuant to a Deed of
Sale with Assumption of Mortgage executed on October 6, 1959 by Jose
P. Dizon in my favor, copy of which is hereto attached, the ownership of
the same has been transferred to me subject of course to your conformity
to the assumption of mortgage. As a consequence of the foregoing

document, the obligation therefore of paying your goodselves the total

amount of indebtedness has shifted to me
Considering that these agricultural properties have not been under
cultivation for- quite a long time, I would therefore request that, on the
premise that the assumption of mortgage would be agreeable to you, that I
be allowed to pay the outstanding obligation, under the same terms trial
conditions as embodied in the original contract of mortgage within ten (10)
years to be divided in 10 equal annual amortizations. I am enclosing
herewith a check in the amount of P3,609.95 representing 10% of the
indebtedness of Jose P. Dizon to show my honest intention in assuming
the mortgage obligation to you ...
The Board of Governors of the DBP, in its Resolution No. 7066 dated October 21, 1959
approved the offer of Gaborro but said Board required him to pay 20% of the purchase
price as initial payment, (Exh. D) Accordingly, on July 11, 1960, the DBP trial Gaborro
executed a conditional sale of the properties in consideration of the sum of P36,090.95
(Exh. C) payable 20% down trial the balance in 10 years in the yearly amortization plan
at 8% per annum.
On January 7, 1960, Dizon assigned his right of redemption Lo Gaborro in an
instrument (Exh. 9) entitled:
ASSIGNMENT OF RIGHT OF REDEMPTION
AND ASSUMPTION OF OBLIGATION
KNOW ALL MEN BY THESE PRESENTS:
This instrument, made trial executed by trial between JOSE P. DIZON,
married to Norberta P. Torres, Filipino, of legal age, with residence trial
postal address at Mabalacat, Pampanga. hereinafter referred to as the
ASSIGNOR trial ALFREDO G. GABORRO, married to Pacita de Guzman,
likewise of legal age, Filipino, with residence trial postal address at 46, 7th
Street, Gilmore Ave., Quezon City, hereinafter referred to as the
ASSIGNEE,
WITNESSETH:
WHEREAS, the Assignor is the owner trial mortgagor of three (3) parcels
agricultural land together with all the improvements existing thereon trial
more particularly described trial bounded as follows:
TRANSFER CERTIFICATE OF TITLE NO. 1567
PROVINCE OF PAMPANGA
1. A parcel of land (Lot No. 188 of the Cadastral Survey of
Mabalacat), with the improvements thereon, situated in the
Municipality of Mabalacat. Bounded on the NE by Lot No.
187: on the SE. by Lots Nos. 183, 189, 191 trial 192; on the
SW. by Lot No. 192; trial on the NW by the unimproved
provincial road to Magalan. Containing an area of two
hundred twenty-one thousand one hundred trial seventy two
square meters (221,172), more or less.

2. A parcel of land (Lot No. 193 of the Cadastral Survey of

Mabalacat), with the improvements thereon, situated in the
Municipality of Mabalacat. Bounded on the NE. by a road
trial Lots Nos. 569, 570 trial 571; on the SE. by Lot No. 571
trial the unimproved road to Magalan-, on the SW. by a road;
trial on the NW by a road trial the Sapang Pritil Containing
an area of nine hundred seventy eight thousand seven
hundred and seven hundred square meters (978,717), more
or less.
3. A parcel of Land (Lot No. 568 of the Cadastral Survey of
Mabalacat), with the improvements thereon, situated in the
Municipality of Mabalacat, Bounded on the NE. by Lot No.
570; and on the SE., SW. and NW. by roads. Containing an
area of one hundred five thousand nine hundred and twentyone square meters (105,921), more or less.
WHEREAS, the above described properties were mortgaged with the
Rehabilitation Finance Corporation, now Development Bank of the
Philippines, which mortgage has been foreclosed on May 26, 1959;
AND WHEREAS, the herein Assignor has still the right to redeem the said
properties from the said Development Bank of the Philippines within a
period of one (1) year counted from the date of foreclosure of the said
mortgage.
NOW, THEREFORE, for ......................................... trial other valuable
considerations, receipt whereof is hereby acknowledged by the Assignor
from the Assignee, The herein Assignor does hereby transfer trial assign
to the herein Assignee, his heirs, successors trial assigns the aforesaid
right to redeem the aforementioned properties above described.
That with this document the herein Assignor relinquishes any and all rights
to the said properties including the improvements existing thereon.
That the Assignee, by these presents, hereby assumes the obligation in
favor of the d Development Bank of the Philippines, as Paying whatever
legal indebtedness the Assignor has with the d B in connection with the
transaction regarding the hove mentioned Properties subject to the file
and conditions that the said Bank may require and further recognizes the
second mortgage in favor Of the Philippine National Bank.
IN WITNESS WHEREOF, the parties have hereunto set their hands in the
City of Manila, Philippines this --------- day of - - - - - -1959.
(Sgd-) JOSE P. DIZON (Sgd.) ALFREDO G. GABORRO
Assignor (Assignee)
(Acknowledgment Omitted)
After the execution of the conditional e to him Gaborro made several payments to the
DBP and PNB. He introduced improvements, cultivated the kinds raised sugarcane and
other crops and appropriated the produce to himself. He will paid the land taxes
thereon.

