G.R. No.

L-44841 January 27, 1986

CIPRIANO E. SAMONTE, FROILAN E. SAMONTE, LORENZO E. SAMONTE, TEODULA E. SAMONTE,

CONSTANCIA E. SAMONTE, and the late MIGUEL SAMONTE as represented by his heirs REMEDIOS B.
SAMONTE, NENITA E. SAMONTE, DIONICIO B. SAMONTE, and ANTONIO SAMONTE, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, BENILDA C. ACOSTA, and SALVADOR C. ACOSTA,
respondents.

MELENCIO-HERRERA, J.:

This Petition for Review on certiorari seeks the reversal of the Decision of respondent Appellate Court in CA-G.R.
No. 55914-R affirming that of the Trial Court and declaring private respondents the owners of the lands in suit.

The antecedents of the case follow:

1. In 1930, PLACIDA Espiritu was the owner of five (5) parcels of rice land situated in Dingras, Ilocos Norte.

2. Sometime during the last days of 1930, according to petitioners (Folio-8), or on September 7, 1931, according
to private respondents (Exhibit "7"), those five parcels were transferred from PLACIDA to VICTORIA Mendoza
(Folio142).

3. Two of the five parcels were subsequently washed away by a river (Folio-10, Exhibit "l-B"). The remaining three
parcels constitute the property subject of this case (the DISPUTED PROPERTY).

4. PLACIDA passed away in December, 1941 (Folio-9), the petitioners herein being her heirs.

5. VICTORIA died on April 19, 1937 (Exhibit "7"), succeeded by her mother Salvadora Feri who died in 1947 (Folio
9), succeeded by her daughter BENILDA Mendoza (sister of VICTORIA) who died on 11 November 1962
(Respondents I Brief, p. 3), and was succeeded by her adopted children, the private respondents herein (Folio-9).

6. There is documentary evidence that BENILDA had claimed ownership of the DISPUTED PROPERTY on May
23, 1947 (Exhibit "7"), reiterated on December 2, 1952 (Exhibit " 6 ").

7. On April 3, 1970, petitioners instituted Case No. 456911 of the then Court of First Instance of Ilocos Norte, which
started the present proceedings, their claim being for the return to them of the DISPUTED PROPERTY for the
reason that possession thereof was transferred to VICTORIA by their mother PLACIDA only by way of antichresis.
Private respondents defended, stating that VICTORIA had purchased the DISPUTED PROPERTY on September
7, 1931.

Previous to that case, Civil Case No. 3630-III was filed before the Court of First Instance of Ilocos Norte by
petitioners for the recovery of the DISPUTED PROPERTY but the same was dismissed without prejudice.

8. On December 28, 1973, the Trial Court dismissed petitioners' complaint on the ground that BENILDA having
claimed ownership of the DISPUTED PROPERTY since 1952, and petitioners' complaint having been filed only
on April 3, 1970, or more than 10 years after December 3, 1952 (date of registration of Exhibit "6"), private
respondents should be deemed to have acquired title to the DISPUTED PROPERTY through ordinary acquisitive
prescription under the provisions of the present Civil Code.

9. On appeal to respondent Appellate Court, the Trial Court's judgment was affirmed on June 21, 1976.
Respondent Court further held that private respondents being in possession of the DISPUTED PROPERTY in the
concept of owner, the legal presumption should be that they have ownership under a just title, which they need
not show, pursuant to Article 541 of the Civil Code; and that petitioners had failed "to show through convincing
evidence that it was they who were the true owners; but their evidence is purely oral. " Respondent Court also
upheld the argument that, assuming the antichresis, petitioners' right to recover the DISPUTED PROPERTY
accrued in 1941 (when "the alleged loan with its interest at 6% had been fully paid"), and they incurred in laches
in not having asserted such right within a reasonable time, instead of waiting until 1962 (or 1970), or 17 or 29
years thereafter.
10. The Petition for Review on certiorari was filed before this Court on October 4, 1976. It was dismissed for lack
of merit on November 26, 1976. The dismissal was reiterated in several subsequent Resolutions, but the Petition
was eventually given due course in the Resolution of October 19, 1977 (Folio-220).

We have decided to uphold the questioned judgment of respondent Appellate Court.

(a) The Appellate Tribunal correctly affirmed the Decision of the Trial Court based on ordinary acquisitive
prescription, except that the required period should have been stated as starting from May 23, 1947 when
BENILDA executed the Affidavit, Exhibit "7", before Judge Simeon Ramos of the then Court of First Instance of
Ilocos Norte. In that Affidavit, BENILDA claimed ownership over the DISPUTED PROPERTY. No judicial
summons, which could interrupt possession for purposes of prescription (Article 1123, Civil Code) had been served
on BENILDA. Neither have private respondents been served with judicial summons prior to the institution, on April
3, 1970, of Case No. 4569-11 of the then Court of First Instance of Ilocos Norte.

