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Cases
G.R. No. L-27084 December 31, 1927
AMBROSIO T. ALOJADO, as administrator of the
intestate estate of the deceased Juana
Mabaquiao, plaintiff-appellant,  argues that, as it was never intention of the parties that, after
vs.
M. J. LIM SIONGCO, ET AL., defendant-appellees.
AVANCEÑA, C. J.:
On October 12, 1907 Juana Mabaquiao sold the land
described in the complaint to Nicolas Alegata for the sum of
P7,744. After the death of Nicolas Alegata, proceeding for
the settlement of his estate was instituted, and on October
23, 1913 his property, which included that purchased from
Juana Mabaquiao, was adjudicated to Lim Kang Sang and
Lim Eng Teeng, his only heirs. On November 11, 1913 they
sold this land to Lim Ponso & Co., with the right to
repurchase for the period of one year, which period expired
without this right having exercised. On February 15, 1918
Lim Ponso & Co. transferred this land unconditionally to Lim
Siongco and Lim Kingko.  entered into between Juana Mabaquiao and Nicolas Alegata,
Upon the death of Juana Mabaquiao, proceeding for the
settlement of her intestate estate were also instituted in
which Ambrosio T. Alojado was appointed administrator. The
latter, in said capacity, now brings this action against Lim
Sionco, Lim Kingko and Lim Ponso & Co. and prays that he
be declared the absolute owner of this land with the
improvements thereon, and that the defendants be ordered
to restore and respect his right of ownership, possession and
usufruct of the property; and, moreover, that other
pronouncements be made as prayed for in his complaint.
The court absolved the defendants from the complaint and
plaintiff appealed from this judgment.  the sentence that it expresses a contract of sale.
The plaintiff contends that the contract executed by Juana
Mabaquiao with Nicolas Alegata on October 12, 1907 was
not a contract of sale with the right to repurchase, but a
contract or antichrises. This contention is untenable. From
the terms of the contract it is clearly a sale with the right to
repurchase. It speaks in unequivocal terms of a sale and the
conveyance of land with the right to repurchase, and the
character of the contract is that of a sale with the right to
repurchase. The contract is very defective in its wording,
especially so where it refers to the period within which to
excercise the right to repurchase. But examining it as a
whole, it clearly appears that it was the parties' intention that
the vendor could repurchase the land without delay when he
had the means to pay the purchase price. What
Averell B. Abrasaldo – II-Sanchez Roman
characterizes a contract or antichresis is that the creditor years, the title of Nicolas Alegata, or his heirs, has by this
acquires the right to receive the fruits of the property of his fact alone been consolidated any events. 
debtor with the obligation to apply them to the payment of
interests, if any is due, and then to the principal of his credit.
Considering the case from this point of view, the appellant
Nowhere in the contract in question does this character of a
contract of antichresis appear. The only substantial thing
a certain period, the land could not be repurchased by the
agreed upon between the parties was that Juana Mabaquiao
vendor, the contract cannot be one of sale with the right to
could repurchase the land when she had the means. The
repurchase, because it conflicts with the nature of this
decision of this court in the case of De la Vega vs. Ballilos
contract, essential of which is the right of the purchaser to
(34 Phil., 683), which the appellant invokes in support of his
consolidate his title immediately after the period of
contention, is in no way applicable. The case dealt with a
redemption has passed.
contract called mortgage by the parties and the court held
that in reality it was contract of antichresis. But in the
contract in that case it was agreed that the debtor assigned Another contention of the appellant is that if the right of
and transfer the ownership and possession of the land to the redemption in this case is considered null after ten years, this
creditor for his management and enjoyment as a profit from nullity must likewise affect the sale itself. These questions
the amount for which it had been mortgaged. This have been resolved by this court in the case of Yadao vs.
agreement, which characterizes the contract of antichresis, Yadao (20 Phil., 260). In that case the contract contained a
does not exist in the instant case.lawphi1.net stipulation that the vendor repurchase the land any time he
had the money, it being understood that he could not
exercise this right of redemption after ten years, and not
An attempt was made, by the testimony of Eulogia Espanola,
having done so within that period, the court held that the
Juana Mabaquio's granddaughter, to prove that the contract
vendor irrevocably acquired title to the land. In that case,
notwithstanding the fact that the right of redemption after ten
was that Mabaquiao, or any of her heirs, might recover
years had been declared null, the sale itself however, was
possession of the land any time upon the payment of
considered valid and the title acquired thereunder
P7,744, and that while this remained unpaid the land would
consolidated; and that is because the stipulation to
continue in the possession of Nicolas Alegata, with the
repurchase is accidental to a sale and may be made at the
obligation to deliver one-fifth of the products therefrom to
will of the parties. A contract of absolute sale may be made
Mabaquiao. Eulogia Espanola testified having been present
without this stipulation. It seems logical that if this stipulation
when the contract was entered into. Against this declaration
is made and it is declared, null, its nullity cannot affect the
the witness Vicente Gomez was presented, who also stated
sale first since the latter might be entered into without said
that he was present at the time the contract was entered into
stipulation. 
and contradicted Eulogia Espanola's testimony and,
furthermore, stated that the latter was not present then. The
evidence is of such a character as not to justify in any The judgment appealed from is affirmed, with the costs
manner the alteration of the clear terms of the document in against the appellant. So ordered.