On July 5, 1961, Jose P. Dizon through his lawyer, Atty. Leonardo Abola, wrote a letter
to Gaborro informing him that he is formally offering reimburse Gaborro Of what he paid
to the banks but without, however, tendering any cash, and demanding an accounting of
the income and of the pro contending that the transaction they entered into was one of
antichresis. Gaborro did not accede to the demands of the petitioner, whereupon, on
JULY 30, 1962, Jose P. Dizon instituted a complaint in the Court of First Instance of
Pampanga, Gaborro, alleging that the documents Deed of Sale With Assumption of
Mortgage and the Option to Purchase Real Estate did not express the true intention and
agreement bet. between the parties. Petitioner Dizon, as Plaintiff below, contended that
the two deeds constitute in fact a single transaction that their real agreement was not an
absolute e of the d of land but merely an equitable mortgage or conveyance by way of
security for the reimbursement or refund by Dizon to Gaborro of any and all sums which
the latter may have paid on account of the mortgage debts in favor of the DBP and the
PNB. Plaintiff prayed that defendant Gaborro be ordered to accept plaintiff's offer to
reimburse him of what he paid to the banks; to surrender the possession of the lands to
plaintiff; to make an accounting of all the fruits, produce, harvest and other income
which he had received from the three (3) parcels of land; and to pay the plaintiff for the
loss of two barns and for damages.
In its answer, the DBP specifically denied the material averments of the complaint and
stated that on October 6, 1959, the plaintiff Dizon was no longer the owner of the land in
question because the DBP acquired them at the extrajudicial foreclosure sale held on
May 26, 1959, and that the only right which plaintiff possessed was a mere right to
redeem the lands under Act 3135 as amended.
Defendant Alfredo G. Gaborro also answer, denying the material averments of the
complaint, stating that the "Deed of Sale with Assumption of Mortgage" expresses the
true agreement of the parties "fully, truthfully and religiously" but the Option to Purchase
Real Estate" does not express the true intention of the parties because it was made only
to protect the reputation of the plaintiff among his townmates, and even in the
supposition that said option is valid, the action is premature. He also filed a
counterclaim for damages, which plaintiff denied.
The issues having been joined, a pre-trial was held and the following stipulation of facts
admitted by the parties was approved by the Court in the following order dated February
22, 1963:
ORDER
At today's initial trial the following were present: Mr. Leonardo Abola, for
the plaintiff; Mr. Carlos Antiporda, for the defendant Alfredo Gaborro; and
Mr. Virgillo Fugoso, for the Development Bank of the Philippines:
The parties brave stipulated on the following facts:
1. That Annex A attached to the complaint is marked Exhibit
A- Stipulation. The parties have admitted the due execution, authenticity
and genuineness of said Exhibit A-Stipulation. This fact has been admitted
by all the three parties.
2. That the defendant Gaborro executed Annex B, which is marked Exhibit
B-Stipulation. This fact has been admitted only between plaintiff and
defendant Gaborro.
3. That the three parcels of land referred to in paragraph 3 of the
complaint, on or before October 6, 1959, were subject to a first mortgage
lien in favor of the Development Bank of the Philippines, formerly

Rehabilitation Finance Corporation, to secure payment of a loan obtained

by the plaintiff Jose P. Dizon in the original sum of P38,000.00 plus
interest, which has been assumed by defendant Gaborro by virtue of a
document, Exhibit A-Stipulation, and also subject to a second mortgage
lien in favor of the Philippine National Bank to secure the payment of a
loan in the sum of P93,831.91 plus interest up to August 30, 1951, which
mortgage liens were duly annotated on TCT 15679. This fact has been
admitted by the plaintiff and defendant Gaborro.
4. In respect to the foreclosure of the first mortgage referred to above, it
was admit that the same was foreclosed on May 26, 1959, the second
mortgage has not been admitted nor foreclosed.
5. That the Development Bank of the Philippines admits that the first
mortgage referred to above was foreclosed on May 26, 1959 under the
provision,,; of Public Act No- 3135, as amended.
6. That subsequently the Development Bank and the defendant Gaborro
executed a document entitled Conditional Sale over the same parcels of
land referred to in paragraph 3 of the complaint, and copy thereof will be
furnished by the Development Bank of the Philippines and marked Exhibit
C-Stipulation.
7. That on or before October 6, 1960, TCT No. 15679 of the Register of D
of Pampanga in the name of Jose P. Dizon covering the three parcels of
land referred to in the complaint was cancelled and in lieu thereof TCT
NO. 24292 of the Register of Deeds of Pampanga was issued in the name
of the Development Bank of the Philippines. This fact has been admitted
by all the parties.
8. That after the execution of the deed of conditional sale, certain
payments were made by the defendant Gaborro to the Development
Bank, the exact amount to be determined later and receipts of payments
to be also exhibited later. This fact has been admitted by all the three
parties.
9. That since October 6, 1959, the defendant Gaborro has made several
payments to the PNB in the amounts appearing on the receipts which will
be shown later, such payments being made on account of the sum of
P38,831.91. The payment was assumed by said - defendant Gaborro.
This fact has been admitted by plaintiff and defendant Gaborro only.
10. That since the execution of Exhibits A and B-Stipulation, it,, defendant
Gaborro has been and still is in the actual possession f the three parcels
of land in question and he is actually cultivating the same and that the land
taxes thereon have been paid by said defendant Gaborro, the amounts of
said taxes appearing on the official receipts to be shown later. This fact
has been admitted by plaintiff and defendant Gaborro only.
11. That since defendant Gaborro took possession of the lands in
question, he has been appropriating all the fruits produced and income of
said lands without giving to the plaintiff any share hereof. This fact has
been admitted by plaintiff and defendant Gaborro only.
Let a copy of this order be served upon the plaintiff, defendant Gaborro
and the Development Bank of the Philippines with the understanding that,
if, within fifteen (15) days, none of the parties questions the correctness of