(b) It is also our opinion that respondent Court correctly invoked Article 541 of the Civil Code 1 in concluding that
private respondents should now be deemed the owners of the DISPUTED PROPERTY. Petitioners' claim that an
instrument of antichresis had been executed by PLACIDA and VICTORIA in the later part of 1930, based on
testimonial evidence, cannot be considered legally sufficient. An unregistered lease for 50 years, enforceable
against the successors-in-interest of the lessee, could have been as easily alleged. A comment which we might
make is that on or about 1930, an express contract of antichresis would have been unusual. 2

(c) As to respondent Court's indirect finding of laches, we repeat hereunder the following statement in Pangadil
vs. Court of First Instance of Cotabato, 116 SCRA, p. 353:

It is equally unbelievable that in the span of time from December 1941 up to the date that Civil
Case No. 2187 was filed on January 7, 1969, a period of more than twenty-seven years, the
petitioners would not have taken any step to verify the status of the land of their father which had
been in the possession of the private respondents during all the time, particularly as to the
possibility of redeeming the supposed mortgage their father had constituted thereon. Their
inaction for such a considerable period of time reflects on the credibility of their pretense that
they merely intended to confirm an oral mortgage, instead of a sale of the land in question.

WHEREFORE, the Decision appealed from is affirmed, with costs against petitioners.

SO ORDERED.

Plana, Gutierrez, Jr., De la Fuente and Patajo, JJ., concur.

Teehankee (Chairman), J., took no part.

Footnotes

1 ART. 541. A possessor in the concept of owner has in his favor the legal presumption that he
possesses with a just title and he cannot be obliged to show or prove it.

2 De la Vega v. Ballillos, 34 Phil, 683; Barretto v. Barretto, 37 Phil. 234; Macapinlac v. Gutierrez
Repide, 43 Phil. 770.
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.

G.R. No. L-15128 August 25, 1960

CECILIO DIEGO, plaintiff-appellee,

vs.
SEGUNDO FERNANDO, defendant-appellant.

Espinosa Law Offices for appellant.

N.L. Dasig and C.L. Francisco for appellee.

REYES, J.B.L., J.:

Appeal by defendant Segundo Fernando from the judgment of the Court of First Instance of Nueva Ecija in its Civil
Case No. 1694 for foreclosure of mortgage. The appeal was originally brought to the Court of Appeals, but was
certified to us by that tribunal because it raises only questions of law.

The facts are not disputed. On May 26, 1950, the defendant Segundo Fernando executed a deed of mortgage in
favor of plaintiff Cecilio Diego over two parcels of land registered in his name, to secure a loan P2,000, without
interest, payable within four years from the date of the mortgage (Exhibit "A"). After the execution of the deed,
possession of the mortgaged properties were turned over to the mortagagee.

The debtor having failed to pay the loan after four years, the mortagagee Diego made several demands upon him
for payment; and as the demands were unheeded, Diego filed this action for foreclosure of mortgage.

Defendant Fernando's defense was that the true transaction between him and plaintiff was one of antichresis and
not of mortgage; and that as plaintiff had allegedly received a total of 120 cavans of palay from the properties
given as security, which, at the rate of P10 a cavan, represented a value of P5,200, his debt had already been
paid, with plaintiff still owing him a refund of some P2,720.00.

The Court below, however, found that there was nothing in the deed of mortgage Exhibit "A" to show that it was
not a true contract of mortgage, and that the fact that possession of the mortgaged properties were turned over to
the mortgagee did not alter the transaction; that the parties must have intended that the mortgagee would collect
the fruits of the mortgaged properties as interest on his loan, which agreement is not uncommon; and that the
evidence showed that plaintiff had already received 55 cavans of palay from the properties during the period of
his possession. Whereupon, judgment was rendered for plaintiff in the amount of P2,000, the loan he gave the
defendant, with legal interest from the filing of the action until full payment, plus P500 as attorney's fees and the
costs; and in case of default in payment, for the foreclosure of the mortgage. From this judgment, defendant took
the present appeal.

The main issue raised is whether the contract between the parties is one of mortgage or of antichresis. Appellant,
while admitting that the contract Exhibit "A" shows a deed of mortgage, contends that the admitted fact that the
loan was without interest, coupled with the transfer of the possession of the properties mortgaged to the
mortgagee, reveals that the true transaction between him and appellee was one of antichresis. As correctly pointed
out by appellee and the lower court, however, it is not an essential requisite of a mortgage that possession of the
mortgaged premises be retained by the mortagagor (Legaspi and Salcedo vs. Celestial, 66 Phil., 372). To be
antichresis, it must be expressly agreed between creditor and debtor that the former, having been given
possession of the properties given as security, is to apply their fruits to the payment of the interest, if owing, and
thereafter to the principal of his credit (Art. 2132, Civil Code, Barretto vs. Barretto, 37 Phil., 234; Diaz vs. De
Mendezona, 48 Phil., 666); so that if a contract of loan with security does not stipulate the payment of interest but
provides for the delivery to the creditor by the debtor of the property given as security, in order that the latter may
gather its fruits, without stating that said fruits are to be applied to the payment of interest, if any, and afterwards
that of the principal, the contract is a mortgage and not antichresis (Legaspi vs. Celestial, supra). The court below,
therefore, did not err in holding that the contract Exhibit "A" is a true mortgage and not an antichresis.