 
G.R. No. 190875               June 13, 2012
This action was brought in January, 1922, fifteen years after
the contract was entered into. This being a sale with the right
ANICETO BANGIS substituted by his heirs, namely:
to repurchase, the question, after this lapse of time, is
RODOLFO B. BANGIS, RONNIE B. BANGIS, ROGELIO B.
reduced to whether or not the title to the land conveyed by
BANGIS, RAQUEL B. QUILLO, ROMULO B. BANGIS,
Juana Mabaquiao has been consolidated. The contract, as
ROSALINA B. PARAN, ROSARIO B. REDDY, REYNALDO
been noted, fixes the period for the exercise of the right of
B. BANGIS, and REMEDIOS B. LASTRE, Petitioners, 
redemption until Juana Mabaquiao, or her heirs has the
vs.
means. Whether or not this is considered a period, it is clear
HEIRS OF SERAFIN AND SALUD ADOLFO, namely: LUZ
that the title transmitted to Nicolas Alegata has been
A. BANNISTER, SERAFIN ADOLFO, JR., and ELEUTERIO
consolidated. According to article 1508 of the Civil Code,
ADOLFO rep. by his Heirs, namely: MILAGROS, JOEL,
when no period of redemption is fixed it shall last four years,
MELCHOR, LEA, MILA, NELSON, JIMMY and MARISSA,
and it is fixed, it shall not exceed ten years. The right of
all surnamed ADOLFO, Respondents.
redemption not having been exercised the period of ten
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Cases
DECISION
PERLAS-BERNABE, J.:
Assailed in this Petition for Review on Certiorari under Rule
45 of the Rules of Court is the March 30, 2009 Decision 1 of
the Court of Appeals Mindanao Station (CA) and its
December 2, 2009 Resolution 2 in CA-G.R. CV No. 00722-
MIN which declared that the transaction between the parties
was a mortgage, not a sale, and ordered petitioners to
surrender the possession of the disputed lot upon
respondents' full payment of their indebtedness.
THE ANTECEDENT FACTS
3 
The spouses Serafin, Sr. and Saludada Adolfo were the
original registered owners of a 126,622 square meter lot
covered by Original Certificate of Title (OCT) No. P-489
issued on December 15, 1954 (derived from Homestead
Patent No. V-34974), located in Valencia, Malaybalay,
Bukidnon. This property was mortgaged to the then
Rehabilitation Finance Corporation (now Development Bank
of the Philippines or DBP) on August 18, 1955,4 and upon
default in the payment of the loan obligation, was foreclosed
and ownership was consolidated in DBP's name under
Transfer Certificate of Title (TCT) No. T-1152. 5 Serafin
Adolfo, Sr., however, repurchased the same and was issued
TCT No. 63136 on December 1, 1971, a year after his wife
died in 1970.
Sometime in 1975, Serafin Adolfo, Sr. (Adolfo) allegedly
mortgaged the subject property for the sum of P12,500.00 to
Aniceto Bangis (Bangis) who immediately took possession of
the land.7 The said transaction was, however, not reduced
into writing.8  ordered to indemnify them: (a) ₱50,000.00 each as moral
When Adolfo died, his heirs, namely, Luz Adolfo Bannister,
Serafin Adolfo, Jr. and Eleuterio Adolfo (Heirs of Adolfo),
executed a Deed of Extrajudicial Partition dated December
24, 1997 covering the subject property and TCT No. T-
651529 was issued to them. On May 26, 1998, the said
property was subdivided and separate titles were issued in
names of the Heirs of Adolfo, as follows: TCT Nos. T-66562
and T-66563 for Luz Adolfo Banester 10 ; TCT Nos. T-66560
and T-66561 in the name of Serafin Adolfo, Jr.; and TCT
Nos. T-66564 and T-66565 in favor of Eleuterio Adolfo.11  suit by his heirs, namely, Rodolfo B. Bangis, Ronie B.
In June 1998, the Heirs of Adolfo expressed their intention to
redeem the mortgaged property from Bangis but the latter
Averell B. Abrasaldo – II-Sanchez Roman
refused, claiming that the transaction between him and
Adolfo was one of sale. During the conciliation meetings in
the barangay, Bangis' son, Rudy Bangis, showed them a
copy of a deed of sale and a certificate of title to the disputed
lot.12 The parties having failed to amicably settle their
differences, a certificate to file action13 was issued by the
barangay.
THE PROCEEDINGS BEFORE THE RTC
On July 26, 2000, the Heirs of Adolfo filed a
complaint14 before the Regional Trial Court (RTC) for
annulment of deed of sale and declaration of the purported
contract of sale as antichresis, accounting and redemption of
property and damages against Bangis, docketed as Civil
Case No. 2993-00. The complaint was amended on
September 11, 2001 to include a prayer for the cancellation
of TCT No. T-10567 and the tax declarations in the name of
Bangis in view of the manifestation15 filed by Ex-Officio
Register of Deeds, Atty. Phoebe Loyola Toribio of the
Registry of Deeds, Malaybalay City which states that the said
title was of "dubious" origin since there was no deed of
conveyance upon which the said transfer certificate of title
was based and that its derivative title, TCT No. T-10566,
does not exist in the files of the Registry of Deeds. 16 On
November 12, 2001, the complaint was again amended to
reflect the other certificates of titles issued in the names of
the Heirs of Adolfo and the amount of ₱12,500.00
representing the mortgage debt,17 followed by another
amendment on October 13, 2003 to include the allegation
that they have partitioned the subject lot on December 24,
1997 and that no copy of the supposed deed of sale in favor
of Bangis can be found in the records of the Provincial
Assessor's Office and the Registrar of Deeds. They further
prayed, in the alternative, to be allowed to redeem the
subject lot under the Homestead Law and that Bangis be
damages; (b) 20% of the value of the property as attorney's
fees; and (c) ₱50,000.00 as litigation expenses as well as
the costs of suit.18 
In his Answer with Counterclaim,19 Bangis claimed to have
bought the subject property from Adolfo for which TCT No. T-
1056720 was issued. He also alleged to have been in open
and adverse possession of the property since 1972 and that
the cause of action of the Heirs of Adolfo has prescribed. On
November 11, 2001, Bangis died and was substituted in this
Bangis, Rogelio B. Bangis, Raquel B. Quillo, Romulo B.
Bangis, Rosalina B. Paran, Rosario B. Reddy, Reynaldo B.