The facts set forth above. this stipulation of facts shall be conclusive upon
the parties interested in this case.
Set the trial on the controversial facts on April 18, 1963 at 13:00 clock in
the morning.
Paragraphs 3 and 10 of the above quoted order were deleted in an order dated July 26,
1963.
The records disclose that during the pendency of the case in the trial court, motions
were filed by the plaintiff for the appointment of a receiver of the properties but all were
denied. plaintiff also reiterated the same motion before the appellate court which,
however, dismissed the same, reserving to him the right to file in the trial court. Plaintiff
did file but with the same result. certiorari proceedings were resorted to in the Court of
Appeals in CA-G.R. No. SP-01403 entitled "Jose P. Dizon vs. Hon. Felipe Buencamino,
et al." which the respondent court denied.
After trial the court held that the true agreement between Jose P. Dizon, the plaintiff
therein, and the defendant Alfredo G. Gaborro is that the defendant would assume and
pay the indebtedness of the plaintiff to the Development Bank of the Philippines and the
Philippine National Bank, and in consideration therefor, the defendant was given the
possession and enjoyment of the properties in question until the plaintiff shall have
reimbursed to defendant fully the amount of P131,831.91 plus 8% interest per annum.
Accordingly, on March 14, 1970, the lower court rendered judgment, the dispositive part
of which reads:
IN VIEW OF THE FOREGOING, the documents entitled 'Deed of Sale
with Assumption of Mortgage'(Exhibit A-Stipulation) and 'Option to
Purchase Real Estate' (Exhibit B-Stipulation) are hereby reformed to the
extent indicated above. However, since this action was filed before the
period allowed the plaintiff to redeem his property, the prematurity of this
action aside from not being principally alleged in the complaint, deters this
Court from ordering further reliefs and remedies. The counterclaim of the
defendant is dismissed.
The plaintiff's motion for new trial and for reconsideration and motion for admission of
supplemental complaint having been denied for lack of merit, on June 6, 1970, plaintiff
appealed to the Court of Appeals, which. however, affirmed the decision with the
modification that the plaintiff-appellant has the right to refund or reimburse the
defendant-appellee the sum of P131,831.91 with interest at 8% per annum from
October 6, 1959 until full payment, said right to be exercised within one (1) year from
the date the judgment becomes final, with the understanding that, if he fails to do so
within the said period, then he is deemed to have lost his right over the lands forever.
Petitioner's motion for reconsideration and/or rehearing having been denied by the
Court of Appeals, hence the present petition for review on certiorari. The petitioner
assigns the following errors, to wit:
I. The Court of Appeals, like the lower court, erred in not holding that upon
established facts and undisputed documentary evidence, the deed of sale
with assumption of mortgage (Exhibit A-Stipulation) constitutes an
equitable mortgage or conveyance to secure petitioner's obligation to
reimburse or refund to defendant Alfredo Gaborro any and all sums to the
extent of P131,831.91, paid by said defendant in total or partial
satisfaction of petitioner's mortgage debts to the DBP and the PNB. In this
connection, the Court of Appeals erred:

(A) In not finding that the petitioner was the lawful owner of
the lands in question:
(B) In not finding that the deed of sale in question is not a
real and unconditional sale; and
(C) In not holding that the option to purchase real estate
(Exhibit B-Stipulation is conclusive evidence that the
transaction in question is in fact an equitable mortgage.
II. The Court of Appeals also erred in finding that the instrument entitled
'Assignment of Right of Redemption and Assumption of Obligation' is
conclusive evidence that the real transaction Evidenced by the 'Deed of
Sale with Assumption of Mortgage' is not an equitable mortgage. In this
connection the said court also erred or at least committed a grave abuse
of discretion:
(A) In not finding that the said deed of assignment is in fact a
mere reiteration of the terms and condition of the deed of
sale;
(B) In finding that the price or consideration of The aforesaid
assignment. of right of redemption consisted of 300 cavans
of palay delivered by Mrs. Gaborro to the petitioner; and
(C) In finding that defendant Gaborro purchased the lands in
question by virtue of the aforementioned deed of
assignment.
III. The, Court of Appeals, like the trial court, also erred in not finding that
the estate of Alfredo G. Gaborro is under obligation to render an
accounting of all the produce, fruits and other income of the lands in
question from October 6, 1959, and to reconvey the said lands to the
herein petitioner. In to connection, the said court also erred:
(A) In not holding that as a mortgagee in possession the
Gaborro estate has the obligation to either render an
accounting of the produce or fruits of the lands, or to pay
rentals for the occupation of said lands;
(B) In not finding that the Gaborro estate has the obligations
to reconvey the lands in controversy to the herein petitioner,
upon payment of the balance due from him after deducting
either the net value of the produce or fruits of the Said lands
or the rentals thereof,
(C) In not finding that further reliefs or remedies may be
granted the herein petitioner; and
(D) In not ordering the admission of herein petitioners
'Supplemental Complaint' dated April 30, 1970.
IV. The Court of Appeals finally erred in not reversing the decision of the
trial court, and in not rendering judgment declaring that the deed of sale
with assumption of mortgage (Exhibit A Stipulation) is in fact an equitable
mortgage; and in not ordering the Gaborro estate either to render an
accounting of all the produce or fruits of the lands in question or to pay

