174 Legazpi vs. Celestial

Title G.R. Nos.
L-43673 and 43674 October 24, 1938
LICERIO LEGASPI and JULIAN SALCEDO, plaintiffs-appellants,

vs.
DAMASO CELESTIAL, defendant-appellee.
Ponente VILLA-REAL, J.
Doctrine ANTICHRESIS
Facts Plaintiffs brought an action against the defendant Damaso Celestial in the justice of the peace
court of Kawit, Cavite, praying that judgment be rendered, ordering said defendant to pay to
the abovenamed plaintiffs the sum of P556.160, plus the corresponding legal interest thereon
from the date of the filing of the complaint, until fully paid, and the costs.
The defendant, answering the complaint, admitted the essential facts alleged therein, stating
that he was disposed to pay what he should appear still to be indebted and, by way of
counterclaim and cross-complaint, claimed that, the contract entered into between him and the
plaintiffs being an antichresis, the latter were bound to render an account of the products of
the five salt beds, the total production of which was from 300 to 350 cavans of salt at P1 a
cavan.
Same plaintiffs filed a complaint in civil case No. 3025 of said Court of First Instance, praying
that the same defendant Damaso Celestial be ordered to pay them the sum of P7,637, with
the legal interest thereon from the date of the filing of the complaint, until fully paid, and the
costs of the suit, and that, upon his failure to do so, the mortgage constituted by said
defendant in their favor to secure the payment of the loan in question be ordered foreclosed. lâwphi1.nêt
2 contracts exist:
The contract Exhibit C-1 is entitled "Contract of Artichresis" while the contract Exhibit A is
entitled "Contract of Mortgage". Both in the contract Exhibit C-1 and in the contract Exhibit A,
the defendant Damaso Calestial, as debtor, agrees to turn over to the plaintiffs, as creditors,
the possession of the salt beds so that the latter, after paying the expenses for the production,
administration and harvest of the salt with one-half of the produce, may keep the other half of
the use, benefit and enjoyment
. It is not stipulated that the net produce of the salt beds shall first be applied to the payment of
the interest, if any, and afterwards to that of the principal of their credit. Both contracts merely
provide that the creditors shall keep one-half of the products.
Contentions Petitioner [LEGASPI] Respondent [CELESTIAL]

stating that the salt gathered he had never refused to pay any balance of the debt resulting
from the 60 salt beds after a rendition of accounts by the plaintiffs and a liquidation;
mentioned in the complaint
was for the exclusive use, alleged that the sixty-five salt beds administered by the
benefit and enjoyment of the plaintiffs, by virtue of the above-stated documents, yielded a
plaintiffs who, under the net produced of a about 6,500 cavans of salt every six
provisions of Exhibit A and months at P1 a cavan; that the plaintiffs should render to the
the intention of the parties, defendant an account of said products so that they may be
were not obliged to submit to
the defendant a liquidation of
the salt produced and applied to the payment of his loan or debt;
gathered, in order that the
same may be deducted from that the approximate total value of half of the number of
the principal. cavans of salt reaped and availed of by the plaintiffs from the
sixty-five salt beds administered by them during three years
and eleven months, that is, from the date of the filing of the
answer, was P13,000; that after deducting from said P13,000
the total amount of the defendant's debt to the plaintiffs under
the above-stated contracts, that is, P8,193.60, there would
still remain a balance in favor of the defendant in the sum of
P4,806.40, which he is entitled to collect from the plaintiffs.
Peace Court Judgment in said case, the dispositive part of which reads as follows: in favour of petitioners
.
Premises considered, judgment hereby rendered ordering the defendant to pay the
herein plaintiffs the sum of P556.60 with interest at the legal rate from January 17,
1935, and to pay the costs of suit. It is so ordered.
CFI Wherefore, judgment is rendered by this court holding that both the so-called instrument of
mortgage Exhibit A and the instrument Exhibit C-1 are really contracts of antichresis and,
consequently, the plaintiffs should render to the defendant an account of the 65 salt beds,
which are the subject matter of the two cases, as soon this decision becomes final, taking into
consideration the sums already paid by the defendant to the plaintiffs.
Issue Whether the contract was a contract of mortgage or antichresis

SC Ruling They are not contracts of antichresis, as defined by article 1881 of the Civil Code.
In a contract of mortgage, the mortgagor, as a general rule, retains the possession of the
property mortgaged as security for the payment of the sum of money borrowed from the
mortgagee, and pays the latter a certain per cent thereof as interest on his principal by way of
compensation for his sacrifice in depriving himself of the use of said money and the enjoyment
of its fruits, in order to give them to the mortgagor. Inasmuch as it is not an essential
requisite of the contract of mortgage that the property mortgaged remain in the
possession of the mortgagor (article 1857 of the Civil Code), the latter may deliver said
property to the mortgagee, without thereby altering the nature of the contract.
It not being an essential requisite of said contract of mortgage that the principal of the
mortgage credit bear interest, or that the interest, as compensation for the use of the principal
and enjoyment of its fruits, be in the form of a certain per cent thereof, such interest may be
in the form of fruits of the property mortgage, without the contract's longing thereby its
character of a mortgage contract.
It is stipulated in the contracts under consideration that, during the term thereof and while the
total amount of the loan remains unpaid by the debtor, the salt beds constituted as security for
the payment of said loan, shall be administered by the creditors who shall destine one-half of
the products thereof for the maintenance and support of the croppers and the improvements
of the property, keeping the other half for themselves.
It appears, therefore, that the debtor, instead of paying a certain per cent of the principal of the
loan as compensation for the sacrifice made by the creditors in depriving themselves of the
use of their principal and the enjoyment of its fruits, so as to give them to the debtor, has
delivered to them the property constituted as a security for the payment of the loan, so that
they may administer and use it, enjoying its fruits, by way of compensation for their said
sacrifice in lending said debtor their money.
Therefore, the contracts, which are the subject matter of this action, have all the essential
requsites of a mortgage, enumerated in article 1857 of the Civil Code and, consequently, are
mortgage contracts.
From the foregoing considerations, this court is of the opinion and so holds, that when a
contracts of loan with security does not stipulate the payment of interest but provides
for the delivery to the creditor by the debtor of the real property constituted as security
for the payment thereof, in order that the creditor may administer the same and avail
himself of its fruits, without stating that said fruits are to be applied to the payment of
interest, if any, and afterwards to that of the principal of the credit, the contract shall be
considered to be one of mortgage and not of antichresis.
Wherefore, the appealed judgment is reversed, and the defendant's debt to the plaintiffs is
declared paid and the deeds of security executed by both parties cancelled, dismissing the
counterclaim and cross-complained filed by said defendant and appellee Damaso Celestial,
with costs to the latter. So ordered.

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Title G.R. Nos.

L-43673 and 43674 October 24, 1938

LICERIO LEGASPI and JULIAN SALCEDO, plaintiffs-appellants,

Contentions Petitioner [LEGASPI] Respondent [CELESTIAL]

Issue Whether the contract was a contract of mortgage or antichresis

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