Bangis and Remedios B. Lastre (Heirs of Bangis).21 
During the trial, one of the Heirs of Bangis, Rodolfo Bangis,
presented a photocopy of an Extra-Judicial Settlement with
Absolute Deed of Sale dated December 30, 197122 for the
purpose of proving the sale of the subject lot by Adolfo and
his heirs in favor of his predecessors-in-interest, Aniceto
Bangis and Segundino Cortel, for the sum of ₱13,000.00. He
also presented a Promissory Note23 of even date purportedly
executed by Bangis and Segundino Cortel undertaking to
pay the balance of the purchase price in the amount of
₱1,050.00.24 Both documents were notarized by Atty.
Valentin Murillo who testified to the fact of their
execution.25 Rodolfo Bangis likewise testified that they have
been paying the taxes due on the property and had even
used the same as collateral for a loan with a bank.26 
On rebuttal, one of the Heirs of Adolfo, Luz Adolfo Bannister,
denied the due execution and genuineness of the foregoing
Extra-Judicial Settlement with Absolute Deed of Sale alleging
forgery.27 
On December 29, 2005, the RTC rendered a Decision28 in
favor of the Heirs of Adolfo, the dispositive portion of which
reads:
WHEREFORE, the preponderance of evidence being
strongly in favor of the plaintiffs and against the defendants,
decision is hereby rendered:
1. Declaring the contract between the plaintiffs and
defendants as a mere mortgage or antichresis and
since the defendants have been in the possession
of the property in 1975 up to the present time
enjoying all its fruits or income, the mortgaged loan
of P12,000.00 is deemed fully paid;
2. Ordering the defendants to deliver the
possession of the property in question and all the
improvements thereon to the plaintiffs peacefully;
3. Declaring TCT No. 10567 in the name of
Aniceto Bangis as NULL AND VOID AB INITIO
and directing the Office of the Register of Deeds to
cause its cancellation from its record to avoid
confusion regarding the ownership thereof; and
4. Declaring all the transfer certificates of title
issued in favor of the plaintiffs namely, Luz Adolfo-
Bannister, Serafin Adolfo, Jr. and Eleuterio Adolfo,
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as above-mentioned as the ones valid and issued
in accordance with PD 1529.
SO ORDERED.
Aggrieved, the Heirs of Bangis appealed the foregoing
disquisition to the Court of Appeals (CA).
THE CA RULING
In its assailed Decision, the CA affirmed the RTC finding that
the contract between the parties was a mortgage, not a sale.
It noted that while Bangis was given possession of the
subject property, the certificate of title remained in the
custody of Adolfo and was never cancelled. The CA also
ordered the Heirs of Adolfo to pay the Heirs of Bangis the
mortgage debt of ₱12,500.0029 with twelve (12%) percent
interest reckoned from 1975 until 1998 and to deliver to them
the possession of the property upon full payment.30 It,
however, deleted the RTC order directing the Register of
Deeds to cancel TCT No. T-10567 in the name of Bangis for
being a collateral attack proscribed under PD 1529.31  other are clear and convincing and adequate to establish a
Dissatisfied, the Heirs of Bangis filed a Motion for
Reconsideration32 arguing that the CA erred in disregarding
their testimonial and documentary evidence, particularly, the
Extra-Judicial Settlement with Absolute Deed of Sale (Exh.
2) which purportedly established the sale in favor of their
predecessor-in-interest, Aniceto Bangis. The said motion
was, however, denied in the Resolution33 dated December 2,
2009.
THE ISSUE BEFORE THE COURT
Hence, the instant petition for review on certiorari based on
the lone assignment of error34 that the transaction between
the parties was one of sale and not a mortgage or
antichresis. In support, petitioner Heirs of Bangis maintain
that the CA erred in not giving probative weight to the Extra-
Judicial Settlement with Absolute Deed of Sale 35 which
supposedly bolsters their claim that their father, Aniceto
Bangis, bought the subject parcel of land from Adolfo.
Hence, the corresponding title, TCT No. T-10567, issued as
a consequence should be respected.
On their part, respondent Heirs of Adolfo averred that no
reversible error was committed by the CA in upholding that
no sale transpired between the parties' predecessors-in-
interest. Moreover, petitioners' TCT No. T-10567 was not
Averell B. Abrasaldo – II-Sanchez Roman
offered in evidence and worse, certified as of dubious origin document, only its photocopy 42 was presented at the trial
per the Manifestation of the Registrar of Deeds.36  without providing sufficient justification for the production of
secondary evidence, in violation of the best evidence rule
embodied under Section 3 in relation to Section 5 of Rule
THE COURT'S RULING
130 of the Rules of Court, to wit:
The petition must fail.
SEC. 3. Original document must be produced; exceptions. -
When the subject of inquiry is the contents of a document, no
At the outset, it should be emphasized that a petition for evidence shall be admissible other than the original
review on certiorari under Rule 45 of the Rules of Court document itself, except in the following cases:
involves only questions of law and not of facts. A question of
law exists when there is doubt as to what the law is on a
(1) When the original has been lost or destroyed,
given set of facts while a question of fact arises when there
or cannot be produced in court, without bad faith
is doubt as to the truth or falsity of the alleged facts.37 
on the part of the offeror;
The Heirs of Bangis, in insisting that both the RTC and the
(2) When the original is in the custody or under the
CA erroneously disregarded the evidence of sale they
control of the party against whom the evidence is
presented, are effectively asking the Court to re-evaluate
offered, and the latter fails to produce it after
factual issues which is proscribed under Rule 45. "Such
reasonable notice;
questions as to whether certain items of evidence should be
accorded probative value or weight, or rejected as feeble or
spurious, or whether or not the proofs on one side or the (3) When the original consists of numerous
accounts or other documents which cannot be
proposition in issue, are without doubt questions of fact."38  examined in court without great loss of time and
the fact sought to be established from them is only
the general result of the whole; and
Nonetheless, the Court perused the records and found
substantial evidence supporting the factual findings of the
RTC, as affirmed by the CA, that the nature of the (4) When the original is a public record in the
transaction between the parties' predecessors-in-interest custody of a public officer or is recorded in a public
was a mortgage and not a sale. Thus, the maxim that factual office.
findings of the trial court when affirmed by the CA are final
and conclusive on the Court39 obtains in this case.