rentals for the occupation thereof, from October 6, 1959; and in not
ordering the estate of Alfredo G. Gaborro to reconvey, transfer and assign
unto the petitioner the aforementioned lands.
The two instruments sought to be reformed in this case ap pear to stipulate rights and
obligations between the parties thereto Pertaining to and involving parcels of land that
had already beer foreclosed and sold extrajudicially, and purchased by the mortgage
creditor, a degree party. It becomes, therefore, necessary to determine the legality of
said rights and obligation arising from the foreclosure and e pro. proceedings only
between the two contracting parties to the instruments executed between them but also
in the so far a agreement affects the rights of the degree panty, the purchase Bank.
Act 3135, Section 6 as amended by Act 4118, under which the Properties were
extrajudicially foreclosed and sold, provides that:
Sec. 6. In all cases in which an extrajudicial rule is made under the special
power hereinbefore referred to, the debtor, his successors in interest or
any judicial creditor or judgment creditor of e 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 or 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 consistent with the provisions of this Act.
Under the Revised Rules of Court, Rule 39, Section 33, the judgment debtor remains in
possession of the property foreclosed and sold, during the period of redemption. If the
judgment debtor is in possession of the property sold, he is entitled to retain it and
receive the fruits, the purchaser not being entitled to such possession. (Riosa v.
Verzosa, 26 Phil. 86; Velasco v. Rosenberg's Inc., 32 Phil. 72; Pabico v. Pauco 43 Phil.
572; Power v. PNB, 54 Phil. 54; Gorospe v. Gochangco L-12735, Oct. 30, 1959).
A judgment debtor, whose property is levied on execution, may transfer his right of
redemption to any one whom he may desire. The right to redeem land sold under
execution within 12 months is a property right and may be sold voluntarily by its owner
and may also be attached and sold under execution (Magno v. Viola and Sotto, 61 Phil.
80).
Upon foreclosure and sale, the purchaser is entitled to a certificate of sale executed by
the sheriff. (Section 27, Revised Rules of Court) After the termination of the period of
redemption and no redemption having been made, the purchaser is entitled to a deed of
conveyance and to the possession of the properties. (Section 35, Revised Rules of
Court). The weight of authority is to the effect that the purchaser of land sold at public
auction under a writ of execution only has an inchoate right in the property, subject to be
defeated and terminated within the period of 12 months from the date of sale, by a
redemption on the part of the owner. Therefore, the judgment debtor in possession of
the property is entitled to remain therein during the period allowed for redemption.
(Riosa v. Verzosa. 26 Phil, 86; 89; Gonzales v. Calimbas, 51 Phil. 355.)
In the case before Us, after the extrajudicial foreclosure and sale of his properties,
petitioner Dizon retained the right to redeem the lands, the possession, use and
enjoyment of the same during the period of redemption. And these are the only rights
that Dizon could legally transfer, cede and convey unto respondent Gaborro under the
instrument captioned Deed of Sale with Assumption of Mortgage (Exh. A-Stipulation),
likewise the same rights that said respondent could acquire in consideration of the
latter's promise to pay and assume the loan of petitioner Dizon with DBP and PNB.

Such an instrument cannot be legally considered a real and unconditional sale of the
parcels of land, firstly, because there was absolutely no money consideration therefor,
as admittedly stipulated the sum of P131,831.91 mentioned in the document as the
consideration "receipt of which was acknowledged" was not actually paid; and secondly,
because the properties had already been previously sold by the sheriff at the
foreclosure sale, thereby divesting the petitioner of his full right as owner thereof to
dispose and sell the lands.
In legal consequence thereby, respondent Gaborro as transferee of these certain limited
rights or interests under Exh. A-Stipulation, cannot grant to petitioner Dizon more that
said rights, such ac the option Co purchase the lands as stipulated in the document
called Option to Purchase Real Estate (Exhibit B-Stipulation), This is necessarily so for
the reason that respondent Gaborro did not purchase or acquire the full title and
ownership of the properties by virtue of the Deed of Sale With Assumption of Mortgage
(Exh. A Stipulation), earlier executed between them which We have ruled out as an
absolute sale. The only legal effect of this Option Deed is the grant to petitioner the right
to recover the properties upon reimbursing respondent Gaborro of the total sums of
money that the latter may have paid to DBP and PNB on account of the mortgage
debts, the said right to be exercised within the stipulated 5 years period.
In the light of the foreclosure proceedings and sale of the properties, a legal point of
primary importance here, as well as other relevant facts and circumstances, We agree
with the findings of the trial and appellate courts that the true intention of the parties is
that respondent Gaborro would assume and pay the indebtedness of petitioner Dizon to
DBP and PNB, and in consideration therefor, respondent Gaborro was given the
possession, the enjoyment and use of the lands until petitioner can reimburse fully the
respondent the amounts paid by the latter to DBP and PNB, to accomplish the following
ends: (a) payment of the bank obligations; (b) make the lands productive for the benefit
of the possessor, respondent Gaborro, (c) assure the return of the land to the original
owner, petitioner Dizon, thus rendering equity and fairness to all parties concerned.
In view of all these considerations, the law and Jurisprudence, and the facts
established. We find that the agreement between petitioner Dizon and respondent
Gaborro is one of those inanimate contracts under Art. 1307 of the New Civil Code
whereby petitioner and respondent agreed "to give and to do" certain rights and
obligations respecting the lands and the mortgage debts of petitioner which would be
acceptable to the bank. but partaking of the nature of the antichresis insofar as the
principal parties, petitioner Dizon and respondent Gaborro, are concerned.
Mistake is a ground for the reformation of an instrument which there having been a
meeting of the minds of The parties o a contract, their true intention is not expressed in
the instrument purporting to embody the agreement, and one of the parries may ask for
such reformation to the end that such true intention may be expressed. (Art. 1359, New
Civil code). When a mutual mistake of the parties causes the failure of the instrument to
disclose their real agreement, said instrument may be reformed. (Art. 1361, New Civil
Code.) It was a mistake for the parties to execute the Deed of Sale With Assumption of
Mortgage and the Option to Purchase Real Estate and stand on the literal meaning of
the file and stipulations used therein.
The instruments must, therefore, be reformed in accordance with the intention and legal
rights and obligations of the parties the petitioner, the respondent and the Banks. We
agree with the reformation decreed by the trial and appellate courts, but in the sense
that petitioner Jose P. Dizon has the right to reacquire the three parcels of land within
the one-year period indicated below by refunding or reimbursing to respondent Alfredo
G. Gaborro or the Judicial Administratrix of his Estate whatever amount the latter has
actually paid on account of the principalonly, of the loans of Dizon with the DBP and

