G.R. No.

L-15128 August 25, 1960 without interest, coupled with the transfer of the possession of
the properties mortgaged to the mortgagee, reveals that the
CECILIO DIEGO, plaintiff-appellee, true transaction between him and appellee was one of
vs. antichresis. As correctly pointed out by appellee and the
SEGUNDO FERNANDO, defendant-appellant. lower court, however, it is not an essential requisite of a
mortgage that possession of the mortgaged premises be
Espinosa Law Offices for appellant. retained by the mortagagor (Legaspi and Salcedo vs.
N.L. Dasig and C.L. Francisco for appellee. 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
REYES, J.B.L., J.: as security, is to apply their fruits to the payment of the
interest, if owing, and thereafter to the principal of his credit
Appeal by defendant Segundo Fernando from the judgment (Art. 2132, Civil Code, Barretto vs. Barretto, 37 Phil., 234;
of the Court of First Instance of Nueva Ecija in its Civil Case Diaz vs. De Mendezona, 48 Phil., 666); so that if a contract
No. 1694 for foreclosure of mortgage. The appeal was of loan with security does not stipulate the payment of
originally brought to the Court of Appeals, but was certified interest but provides for the delivery to the creditor by the
to us by that tribunal because it raises only questions of law. debtor of the property given as security, in order that the
latter may gather its fruits, without stating that said fruits are
The facts are not disputed. On May 26, 1950, the defendant to be applied to the payment of interest, if any, and
Segundo Fernando executed a deed of mortgage in favor afterwards that of the principal, the contract is a mortgage
of plaintiff Cecilio Diego over two parcels of land registered and not antichresis (Legaspi vs. Celestial, supra). The court
in his name, to secure a loan P2,000, without interest, below, therefore, did not err in holding that the contract
payable within four years from the date of the mortgage Exhibit "A" is a true mortgage and not an antichresis.
(Exhibit "A"). After the execution of the deed, possession of
the mortgaged properties were turned over to the The above conclusion does not mean, however, that appellee,
mortagagee. having received the fruis of the properties mortgaged, will
be allowed to approprite them for himself and not be
The debtor having failed to pay the loan after four years, required to account for them to the appellant. For the contract
the mortagagee Diego made several demands upon him for of mortgage Exhibit "A" clearly provides that the loan of
payment; and as the demands were unheeded, Diego filed P2,000 was "without interest within four (4) years from date
this action for foreclosure of mortgage. of this instrument"; and there being no evidence to show that
the parties had intended to supersede such stipulation when
Defendant Fernando's defense was that the true transaction the possession of the mortgaged properties were turned over
between him and plaintiff was one of antichresis and not of to the appellee by another allowing the latter to collect, the
mortgage; and that as plaintiff had allegedly received a fruits thereof as interest on the loan, the trial court is not
total of 120 cavans of palay from the properties given as authorized to infer from this transfer of possession alone that
security, which, at the rate of P10 a cavan, represented a the loan was to be without interest for four years, and
value of P5,200, his debt had already been paid, with substituted another giving appellee the right to receive the
plaintiff still owing him a refund of some P2,720.00. fruits of the mortgaged properties as interests.

The Court below, however, found that there was nothing in The true position of appellee herein under his contract with
the deed of mortgage Exhibit "A" to show that it was not a appellant is a "mortgage in possession" as that term is
true contract of mortgage, and that the fact that possession understood in American equity jurisprudence; that is "one who
of the mortgaged properties were turned over to the has lawfully acquired actual or constructive possession of the
mortgagee did not alter the transaction; that the parties must premises mortgaged to him, standing upon his rights as
have intended that the mortgagee would collect the fruits of mortgagee and not claiming under another title, for the
the mortgaged properties as interest on his loan, which purpose of enforcing his security upon such property or
agreement is not uncommon; and that the evidence showed making its income help to pay his debt" (Diaz vs. De
that plaintiff had already received 55 cavans of palay from Mendezona, citing 27 Cyc. 1237, 48 Phil., 666). As such
the properties during the period of his possession. mortgagee in possession, his rights and obligations are, as
Whereupon, judgment was rendered for plaintiff in the pointed out by this Court in Macapinlac vs. Gutierrez
amount of P2,000, the loan he gave the defendant, with Repide (43 Phil., 770), similar to those of an antichretic
legal interest from the filing of the action until full payment, creditor:
plus P500 as attorney's fees and the costs; and in case of
default in payment, for the foreclosure of the mortgage. From The respective rights and obligations of the parties
this judgment, defendant took the present appeal. to a contract of antichresis, under the Civil Code,
appear to be similar and in many respects identical
The main issue raised is whether the contract between the with those recognized in the equity jurisprudence of
parties is one of mortgage or of antichresis. Appellant, while England and America as incident to the position of a
admitting that the contract Exhibit "A" shows a deed of mortgagee in possession, in reference to which the
mortgage, contends that the admitted fact that the loan was following propositions may be taken to be
established, namely, that if the mortgagee acquires
 possession in any lawful manner, he is entitled to Wherefore, the judgment of the court below is modified in
retain such possession until the indebtedness is the sense that the amount of appellee's principal recovery is
satisfied and the property redeemed; that the non- reduced to P1,505.00, with an obligation on the part of
payment of the debt within the term agreed does appellee to render an accounting of all the fruits received by
not vest the ownership of the property in the him from the properties in question from the time of the filing
creditor; that the general duty of the mortgagee in of this action until full payment, or in case of appellant's
possession towards the premises is that of the failure to pay, until foreclosure of the mortgage thereon, the
ordinary prudent owner; that the mortgagee must value of which fruits shall be deducted from the total amount
account for the rents and profits of the land, or its of his recovery. No costs in this instance.
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.