SEC. 5. When original document is unavailable. - When the
original document has been lost or destroyed, or cannot be
THERE WAS NEITHER AN produced in court, the offeror, upon proof of its execution or
ANTICHRESIS NOR SALE existence and the cause of its unavailability without bad faith
on his part, may prove its contents by a copy, or by a recital
of its content in some authentic document, or by the
For the contract of antichresis to be valid, Article 2134 of the
testimony of witnesses in the order stated.
Civil Code requires that "the amount of the principal and of
the interest shall be specified in writing; otherwise the
contract of antichresis shall be void." In this case, the Heirs The bare testimony of one of the Heirs of Bangis, Rodolfo
of Adolfo were indisputably unable to produce any document Bangis, that the subject document was only handed 43 to him
in support of their claim that the contract between Adolfo and by his father, Aniceto, with the information that the original
Bangis was an antichresis, hence, the CA properly held that thereof "could not be found"44 was insufficient to justify its
no such relationship existed between the parties. 40  admissibility. Moreover, the identification made by Notary
Public Atty. Valentin Murillo45 that he notarized such
document cannot be given credence as his conclusion was
On the other hand, the Heirs of Bangis presented an Extra-
not verified against his own notarial records.46 Besides, the
Judicial Settlement with Absolute Deed of Sale dated
Heirs of Bangis could have secured a certified copy of the
December 30, 197141 to justify their claimed ownership and
deed of sale from the Assessor's Office 47 that purportedly had
possession of the subject land. However, notwithstanding
that the subject of inquiry is the very contents of the said
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its custody in compliance with Section 7, Rule 130 48 of the
Rules of Court.
In sum, the Heirs of Bangis failed to establish the existence
and due execution of the subject deed on which their claim of
ownership was founded. Consequently, the RTC and CA
were correct in affording no probative value to the said
document.49  annex "B-2", T-66560 annex "B-3", T-66561 annex "B-4", T-
TCT NO. T-10567 IN THE NAME OF
ANICETO BANGIS CANNOT PREVAIL
OVER THE TITLES OF THE HEIRS OF
ADOLFO
Records reveal that TCT No. T-10567 purportedly secured
as a consequence of the deed of sale executed by Adolfo
and his heirs in favor of Bangis was not offered in evidence.
A perusal of its copy, however, shows that it was a transfer
from TCT No. T-10566, 50 which title the Heirs of Bangis
unfortunately failed to account for, and bore no relation at all
to either OCT No. P-489 (the original title of the Spouses
Adolfo) or TCT No. T-6313 (issued to Adolfo when he
repurchased the same property from DBP). The
Manifestation51 of the Register of Deeds of Malaybalay City
regarding the doubtful origin of TCT No. T-10567 and the
regularity of the titles of the Heirs of Adolfo are insightful,
thus:
That the verification from the office of the original copy of
Transfer Certificate of Title No. T-10567 in the name of
Anecito Bangis is existing in the office. Machine copy of the
said title is hereto attached as annex "A" but nothing in the
title whether annotated or attached, any Deed of
Conveyance or other Documents by which said title was
issued or transferred in the name of Anecito Bangis.
That for the information and guidance of the court attached
herewith is a machine copies [sic] Original Certificate of Title
No. P-489 in the name of Serafin Adolfo, marked as annex
"B" which supposedly the mother title of Transfer Certificate
of Title No. T-10567 as to how this title was transferred in the
name of Anecito Bangis. Nothing will show which will validly
supports [sic] the said transfer, in other words the said title is
dubious.
This Original Certificate of Title No. P-489 in the name of
Serafin Adolfo was mortgage to the Development Bank of
the Philippines and then it was consolidated and Transfer
Certificate of Title No. T-1152 was issued in the name of
Development Bank of the Philippines. From the Development
Averell B. Abrasaldo – II-Sanchez Roman
Bank of the Philippines a Deed of Sale was executed by the
Development Bank of the Philippines in favor of Serafin
Adolfo and Transfer Certificate of Title No. T-6313 marked
annex "B-1" was issued in the name of Serafin Adolfo.
An Extrajudicial Settlement was now [sic] by the Heirs of
Serafin Adolfo and Transfer Certificate of Title Nos. T-65152
66562 annex "B-5", T-66563 annex "B-6", T-66564 annex "B-
7", and T-66565 annex "B-8" were issued to the Heirs.
The titles issued to the Heirs of Serafin Adolfo were
legitimately issued by this office after all its [sic] requirements
and supporting documents were submitted and proper
annotations were reflected at the back of the title of Serafin
Adolfo.
Transfer Certificate of Title No. T-10567 as shown on the title
was derived from Transfer Certificate of Title No. T-10566
but [sic] title is not existing in this office.
As held in the case of Top Management Programs
Corporation v. Luis Fajardo and the Register of Deeds of Las
Piñas City:52 "if two certificates of title purport to include the
same land, whether wholly or partly, the better approach is to
trace the original certificates from which the certificates of
titles were derived."
Having, thus, traced the roots of the parties' respective titles
supported by the records of the Register of Deeds of
Malaybalay City, the courts a quo 53 were correct in upholding
the title of the Heirs of Adolfo as against TCT No. T-10567 of
Bangis, notwithstanding its earlier issuance on August 18,
197654 or long before the Heirs of Adolfo secured their own
titles on May 26, 1998. To paraphrase the Court's ruling
in Mathay v. Court of Appeals:55 where two (2) transfer
certificates of title have been issued on different dates, the
one who holds the earlier title may prevail only in the
absence of any anomaly or irregularity in the process of its
registration, which circumstance does not obtain in this case.
CANCELLATION OF TCT NO. T-10567
The Court cannot sustain the CA's ruling56 that TCT No. T-
10567 cannot be invalidated because it constitutes as a
collateral attack which is contrary to the principle of
indefeasibility of titles.