PNB, excluding the interests and land taxes that may have been paid or may have
accrued, on duly certified financial statements issued by the said banks.
On the issue of the accounting of the fruits, harvests and other income received from
the three parcels of land from October 6, 1959 up to the present, prayed and demanded
by Dizon of Gaborro or the Judicial Administratrix of the latter's estate, We hold that in
fairness and equity and in the interests of justice that since We have ruled out the
obligation of petitioner Dizon to reimburse respondent Gaborro of any interests and land
taxes that have accrued or been paid by the latter on the loans of Dizon with DBP and
PNB, petitioner Dizon in turn is not entitled to an accounting of the fruits, harvests and
other income received by respondent Gaborro from the lands, for certainly, petitioner
cannot have both benefits and the two may be said to offset each other.
By virtue of the Option to Purchase Real Estate (Exh. B Stipulation) which on its face
granted Dizon the option to purchase the properties which must be exercise within the
period from January, 1960 to December 31, 1965 but which We held to be simply the
grant of the right to petitioner Dizon to recover his properties within the said period,
although already expired by reasons and circumstances beyond his control, petitioner is
entitled to a reconveyance of the properties within a reasonable period The period of
one year from the date of the finality of this judgment as laid down by the Court of
Appeals for the exercise of such right by petitioner Dizon appears fair and reasonable
and We approve the same.
Since We are not informed of the status of Dizon's loan of P93,831.91 with the
Philippine National Bank which appears to be on a subsisting basis, it is proper to
indicate here how petitioner Dizon may exercise the right to a reconveyance of the
properties as herein affirmed, as follows:
(a) Dizon is granted the right to a reconveyance of the properties by
reimbursing Gaborro (or his estate) whatever amounts) the latter has
actually paid on account of the principal only, of Dizon's loans of
P38,000.00 and P93,831.91 which the DBP and PNB,
respectively, exclusive of the interests that may have accrued thereon or
may have been paid by Gaborro, on the basis of duly certified statements
issued by said banks;
(b) Any outstanding balance due on Dizon's original principal loan of
P38,000.00 with the Development Bank of the Philippines assumed by
Gaborro and on Dizon's original principal loan of 93,831.91 with the PNB
shag be deducted from the above-fixed reconveyance price payable to
Gaborro, in order to enable Dizon to pay off the said mortgage loans
directly to the said banks, in accordance with file mutually agreed upon
with them by Dizon;
(c) In other words, the maximum reconveyance price that Dizon is
obligated to pay is the total sum of ?131,831.91 (the sum total of the
principals of his two original loans with the DBP and PNB), and should the
amounts due to the said banks exceed this total of P131,831.91 (because
of delinquent interests and other charges), nothing shall be due Gaborro
by way of reimbursement and Dizon will thereupon step into the shoes of
Gaborro as owner-mortgagor of the properties and directly arrange with
the banks for the settlement of the amounts still due and payable to them,
subject to the right of Dizon to recover such amounts in excess of
P131,831.91 from Gaborro by writ of execution in this case; and
(d) As already stated, Dizon is not entitled to an accounting of the fruits,
harvests and other income received by Gaborro from the land while

Gaborro in turn is not entitled to the payment of any interests on any

amounts paid by him on account of the principal loans to the banks nor
reimbursement of any interests paid by him to the banks.
WHEREFORE, the judgment appealed from is hereby affirmed with the modification
that petitioner Dizon is granted the right within one year from finality of this decision to a
reconveyance of the properties in litigation upon payment and reimbursement to
respondent estate of o G. Gaborro of the amounts actually paid by Gaborro or his estate
on account of the principal only of Dizon's original loans with the Development Bank of
the Philippines and Philippine National Bank in and up to the total amount of
P131,831.91, under the terms and conditions set forth in the preceding paragraph with
subparagraphs (a) to (d), which are hereby incorporated by reference as an integral part
of this judgment, and upon the exercise of such right, respondent estate shall forthwith
execute the corresponding deed of reconveyance in favor of petitioner Dizon and deliver
possession of the properties to him. Without pronouncement as to costs.
Teehankee (Chairman), Makasiar, Muoz Palma and Fernandez, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-38185 September 24, 1986
HILARIO RAMIREZ and VALENTINA BONIFACIO, petitioners,
vs.
HONORABLE COURT OF APPEALS, FRANCISCA MEDINA, MATILDE MARTIN,
EMILIO MARTIN, DELFIN GUINTO, TEOFILO GUINTO, PRUDENCIO GUINTO and
MARGARITA GUINTO, respondents.
Castro, Makalintal, Mendoza & Associates for petitioner.
Flores, Ocampo, Dizon & Domingo Law Office for respondents.

