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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..L., J.!

Appeal by defendant Segundo Fernando from the judgment of the Court of First Instance of Nueva

cija in its Civil Case No. !"#$ for foreclosure of mortgage. %he appeal &as originally brought to the

Court of Appeals, but &as certified to us by that tribunal because it raises only 'uestions of la&.

%he facts are not disputed. (n )ay *", !#+, the defendant Segundo Fernando eecuted a deed of

mortgage in favor of plaintiff Cecilio iego over t&o parcels of land registered in his name, to securea loan /*,, &ithout interest, payable &ithin four years from the date of the mortgage 0hibit 1A12.

After the eecution of the deed, possession of the mortgaged properties &ere turned over to the

mortagagee.

%he debtor having failed to pay the loan after four years, the mortagagee iego made several

demands upon him for payment3 and as the demands &ere unheeded, iego filed this action for

foreclosure of mortgage.

efendant Fernando4s defense &as that the true transaction bet&een him and plaintiff &as one of

antichresis and not of mortgage3 and that as plaintiff had allegedly received a total of !* cavans of

palay from the properties given as security, &hich, at the rate of /! a cavan, represented a value of/+,*, his debt had already been paid, &ith plaintiff still o&ing him a refund of some /*,5*..

%he Court belo&, ho&ever, found that there &as nothing in the deed of mortgage hibit 1A1 to sho&

that it &as not a true contract of mortgage, and that the fact that possession of the mortgaged

properties &ere turned over to the mortgagee did not alter the transaction3 that the parties must have

intended that the mortgagee &ould collect the fruits of the mortgaged properties as interest on his

loan, &hich agreement is not uncommon3 and that the evidence sho&ed that plaintiff had already

received ++ cavans of palay from the properties during the period of his possession. 6hereupon,

judgment &as rendered for plaintiff in the amount of /*,, the loan he gave the defendant, &ith

legal interest from the filing of the action until full payment, plus /+ as attorney4s fees and the

costs3 and in case of default in payment, for the foreclosure of the mortgage. From this judgment,defendant too7 the present appeal.

%he main issue raised is &hether the contract bet&een the parties is one of mortgage or of

antichresis. Appellant, &hile admitting that the contract hibit 1A1 sho&s a deed of mortgage,

contends that the admitted fact that the loan &as &ithout interest, coupled &ith the transfer of the

possession of the properties mortgaged to the mortgagee, reveals that the true transaction bet&een

him and appellee &as one of antichresis. As correctly pointed out by appellee and the lo&er court,

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ho&ever, it is not an essential re'uisite of a mortgage that possession of the mortgaged premises be

retained by the mortagagor 08egaspi and Salcedo vs. Celestial, "" /hil., 95*2. %o be antichresis, it

must be epressly agreed bet&een 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

o&ing, and thereafter to the principal of his credit 0Art. *!9*, Civil Code, :arretto vs. :arretto, 95

/hil., *9$3 ia; vs. e )ende;ona, $< /hil., """23 so that if a contract of loan &ith security does notstipulate 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, &ithout stating that said fruits

are to be applied to the payment of interest, if any, and after&ards that of the principal, the contract

is a mortgage and not antichresis 08egaspi vs. Celestial, supra2. %he court belo&, therefore, did not

err in holding that the contract hibit 1A1 is a true mortgage and not an antichresis.

%he above conclusion does not mean, ho&ever, that appellee, having received the fruis of the

properties mortgaged, &ill be allo&ed to approprite them for himself and not be re'uired to account

for them to the appellant. For the contract of mortgage hibit 1A1 clearly provides that the loan of

/*, &as 1&ithout interest &ithin four 0$2 years from date of this instrument13 and there being no

evidence to sho& that the parties had intended to supersede such stipulation &hen the possessionof the mortgaged properties &ere turned over to the appellee by another allo&ing the latter to collect,

the fruits thereof as interest on the loan, the trial court is not authori;ed to infer from this transfer of

possession alone that the loan &as to be &ithout interest for four years, and substituted another

giving appellee the right to receive the fruits of the mortgaged properties as interests.

%he true position of appellee herein under his contract &ith appellant is a 1mortgage in possession1

as that term is understood in American e'uity jurisprudence3 that is 1one &ho has la&fully ac'uired

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 ma7ing its income help to pay his debt1 0ia; vs. e )ende;ona, citing *5 Cyc. !*95, $