Antichresis (Articles 2132-2139) Article 2132.

By the contract of antichresis 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, if owing, and thereafter to the principal of his credit. (1881) Article 2133. The actual market value of the fruits at the time of the application thereof to the interest and principal shall be the measure of such application. (n) Article 2134. The amount of the principal and of the interest shall be specified in writing; otherwise, the contract of antichresis shall be void. (n) Article 2135. The creditor, unless there is a stipulation to the contrary, is obliged to pay the taxes and charges upon the estate. He is also bound to bear the expenses necessary for its preservation and repair. The sums spent for the purposes stated in this article shall be deducted from the fruits. Article 2136. The debtor cannot reacquire the enjoyment of the immovable without first having totally paid what he owes the creditor. But the latter, in order to exempt himself from the obligations imposed upon him by the preceding article, may always compel the debtor to enter again upon the enjoyment of the property, except when there is a stipulation to the contrary. (1883) Article 2137. The creditor does not acquire the ownership of the real estate for non-payment of the debt within the period agreed upon. Every stipulation to the contrary shall be void. But the creditor may petition the court for the payment of the debt or the sale of the real property. In this case, the Rules of Court on the foreclosure of mortgages shall apply. (1884a) Article 2138. The contracting parties may stipulate that the interest upon the debt be compensated with the fruits of the property which is the object of the antichresis, provided that if the value of the fruits should exceed the amount of interest allowed by the laws against usury, the excess shall be applied to the principal. (1885a) Article 2139. The last paragraph of article 2085, and articles 2089 to 2091 are applicable to this contract. (1886a) Definition By the contract of antichresis 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, if owing, and thereafter to the principal of his credit. Characteristics: 1) Accessory contract secures the performance of principal obligation 2) Formal contract must be in writing to be valid Measure of Application of Fruits to Interest and Principal The fruits of the immovable which is the object of the antichresis must be appraised at their actual market value at the time of the application. Form of the Contract The amount of the principal and of the interest shall be specified in writing; otherwise, the contract of antichresis shall be void. Art. 2134 is an instance when the law requires that a contract be in some form in order that it may be valid, not only to affect third persons. However, even if the antichresis is void the principal obligation may still be valid. Obligations of the Antichretic Creditor

The creditor acquires the right to enjoy the fruits of the property delivered to him. This right carries two (2) obligations: 1) He is obliged to pay the taxes and charges upon the estate;and 2) He is bound to bear the expenses necessary for the preservation and repair. Obligation of the Antichretic Debtor The property delivered stands as a security for the payment of the obligation of the debtor in antichresis. Hence, the debtor cannot demand its return until the debt is totally paid. Right of Creditor in Case of Nonpayment of Debt If the debt is not paid, the creditor does not acquire ownership of the immovable since what was transferred is not the ownership but merely the right to receive the fruits. A stipulation authorizing the antichretic creditor to appropriate the property upon the non-payment of the debt within the period agreed upon is void. He can: 1) Bring an action for specific performance; 2) Petition for the sale of the real property as in foreclosure of mortgages under Rule 68, Rules of Court; or 3) Agree with the antichretic debtor on extrajudicial foreclosure. Antichretic Creditor Cannot Acquire Property by Prescription An antichretic creditor cannot acquire by prescription the land surrendered to him by the debtor. The creditor is not a possessor in the concept of owner but mere holder placed in possession of the land by the owner. Hence, their possession cannot serve as title for acquiring dominion. (Ramirez vs. CA, G.R. No. 38185, Sept. 24, 1986)

REVIEW QUESTIONS Q. In 1941 D borrowed P2,000 from C. As security for the loan, the former conveyed to the latter a parcel of unregistered land. This conveyance is evidenced by a deed which the parties call sangla or prenda in the dialect. The records show that since 1941 C had been in continuous possession and enjoyment of the property, and that in 1950, the tax declaration was changed to his name. In 1958 D died survived by his son X. Subsequently, X brought an action against C for the recovery of the land and for an accounting of the fruits. C, however, interposed the defense of prescription. Decide the case. A. Xs action against C will prosper. It is well-settled in this jurisdiction that the contract in this case indicates a mortgage which, coupled with the delivery of possession of the land to the creditor, amounts to a contract of antichresis (Diaz vs. Mendezona, 48 Phil. 666; Miranda vs. Imperial, 77 Phil. 1066; Trillana vs. Manansala, 51 Off. Gaz. 2911). ********** Q. A obtains a loan of P500.00 from B and delivers to the latter a piece of coconut land as security for the payment of the loan. In the deed executed, A agreed that B would avail of the fruits of the land during the time that the loan remains unpaid, without saying that the value of said fruits should be applied to the interest or capital of the loan. State the nature of the contract between the parties. Reasons. A. It is submitted that the contract in this case is a type of equitable mortgage, because, although it lacks some of the formalities prescribed by law, nevertheless it shows the intention of

the parties to charge real property as security for the payment of a debt and contains nothing that is contrary to law. Strictly speaking, it cannot be considered contract of antichresis because it lacks the requisite regarding the obligation of the creditor to apply the fruits received by him to the payment of the interest, if owing, and thereafter to the principal of his credit. Inspite of the fact that it is a type of equitable mortgage where the mortgagee is in possession, it has been held by the SC that the rights and obligations of the parties are similar and in many respect identical with those in a contract of antichresis.