GUTIERREZ, JR., J.:

This is an appeal from the decision of the Court of Appeals which affirmed in toto the
decision of the then Court of First instance of Rizal rendered in the petition for review of
the decree of registration issued in Land Registration Case No. N-2597, L.R.C. Record
No. N-17939.
On September 15,1959, petitioners-spouses Hilario Ramirez and Valentina Bonifacio
filed an application for registration of a parcel of riceland in Pamplona, Las Pinas Rizal.
After notice and publication nobody appeared to oppose the application. An order of
general default was issued and the court allowed the petitioners to present evidence in
support of their claim. Thereafter, the petitioners presented parol evidence that they
acquired the land in question by purchase from Gregorio Pascual during the early part
of the American regime but the corresponding contract of sale was lost and no copy or
record of the same was available.
On January 30, 1960, the court ordered the issuance of the decree of registration and
consequently: Original Certificate of Title No. 2273 of the Registry of Deeds of Rizal was
issued in the petitioners names.

On March 30, 1960, the private respondents Francisca Medina, Basilio Martin, Matilde
Martin, Delfin Guinto, Teofilo Guinto, Prudencio Guinto and Margarita Guinto,
petitioners' nephews and nieces, filed a petition to review the decree of registration on
the ground of fraud. The private respondents based their claim to the land on the
following allegations: that they are the legal heirs of the deceased Agapita Bonifacio
who died intestate on March 11, 1936; that Valentina Bonifacio is a sister of the
deceased Agapita Bonifacio, they being the children of one Gregoria Pascual; that
Gregoria Pascual previously owned the land in question as evidenced by Tax
Declaration No. 6611 of Las Pinas Rizal issued on December 8, 1920; that Agapita
Bonifacio acquired the property in question by purchase from Gregoria Pascual for
which reason Tax Declaration No. 8777 was issued in her name on May 21, 1928; that
Gregoria Pascual during her lifetime, from 1916, possessed the said property in the
concept of owner, publicly and uninterruptedly, which possession was continued by
Agapita Bonifacio in 1928; that in 1938 respondents obtained a loan of P400.00 from
the petitioners which they secured with a mortgage on the land in question by way of
antichresis; that for this reason, Tax Declaration No. 8777 was cancelled and
substituted by Tax Declaration Nos. 9522 and 2385 issued in the names of the
petitioners; that, thereafter, the petitioners began paying taxes on the land; that after
several attempts to redeem the land were refused by the petitioners, the respondents
filed a complaint in the Court of First Instance of Pasay City docketed as Civil Case No.
272-R for the recovery of the possession and ownership of the said property; that when
they learned of the issuance of the certificate of title to the land in the petitioners'
names, they also filed the instant petition for review. The previous complaint, Civil Case
No. 272-R, was subsequently dismissed on a joint petition filed by the parties after they
agreed to have the determination of the question of ownership resolved in the
registration proceedings.
In their answer, the spouses Ramirez denied the material allegations of the petition,
they based their claim to the land on two deeds of sale allegedly executed on April 15,
1937 and April 23, 1937 which they allegedly found accidentally in March 1960.
After trial, the court found that deeds of sale spurious. It further found that the
respondents took possession of the land as owners after the death of Agapita Bonifacio
and in 1938, mortgaged it to the spouses Ramirez to secure the payment of a loan in
the amount of P400.00. It was agreed that the respondents could not redeem the
property within a period of five years and that the petitioners would take possession of
the land, enjoy its fruits, and pay the land taxes thereon. The written agreement was
kept by the petitioners as creditors. The trial court appreciated the fact of the petitioners'
failure, despite formal request, to produce the document in court in favor of the
respondents. Finding the claims of the herein respondents sustained by the evidence, it
ordered the reconveyance of the property in the following manner:
WHEREFORE, judgment is hereby rendered in favor of petitioners and
against applicants as follows:
1) Setting aside its decision dated December 28, 1959 insofar as it found
and declared applicants to be the owners of the parcel of land described in
Exhibits A, B and C and insofar as it ordered the registration thereof in
their names;
2) Declaring the petitioners, all Filipinos, all of legal age, and all residents
of Ligas Bacoor, Cavite, to be the true and absolute owners pro indiviso of
the said parcel of land described in Exhibits A, B and C in the following
proportions:
a. Francisca Medina, married to Tomas de Leon, one-third (1/3) thereof;