It must be noted that Bangis interposed a counterclaim in his
Answer seeking to be declared as the true and lawful owner
of the disputed property and that his TCT No. T-10567 be
declared as superior over the titles of the Heirs of
Adolfo.57 Since a counterclaim is essentially a
complaint58 then, a determination of the validity of TCT No. T-
10567 vis-a-vis the titles of the Heirs of Adolfo can be
considered as a direct, not collateral, attack on the subject
titles.59 
In Pasiño v. Monterroyo, the Court has ruled, thus:
It is already settled that a counterclaim is considered an
original complaint and as such, the attack on the title in a
case originally for recovery of possession cannot be
considered as a collateral attack on the title. Development
Bank of the Philippines v. Court of Appeals is similar to the
case before us insofar as petitioner in that case filed an
action for recovery of possession against respondent who, in
turn, filed a counterclaim claiming ownership of the land. In
that case, the Court ruled:
Nor is there any obstacle to the determination of the validity
of TCT No. 10101. It is true that the indefeasibility of torrens
title cannot be collaterally attacked. In the instant case, the
original complaint is for recovery of possession filed by
petitioner against private respondent, not an original action
filed by the latter to question the validity of TCT No. 10101
on which petitioner bases its right. To rule on the issue of
validity in a case for recovery of possession is tantamount to
a collateral attack. However, it should not [b]e overlooked
that private respondent filed a counterclaim against
petitioner, claiming ownership over the land and seeking
damages. Hence, we could rule on the question of the
validity of TCT No. 10101 for the counterclaim can be
considered a direct attack on the same. ‘A counterclaim is
considered a complaint, only this time, it is the original
defendant who becomes the plaintiff... It stands on the same
footing and is to be tested by the same rules as if it were an
independent action.’ x x x (Citations omitted) 60 
Besides, the prohibition against collateral attack does not
apply to spurious or non-existent titles, which are not
accorded indefeasibility,61 as in this case.
THE PRESENT ACTION HAS NOT PRESCRIBED
The claim of the Heirs of Bangis that since they have been in
possession of the subject land since 1972 or for 28 years
reckoned from the filing of the complaint in 2000 then, the
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present action has prescribed is untenable.1âwphi1 It bears
to note that while Bangis indeed took possession of the land
upon its alleged mortgage, the certificate of title (TCT No.
6313) remained with Adolfo and upon his demise, transferred
to his heirs, thereby negating any contemplated transfer of
ownership. Settled is the rule that no title in derogation of
that of the registered owner can be acquired by prescription
or adverse possession.62 Moreover, even if acquisitive
prescription can be appreciated in this case, the Heirs of
Bangis' possession being in bad faith is two years shy of the
requisite 30-year uninterrupted adverse possession required
under Article 1137 of the Civil Code.1âwphi1
Consequently, the Heirs of Bangis cannot validly claim the
rights of a builder in good faith as provided for under Article
449 in relation to Article 448 of the Civil Code. Thus, the
order for them to surrender the possession of the disputed
land together with all its improvements was properly made.
LIABILITY FOR THE PAYMENT OF INTEREST
Finally, it is undisputed that the Heirs of Bangis made no
judicial or extrajudicial demand on the Heirs of Adolfo to pay
the mortgage debt. Instead, it was the latter who signified
their intent to pay their father's loan obligation, admittedly in
the amount of ₱12,500.00,63 which was refused. The
mortgage contract therefore continued to subsist despite the
lapse of a considerable number of years from the time it was
constituted in 1975 because the mortgage debt has not been
satisfied.
Following the Court's ruling in the iconic case of Eastern
Shipping Lines, Inc. v. Court of Appeals,64 the foregoing
liability, which is based on a loan or forbearance of money,
shall be subject to legal interest of 12% per annum from the
date it was judicially determined by the CA on March 30,
2009 until the finality of this Decision, and not from 1975 (the
date of the constitution of the mortgage); nor from 1998
(when an attempt to pay was made) or in 2000 at the time
the complaint was filed, because it was the Heirs of Adolfo
and not Bangis who filed the instant suit65 to collect the
indebtedness. Thereafter, the judgment award inclusive of
interest shall bear interest at 12% per annum until its full
satisfaction.66 
WHEREFORE, premises considered, the instant petition for
review on certiorari is DENIED and the assailed Decision
dated March 30, 2009 of the Court of Appeals Mindanao
Station (CA) and its Resolution dated December 2, 2009 in
CA-G.R. CV No. 00722-MIN are AFFIRMED with
Averell B. Abrasaldo – II-Sanchez Roman
MODIFICATION: (1) cancelling TCT No. T-10567; and (2)
ordering respondent Heirs of Adolfo to pay petitioner Heirs of
Bangis the sum of ₱12,500.00 with legal interest of 12% per
annum reckoned from March 30, 2009 until the finality of this
Decision and thereafter, 12% annual interest until its full
satisfaction.
The rest of the Decision stands.
SO ORDERED.
G.R. No. L-11933       December 1, 1917
ALBERTO BARRETTO, plaintiff-appellee,  writing by the plaintiff.
vs.
LEONARDO F. BARRETTO, ET AL., objector-appellant. 
TORRES, J.:
This case was begun in the Court of First Instance of
Zambales by Alberto Barretto, who claimed delivery to him of
a piece of land which was a part of the hacienda named
"Balintagac" together with its fruits or their value, and also of
a lot situated in the same hacienda together with the rents
thereof, and was brought to this court on appeal, by the bill of
exceptions, presented by the counsel for the defendants and
the defendant interveners from the judgment entered on July
2, 1915, in the office of the clerk of the said Court of First
Instance, by which, after declaring that the said Alberto
Barretto y Blanco is the owner of the hacienda of Balintagac
described in the complaint, it was ordered that the defendant
Leonardo F. Barretto deliver to the plaintiff the possession of
the piece of land and the lot withheld, and pay, together with
the other defendants, the costs of the action.