The above conclusion does not mean, however, that appellee, having received the fruis of the properties
mortgaged, will be allowed to approprite them for himself and not be required to account for them to the appellant.
For the contract of mortgage Exhibit "A" clearly provides that the loan of P2,000 was "without interest within four
(4) years from date of this instrument"; and there being no evidence to show that the parties had intended to
supersede such stipulation when the possession of the mortgaged properties were turned over to the appellee by
another allowing the latter to collect, the fruits thereof as interest on the loan, the trial court is not authorized to
infer from this transfer of possession alone that the loan was to be without interest for four years, and substituted
another giving appellee the right to receive the fruits of the mortgaged properties as interests.
The true position of appellee herein under his contract with appellant is a "mortgage in possession" as that term
is understood in American equity jurisprudence; that is "one who has lawfully acquired actual or constructive
possession of the premises mortgaged to him, standing upon his rights as mortgagee and not claiming under
another title, for the purpose of enforcing his security upon such property or making its income help to pay his
debt" (Diaz vs. De Mendezona, citing 27 Cyc. 1237, 48 Phil., 666). As such mortgagee in possession, his rights
and obligations are, as pointed out by this Court in Macapinlac vs. Gutierrez Repide (43 Phil., 770), similar to those
of an antichretic creditor:

The respective rights and obligations of the parties to a contract of antichresis, under the Civil Code,
appear to be similar and in many respects identical with those recognized in the equity jurisprudence of
England and America as incident to the position of a mortgagee in possession, in reference to which the
following propositions may be taken to be established, namely, that if the mortgagee acquires
possession in any lawful manner, he is entitled to retain such possession until the indebtedness is
satisfied and the property redeemed; that the non-payment of the debt within the term agreed does not
vest the ownership of the property in the creditor; that the general duty of the mortgagee in possession
towards the premises is that of the ordinary prudent owner; that the mortgagee must account for the
rents and profits of the land, or its value for purposes of use and occupation, any amount thus realized
going towards the discharge on the mortgage debt; that if the mortgage remains in possession after the
mortgage debt has been satisfied, he becomes a trustee for the mortgagor as to the excess of the rents
and profits over such debt; and lastly, that the mortgagor can only enforce his rights to the land by an
equitable action for an account and to redeem. (3 Pom. Eq. Jur. secs. 1215-1218)

Similarly, in Enriquez vs. National Bank, 55 Phil., 414, we ruled that a creditor with a lien on real property who took
possession thereof with the consent of the debtor, held it as an "antichretic creditor with the right to collect the
credit with interest from the fruits, returning to the antichretic creditor the balance, if any, after deducting the
expenses," because the fact that the debtor consented and asked the creditor to take charge of managing his
property "does not entitle the latter to appropriate to itself the fruits thereof unless the former has expressly waived
his right thereto."

In the present case, the parties having agreed that the loan was to be without interest, and the appellant not having
expressly waived his right to the fruits of the properties mortgaged during the time they were in appellee's
possession, the latter, like an antichretic creditor, must account for the value of the fruits received by him, and
deduct it from the loan obtained by appellant. According to the findings of the trial court, appellee had received a
net share of 55 cavans of palay out of the mortgaged properties up to the time he filed the present action; at the
rate of P9.00 per cavan (a rate admitted by the parties), the total value of the fruits received by appellee is P495.00.
Deducting this amount from the loan of P2,000.00 received by appellant from appellee, the former has only
P1,505.00 left to pay the latter.

Appellant also claims that the lower court erred in ordering him to pay legal interest on his indebtedness to plaintiff
from the filing of the action, since the latter is, up to the present, still in the possession of the properties mortgaged
and still enjoying the fruits. The court did not err in so holding, since at the time the action was filed and up to the
present, appellant has not discharged his indebtedness to appellee, and the law allows the latter, in the absence
of stipulation as to payment of interest, legal interest from the time of the debtor's default (Art. 2209, New Civil
Code, Art. 1108, old). However, appellee should be made to account for the fruits he received from the properties
mortgaged from the time of the filing of this action until full payment by appellant, which fruits should be deducted
from the total amount due him from appellant under this judgment.

Wherefore, the judgment of the court below is modified in the sense that the amount of appellee's principal
recovery is reduced to P1,505.00, with an obligation on the part of appellee to render an accounting of all the fruits
received by him from the properties in question from the time of the filing of this action until full payment, or in case
of appellant's failure to pay, until foreclosure of the mortgage thereon, the value of which fruits shall be deducted
from the total amount of his recovery. No costs in this instance.

Paras, C.J., Bengzon, Padilla, Bautista Angelo, Labrador, Concepcion, Barrera and Gutierrez David, JJ., concur.