b. Emilio Martin, married to Dolores Antonio, and Matilde Martin, married

to Federico Torres, one-third (1/3) thereof-,
c. Teofilo Guinto, married to Rocila de la Cruz, Delfin Guinto, married to
Gregoria Pamaran, Prudencio Guinto, married to Ana Guinto, and
Margarita Guinto, married to Felix Calacala one- third (1/3) thereof;
3) Ordering the registration of the said parcel of land described in Exhibits
A, B and C in the names of petitioners;
4) Setting aside its order for the issuance of the decree of registration in
favor of applicants dated January 30, 1959, and ordering the issuance of
the decree of registration in the names of petitioners;
5) Cancelling Original Certificate of Title No. 2273 of the Register of
Deeds of Rizal in the names of applicants and the issuance in lieu thereof
of another original certificate of title in the names of petitioners in the
proportion of their ownership of the property as stated in paragraph 2
above;
6) Ordering applicants to pay P3,000.00 to petitioners as and for attorney's
fees;
7) Ordering applicants to pay the costs of this suit.
The decision was affirmed by the Court of Appeals. On a motion for reconsideration
filed by the petitioners, the same appellate court, but with a new member, promulgated
a resolution setting aside the original decision. On a motion for reconsideration filed by
the private respondents, this resolution was set aside and the original decision was
reinstated.
The petitioners went to this Court in a petition for review on certiorari with the following
questions:
ONE-HAS THE COURT OF FIRST INSTANCE, ACTING AS A LAND
REGISTRATION COURT, THE JURISDICTION TO GIVE DUE COURSE
TO A PETITION FOR REVIEW OF DECREE UNDER SEC. 38 OF ACT
496 AND TO RE-OPEN THE ORIGINAL PROCEEDINGS WHEN THE
PETITION IS ACTUALLY ONE OF RECONVEYANCE AND NOT BASED
ON ACTUAL OR EXTRINSIC FRAUD?
TWO-DOES SEC. 38 OF ACT NO. 496 APPLY ON ALL FORES (SIC) TO
ORIGINAL LAND REGISTRATION PROCEEDINGS HAD UNDER
PARAGRAPH B, SECTION 48 OF COM. ACT NO. 141 AS AMENDED BY
REP. ACT NO. 1942 WHEREIN THE LAND INVOLVED IS PUBLIC
AGRICULTURAL LAND?
THREE-HAS THE COURT OF FIRST INSTANCE, ACTING AS A LAND
REGISTRATION COURT, THE POWER AND AUTHORITY TO VEST
TITLE ON THE LAND INVOLVED TO HEREIN PRIVATE
RESPONDENTS AND ORDER EVEN ITS PARTITION AMONGST THEM
IN THE FACE OF THE ADMITTED FACT THAT THE LAND IS IN
ACTUAL POSSESSION OF PETITIONERS WHILE PRIVATE
RESPONDENTS HAD NOT POSSESSED THE SAME AT ALL?

FOUR-DO THE PRIVATE RESPONDENTS HAVE THE LEGAL

CAPACITY AND QUALIFICATION TO ACQUIRE AND BE VESTED BY
THE COURT WITH TITLE TO THE LAND IN QUESTION?
We find the petition without merit.
The first question does not warrant favorable consideration. The issue was submitted to
the appellate court and in our opinion, correctly resolved therein. The Court of Appeals
stated:
... The petition alleged that 'the applicants Hilario Ramirez and Valentina
Bonifacio willfully and fraudulently suppressed the facts that the petitioners
are the legal and rightful owners of the ricefield in question and that they
possess the said ricefield merely as antichretic creditors as security for the
loan of P400.00; that the applicants are guilty of fraudulent
misrepresentation and concealment when they declared in their
application, in the case at bar, that no other person had any claim or
interest in the said land.' These we believe are sufficient allegations of
extrinsic fraud.
In the applicant's application for registration, which followed the form
required by the Land Registration Act, the applicants alleged that 'to the
best of our knowledge and belief, there is no mortgage or incumbrance of
any kind whatsoever affecting said land, nor any other person having any
estate or interest therein, legal or equitable, in possession, remainder,
reversion or expectancy.' This allegation is false and made in bad faith,
for, as We have found, the applicants are not the owners of the land
sought to be registered and they are in possession thereof only as
antichretic creditors.
The averments in the petition for review of the decree of registration constitute specific
and not mere general allegations of actual and extrinsic fraud. Competent proof to
support these allegations was adduced. We find no compelling reason to disturb the
findings of the two courts below.
The petitioners in this case did not merely omit a statement of the respondents' interest
in the land. They positively attested to the absence of any adverse claim therein. This is
clear misrepresentation. The omission and concealment, knowingly and intentionally
made, of an act or of a fact which the law requires to be performed or recorded is fraud,
when such omission or concealment secures a benefit to the prejudice of a third person
(Estiva v. Alvero, 37 Phil. 497).
In the case of Libundan v. Palma Gil (45 SCRA 17), this Court held:
The purpose of the law in giving aggrieved parties, deprived of land or any
interest therein, through fraud in the registration proceedings, the
opportunity to review the decree is to insure fair and honest dealing in the
registration of land. But the action to annul a judgment, upon the ground of
fraud, would be unavailing unless the fraud be extrinsic or collateral and
the facts upon which it is based have not been controverted or resolved in
the case where the judgment sought to be annulled was rendered.
Extrinsic or collateral fraud, as distinguished from intrinsic fraud, connotes
any fraudulent scheme executed by a prevailing litigant 'outside the trial of
a case against the defeated party, or his agents, attorneys or witnesses,
whereby said defeated party is prevented from presenting fully and fairly
his side of the case.' But intrinsic fraud takes the form of 'acts of a party in
a litigation during the trial, such as the use of forged instruments or