In his complaint of November 11, 1913, filed in the Court of
First Instance of Zambales, Alberto Barretto alleges as his
first cause of action that he is the owner of the whole
hacienda called Balintagac, situated in the barrio of the same
name, in the municipality of San Felipe of said province,
having an area of about 200 qui_¤_ones antiguos, and
bounded on the north by the Anonang River; on the south by
the Carmen Mountain; on the east by the corner of the
Balintagac; and on the west by the Tectec Mountain. That he
was in possession of the said hacienda quietly, peacefully,
and continuously, as were his predecessors since the year
1884 until May, 1912; that on a certain day of the latter
month and year, the defendant Leonardo F. Barretto alleging
himself to be the owner of a certain part of said hacienda
illegally and unduly usurped a portion of land of the said
hacienda on the eastern part situated in Ilum-Ilog, Santa
Maria and Inubo-grande y pequeño, Santa Maria and
Carupisan, bounded on the north by the Anonang River, on
the east by the Golongoro River and the corner of
Balintagac, on the south by the Balintagac and Inbo
mountains, and on the west by the rest of the hacienda
which the plaintiff at present holds; that since that time the
defendant had been receiving two-thirds of the fruits which
the usurped portion annually produced, which amounted to
33 uyones and 145 and 33 per cent cavanes of rice at P8 per
upon and P2 a cavan, and whose value amounts to the sum
P554; that the defendant refused to return that portion of
land usurped together with the fruits received, or their value,
in spite of the fact that he has been required to do so in
 
That, as a second cause of action, the defendant, on the said
month of May, 1912, illegally took possession of a lot
situated in the same hacienda and barrio of Balintagac,
bounded on the front by the provincial road, on its right, left,
and rear sides by lands of the hacienda belonging to the
plaintiff, measuring 18 meters in front by 48 meters deep,
that is, an area of 864 square meters, which lot should
reasonably produce for its use a monthly rent of P1, and that
in spite of the fact that the plaintiff had requested the
defendant to vacate and to deliver the said lot to him with its
rents, he (defendant) refused to return the said lot or pay the
rents therefor, for which reason the plaintiff prayed judgment
in his favor ordering the delivery or restitution of the said
portion of land and lot, claimed in his first and second causes
of action, together with the products of rice said to have been
received, and those which in the future may be obtained, or
their value, and the sum of P18 for the reasonable use of the
lot since May, 1912, to October, 1913, and the rent that it
should produce at the rate of P1 a month until the actual
delivery of the lot shall have been made, with the costs of the
action. 
The demurrer to the said complaint having been overruled,
the counsel for the defendant in an answer dated May 23,
1914, denied each and every one of the allegations
contained in the complaint and alleged that the defendant is
in possession of the land and lot claimed in the first and
second causes of action of the complaint, as well as of the
rest of the hacienda, that is, that he is in possession of all the
hacienda of Balintagac as the true owner thereof since
1881. 
Upon the permission of the Court, the attorney for Angelica
Barretto, Beatriz Barretto West and her husband, J. C. West,
Maria Teresa Barretto York and her husband Archibald C.
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York, Carlos Alejandro Barretto, Bernardo O. Barretto, and
Ernesto E. Barretto, filed a complaint of intervention in this
case, alleging among other things that the hacienda of
Balintagac in controversy was owned and possessed by
Juan Antonio Barretto, Sr.; that on his death in Zambales on
November 21, 1881, he left seven children called Juan
Antonio Barretto, domiciled in Macao, Angelica Maria
Barretto, a resident of Manila, Leonardo F. Barretto, a
resident of San Felipe, Zambales, Francisca Barretto also
domiciled in Macao, Bartolome Barretto, a resident of Kow
Loon, China, and now deceased Jose A. Barretto and
Leopoldo Barretto, and these seven children of the deceased
Juan Antonio Barretto, Sr., were his only heirs who
succeeded him in all his rights and actions and for this
reason they became owners with the right of possession of
the said hacienda of Balintagac, as in fact they are at present
in possession of the same through their agents and
representatives; that one of his children, Jose A. Barretto on
his death in 1893 left three children, Beatriz Barretto, Amalia
Barretto, and Jose Conde Barretto, who succeeded in all
rights of their father Jose A. Barretto and in the possession
of the said hacienda, as well as the four children of Leopoldo
F. Barretto, who died in 1894, named Maria Teresa Barretto,
Carlos Alejandro Barretto, Ernesto E. Barretto, and Bernardo
O. Barretto, coowners and copossessors of the said
hacienda; that the interveners deny that the plaintiff Alberto
Barretto is the owner of any part of the said hacienda and the
lot mentioned in the complaint, or that the said plaintiff was in
possession of them, or any portion of the same, and that the
defendant Leonardo F. Barretto is in possession of the said
hacienda Balintagac and the lot described in the complaint
as the representative of the interveners and the other
coheirs, of the estate of the deceased Juan Antonio Barretto
Sr., since the said Leonardo F. Barretto being one of the
coheirs, is not the only owner of the said hacienda, nor of
any part of the same except that portion which belongs to
him as one of the heirs of the original owner, but without any
right to withhold the possession of the hacienda as against
the interveners, and concluded by asking that they be
declared owners as the heirs of their deceased ascendant
Juan Antonio Barretto, Sr., of their respective undivided
shares in the hacienda and lot mentioned in the complaint,
adjudging to them the possession of the same, with the
costs. lawphi1.net
The counsel for Amalia Barretto Moore and her husband, J.
