D.4.2. G.R. No.

153710 September 2, 2002

SPS. ZOTOMAYOR vs. PEDRO RUBIO, et al.

FACTS:
Petitioner spouses Vivencio and Feliza Javier secured two loans from a
certain Tito Santos (now deceased), husband of Rufina Santos, now also deceased,
who are both predecessors-in-interest of herein private respondents, all surnamed
Rubio. The two loans granted by Tito Santos evidenced by a promissory note.
Since petitioners also reneged on their obligation to pay their second loan which
was secured by the real estate mortgage, Tito Santos foreclosed on petitioners'
property. The foreclosure was annotated on petitioners' TCT. Tito Santos died.
Rufina Santos, his surviving spouse, had petitioners' TCT cancelled and a new title
issued in her name.
The trial court simply held that the contract entered into by the parties with
respect to the loan was not a real estate mortgage but a contract of antichresis.
There being no mortgage to foreclose, according to the court, the new transfer
certificate of title issued in the name of Rufina Santos was null and void. The
Court of Appeals found the appeal meritorious and reversed the trial court. 

ISSUE:
Whether or not the contract entered into by Tito Santos and appellee-spouses
is a contract of antichresis is without factual and legal basis.

RATIO DECIDENDI:
No. The conclusion of the trial court that the contract entered into by Tito
Santos and appellee-spouses is a contract of antichresis is without factual and legal
basis. Under Article 2132 of the Civil Code, a contract is one of antichresis when
"the creditor acquires the right to receive the fruits of an immovable of his debtor,
with the obligation to apply them to the payment of the interest of the loan, if
owing, and thereafter to the principal of his credit." Thus, when a contract of loan
with security does not stipulate that the creditor would apply the fruits of his
debtor's "immovable" to the interestof the loan when owing, and thereafter to the
principal, the contract is not a contract of antichresis but a contract of mortgage.
First, the use of the concession is not the "immovable" contemplated by law,
the fruits of which is to be applied towards the payment of the interest of the loan,
if owing, and thereafter to the principal. Second, the concession for quarry
extraction is merely a privilege granted to appellee-spouses by the government. It
is not an immovable property that can be used as security for the payment of an
obligation. Third, and more importantly, the concession was in fact not used as
security for appellee-spouses' loan. Rather, it is the property of appellee-spouses as
a collateral for the P40,000.00 portion of the loan. Thus, the "Kasunduan" was
merely a mode of payment, separate and distinct from the real estate mortgage.