perjured testimony, which did not affect the presentation of the case, but
did prevent a fair and just determination of the case.
Thus, relief is granted to a party deprived of his interest in land where the
fraud consists in a deliberate misrepresentation that the lots are not
contested when in fact they are, or in applying for and obtaining
adjudication and registration in the name of a co-owner of land which he
knows had not been alloted to him in the partition, or in intentionally
concealing facts, and conniving with the land inspector to include in the
survey plan the bed of a navigable stream, or in willfully misrepresenting
that there are no other claims, or in deliberately failing to notify the party
entitled to notice, or in inducing him not to oppose an application, or in
misrepresenting about the indentity of the lot to the true owner by the
applicant causing the former to withdraw his opposition. In all these
examples the overriding consideration is that the fraudulent scheme of the
prevailing litigant prevented a party from having his day in court or from
presenting his case, The fraud, therefore, is one that affects and goes into
the jurisdiction of the court.
The second question assigned as an error must also be resolved against the
petitioners.
Section 122 of Act No. 496 otherwise known as the Land Registration Act provides:
SEC. 122. Whenever public lands in the Philippine Islands belonging to
the Government of the United States or to the Government of the
Philippine Islands are alienated, granted, or conveyed to persons or the
public or private corporations, the same shall be brought forthwith under
the operation of this Act and shall become registered lands. It shall be the
duty of the official issuing the instrument of alienation, grant, or
conveyance in behalf of the Government to cause such instrument before
its delivery to the grantee, to be filed with the register of deeds for the
province where the land lies and to be there registered like other deeds
and conveyances, whereupon a certificate shall be entered as in other
cases of registered land, and an owner's duplicate certificate issued to the
grantee. The deed, grant, or instrument of conveyance from the
Government to the grantee shall not take effect as a conveyance or bind
the land, but shall operate only as contract between the Government and
the grantee and as evidence of authority to the clerk or register of deeds
to make registration. The act of registration shall be the operative act to
convey and affect the land, and in all cases under this Act, registration
shall be made in the office of the register of deeds for the province where
the land lies. The fees for registration shall be paid by the grantee. After
due registration and issue of the certificate and owner's duplicate, such
land shall be registered land for all purposes under this Act.
The law is clear. We can apply it to the facts without need for judicial interpretation.
Once the deed, grant, or instrument of conveyance of public land is registered with the
Register of Deeds and the corresponding certificate and owner's duplicate title is issued,
such land is deemed registered land. It is brought within the scope and operation of the
Land Registration Law. This is the doctrine laid down by this Court in a long line of
cases. (See Heirs of Deogracias Ramos v. Court of Appeals, 139 SCRA 293; Lahora v.
Dayanghirang 37 SCRA 346; Ramirez v. Court of Appeals, 30 SCRA 297; Director of
Lands v. Jugado 2 SCRA 32; Nelayan v. Nelayan, 109 Phil. 183; Republic v. Heirs of
Carle 105 Phil. 1227; El Hogar Filipino v. Olviga, 60 Phil. 17; Manolo v. Lukban, 48 Phil.
973). The land in this case having been registered and covered by an original certificate
of title issued by the Register of Deeds of Rizal, it is within the provisions of the Land

Registration Act. Thus, the decree of registration granted by the lower court in favor of
the petitioners may be reviewed on the ground of actual and extrinsic fraud pursuant to
Section 38 of the same Act.
There is likewise no merit in the third assigned error. While there was an admission that
the petitioners have been in actual possession of the disputed land since 1938, it was
made to show and prove the fact that the petitioners are only antichretic creditors. The
respondents never admitted that they have not possessed the land at all. On the
contrary, they alleged that they and their predecessors-in-interest namely Gregoria
Pascual and Agapita Bonifacio have been in possession of the land since time
immemorial and that the petitioners were placed in possession of the land pursuant to a
contract of antichresis.
The court below found that the petitioners are merely antichretic creditors. This finding
and its factual bases were affirmed by the Court of Appeals. On the basis of the
evidence supporting this conclusion, this finding is binding on us as it is not our duty to
weigh evidence on this point all over again. This court has on several occasions held
that the antichretic creditor cannot ordinarily acquire by prescription the land
surrendered to him by the debtor (Trillana v. Manansala, et al., 96 Phil. 865; Valencia v.
Acala, 42 Phil. 177; Barreto v. Barreto, 3 Phil. 234). The petitioners are not possessors
in the concept of owner but mere holders placed in possession of the land by its
owners. Thus, their possession cannot serve as a title for acquiring dominion (See Art.
540, Civil Code).
The fourth issue raised by the petitioners is answered by a referral to the detailed
factual findings and conclusions of the trial court. Ten pages of the record on appeal
(Record on Appeal, CA-G.R. No. 40425-R, pp. 56-66) state in convincing detail the
portion of the trial court's decision which support its conclusion that Hilario Ramirez and
Valentina Bonifacio are not the owners of the disputed land and have no registrable
right over it and that the respondents herein have established their ownership by a
strong preponderance of evidence. The respondents were declared the true and real
owners and entitled to registration in their names. The final resolution of the Court of
Appeals affirmed the trial court's decision in toto. We see no reversible error in this
finding.
The argument of laches is explained and countered by the close relationship of the
parties and the nature of a contract of antichresis. The private respondents are
nephews and nieces, with their spouses, of the petitioners. Moreover, there is evidence
to show that long before the filing of the cases, there had been attempts to recover the
property.
In view of the foregoing, we are constrained to affirm the appellate court's decision. We
note, however, that in spite of the finding of an existing contract of antichresis between
the parties, the two courts below did not order the payment of the principal amount of
mortgage. Under Article 2136 of the Civil Code, the debtor cannot reacquire the
enjoyment of the immovable without first having totally paid what he owes the creditor.
WHEREFORE, the decision appealed from is hereby AFFIRMED with a modification
that the respondents are ordered to pay the petitioners the amount of P 400.00 as
principal for the contract of antichresis, the fruits obtained from the possession of the
land having been applied to the interests on the loan.
SO ORDERED.
Feria (Chairman), Fernan, Alampay and Paras, JJ., concur.