B. Moore, residents of San Francisco, California, with the
permission of the court filed a complaint of intervention
proclaiming their intention to unite, take part and reproduced
the application for intervention formerly asked by Angelica
Maria Barretto and others, adopting all the allegations
contained in the former complaint of intervention with the
prayers therein made.  payment of the sum of P7,648. Lastly and likewise as a
Averell B. Abrasaldo – II-Sanchez Roman
The demurrer interposed by the plaintiff having been
overruled and the court having ordered Juan Antonio
Barretto, Jr., Amalia Barretto, Jose Conde Barretto,
Francisco Barretto, and Bartolome Barretto to appear and
become parties to this action, with the exception of the
plaintiff, the latter in answer to the complaint of intervention
alleged: that he admits the first three paragraphs of said
complaint and denies generally and specifically those
following, up to paragraph 13, except the last of these in
which it is alleged that Leonardo F. Barretto was the
representative of the interveners and of the other heirs of
Juan Antonio Barretto, Sr., which part is admitted. As a
special defense he alleged that by a notarial document
executed May 16, 1882, Juan Antonio Barretto Grandpre, Jr.,
then executor of his deceased father Juan Antonio Barretto,
Sr., declaring himself to be the absolute owner of all the
hacienda of Balintagac — the boundary of which is
expressed and its area is 200 quiñones — borrowed money
in the sum of P11,000 from Antonio Vicente Barretto for the
expenses of the said hacienda with the obligation to pay
P1,000 for delinquency and other causes and interests at 8
per cent per annum, payable quarterly in advance, and as
guaranty for said loan he mortgaged specifically the
cultivated half of the hacienda and other properties
mentioned in the instrument and to this effect the brothers of
said Juan Antonio Barretto Grandpre intervened and
procured the granting of the loan for the indicated purpose,
inducing the creditor to grant said loan on the security of the
mortgage above mentioned; that for the failure of the debtor
to pay his debt, the creditor Antonio Vicente Barretto, on
April, 1885, brought an action to foreclose the mortgage in
order to recover the money loaned, against Juan Antonio
Barretto Grandpre in his own behalf and as executor of his
father. The trial was at first conducted against himself and
then against Leonardo F. Barretto as attorney in fact of said
Juan Antonio Barretto Grandpre. Half of the mortgaged
hacienda was levied upon and a judgment to sell the
property was rendered, but said half of the attached
hacienda could not be sold in spite of the fact that it was
placed at auction three times, its price in the last two having
been reduced; then the creditor, about May, 1888, prayed for
the adjudication of all the property attached to the payment
of his credit of P7,648 to which adjudication and conveyance
in part payment the defendant Leonardo F. Barretto
voluntarily agreed and consented as attorney in fact of Juan
Antonio Barretto Grandpre. The Juan Antonio Barretto, Jr.,
and his brothers, not being able to pay the debt, interests,
and costs delivered and conveyed all the hacienda of
Balintagac to the creditor about the year 1889 or 1890. That
from these years the brothers of Juan Antonio Barretto
Grandpre named Leonardo F. Barretto, Jose Barretto,
Leopoldo Barretto, and Bartolome Barretto administered, by
the appointment and exclusive account of Antonio Vicente
Barretto, the entire hacienda, acknowledging him as the
owner of all of it and delivering to him all its products till April,
1896. That in this month of that year Antonio Vicente
Barretto leased the whole hacienda for P900 annually to Luis
Bonifacio Barretto who administered it till his death in 1902
with the knowledge and without the objection of Leonardo F.
Barretto, the attorney in fact and representative of his
brothers and coheirs. That on the death of Antonio Vicente
Barretto and his children Antonio Maria Barretto y Rocha,
Ricardo Esteban Barretto y Rocha and Guadalupe Barretto y
Rocha succeeded him, about the year 1902 they appointed
Antonio T. Barretto y Blanco as administrator of the entire
hacienda with its annual rent of P225 and he administered it
continuously without any interruption whatsoever till May or
June, 1912, when Leonardo F. Barretto illegally took
possession of two portions of the said hacienda the area and
boundaries of which are described in the complaint. That on
March 31, 1913, Antonio and Ricardo Barretto y Rocha by
means of a notarial document, sold to the plaintiff Alberto
Barretto y Blanco the two-thirds part which belonged to them
as heirs of the creditor Antonio Vicente Barretto. That about
June, 1902, Guadalupe Barretto y Rocha with the consent of
her husband donated all her rights and interests as heir of
Antonio Vicente Barretto, on condition that the donee should
deliver to every one of his brothers or the latter's children
one eight part of what the donation consisted, and Alberto
Barretto, having acquired the rights which Ricardo, Antonio
Barretto having acquired the rights which Ricardo, Antonio
Maria, and Guadalupe Barretto y Rocha had as successors
of Antonio Vicente Barretto over the whole of the said
hacienda, the plaintiff has possessed the same quietly,
publicly, and peacefully as its owner until May or June, 1912,
when Leonardo F. Barretto usurped and retained certain
portions of the property and its land tax (with the sworn
declaration of ownership since it was introduced up to the
present) as been paid by him in the name and on the
account of the heirs of Antonio Vicente Barretto. 
As a special defense and as an estoppel he (plaintiff) alleged
that Juan Antonio Barretto, Jr., and his brothers Leonardo F.
Barretto, Bartolome Barretto, Jose Barretto, and Leopoldo
Barretto by their own acts induced Antonio Vicente Barretto
intentionally and deliberately to believe that Juan Antonio
Barretto, Jr., had full and absolute power to dispose of all the
hacienda of Balintagac, by reason of which the creditor
executed the loan on the security of the said property and
then his brothers by their own acts acknowledged Antonio
Vicente Barretto as the owner of the whole hacienda, and
Leonardo F. Barretto, on his part, as attorney in fact of Juan
Antonio Grandpre, Jr., and as representative of his coheirs
agreed to the adjudication of the attached and cultivated half
of the hacienda in favor of Antonio Vicente Barretto in
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special defense he (plaintiff) alleged prescription for the
reason that Antonio Vicente Barretto in his own behalf and in
that of his successors and through his representatives,
administrators, lessees and grantees, since 1889 and 1890
had been in possession of the hacienda publicly, quietly and
peacefully till May or June, 1912, without any interruption
and as owner of the whole of said hacienda by means of
which possession they had acquired the dominion and
ownership of all the said hacienda by acquisitive prescription,
and at the same time all rights and actions which Leonardo
F. Barretto and the interveners could have or might allege as
to all part of it, have prescribed; and, therefore, Alberto
Barretto asked the court to dismiss the complaint of
intervention, declaring him the owner of all the hacienda of
Balintagac, with costs to the defendants and interveners.  the usurpation of two small portions of that property effected
The counsel for the interveners in answer to the special
defenses alleged in the preceding pleading, said that he
denies generally and specifically all that was alleged in it by
the plaintiff, defendant in the intervention.  while living, and then by his successors among whom was
After the trial and the introduction of evidence on both sides,
the exhibits being attached to the record, the court by
judgment recorded in the office of the clerk of the Court of
First Instance of Zambales July 2, 1915, rendered the
decision above mentioned, against which the defendants and
the interveners excepted and asked for a new trial, which
was denied and exception was taken to the ruling by them.
The corresponding bill of exceptions having been presented,
the same was approved and forwarded to this court together
with the document and transcript of the stenographic notes
and other proceedings which constitute the evidence
adduced by the parties in the action. 
The fact is uncontroverted and fully proved in the record that
Antonio Vicente Barretto as creditor — not being able to
collect his credit of P11,000 and interest at 8 per cent, nor
obtain the adjudication in his favor of half of hacienda of
Balintagac which was mortgaged for the security of the debt,
and there having been no bidders on the three occasions in
which it was offered for public auction — took possession, in
1888 or 1889, of all the hacienda and from that time on
received through his administrators the products of the same
for the purpose of collecting his credit interests, and on the
lack of proof to contrary it may be established that he took
possession of said hacienda by virtue of voluntary
assignment with the express consent of heirs of the
deceased Juan Antonio Barretto, Sr., owner of one-half of
the hacienda and of Juan Antonio Barretto Grandpre, Jr.,
owner of the other half.  proved deserves in law the name of antichresis as defined by
Averell B. Abrasaldo – II-Sanchez Roman
It does not fully appear which contract has been entered into By the antichresis a creditor acquires a right to
between the creditor and the said heirs of the deceased Juan receive the fruits of real property of his debtor, with
Antonio Barretto, Sr., and his son Juan Antonio Barretto the obligation to apply them to the payment of the
Grandpre; but from the facts that have been fully established interest, if due, and afterwards to the principal of
it is inferred that since the years 1888-1889, once the his credit.
foreclosure proceedings brought by the creditor Antonio
Vicente Barretto, against Juan Antonio Barretto Jr., were
The perusal of the following articles, 1882 to 1886, of the
suspended, because the creditor had not been able to obtain
Code, shows in a convincing way that the possession of the
the adjudication of the hacienda in his favor, the creditor took
hacienda enjoyed by the creditor Antonio Vicente Barretto
possession of the hacienda of Balintagac, and held it in
while living and later on by his successors up to the present
usufruct with the knowledge and express consent of its
time was conferred to them by virtue of the stated contract or
legitimate owners; thenceforth there has not been any
agreement in antichresis; thus, one of the administrators of
opposition or protest against the possession which by
the hacienda, Luis Barretto, was the one who presented the
usufruct the creditor and his successors enjoyed, aside from
sworn declaration of ownership of the same for the purposes
of the assessment tax and paid the land tax in the name of
by the defendant Leonardo F. Barretto in 1912. 
the creditor who possessed and held the hacienda in
usufruct, as it is duly established in the record. 
Considering that from the facts proved, which refer to the
possession and usufruct enjoyed by Antonio Vicente Barretto
Although article 1884 of the same Code states that the
creditor does not acquire through possession the ownership
the plaintiff, Alberto Barretto y Blanco, it is logically deduced
of the real property delivered by virtue of an antichresis, for
that such facts were accomplished by virtue of a verbal
failure to pay the debt within the stipulated time — any
contract, and not by written one, entered into between the
agreement to the contrary being void — nevertheless, the
owners of the hacienda and the creditor Antonio Vicente
debtor according to the preceding article 1883 cannot
Barretto. Since from the documentary and oral evidence on
recover the use of the real property given in antichresis to
record it is not shown that the debtors have delivered the
the creditor, without previously fully paying the creditor, who
whole hacienda to the creditor by assignment of the property,
in case of insolvency may ask for the sale of the real
in payment of the debt that weighed down, as it were, the
property which he possesses by virtue of the covenant in
half which secures the payment of the debt it is to be
antichresis, unless the pending debt be paid. 
presumed with founded and just reason that the debtors
delivered not only one half, but the whole hacienda with a
view that the creditor might collect by usufruct his credit with It appears to be duly proved in the record that in 1912 the
the accrued interests.  defendant Leonardo F. Barretto, by himself and for himself
and without the consent of the present possessor now the
plaintiff, took over and usurped a portion of land of the
Even when it cannot possibly be doubted that the
hacienda and a lot included in it, withholding and refusing to
assignment of the hacienda to Antonio Vicente Barretto was
deliver them to the creditor in antichresis on the pretext that
not made in payment of his credit, as shown by the evidence
he is the owner of the whole hacienda; and as it does appear
adduced at the trial, nevertheless, in spite of the fact that the
in any way that the debt, for the payment of which the whole
agreement between the creditor and the debtors was not set
hacienda of Balintagac was delivered in antichresis, has
down in any document, due to the relationship which exists
been paid, it is doubtless that the defendant Leonardo F.
between them, it may safely be asserted, assuming the facts
Barretto, when he effected the usurpation, acted without just
that took place, that the debtors have limited themselves to
reason and in contravention of the provisions of the said
give to the creditor the right to collect his credit from the fruits
article 1883 of the Civil Code. It is known that the action to
of the hacienda of Balintagac, conferring upon him the
recover a thing, where a legitimate possessor has been
possession of the property, but not transferring to him the
deprived of his possession, takes place in accordance with
dominion of the same, since such transfer does not in any
the law, even against the owner himself, who wrested the
way appear to be proved in the present action. 
possession, since the despoiler can never be protected by
the law even on his right of ownership, without first restoring
The agreement or verbal stipulation which lead to the facts what he acquired through his authority by an illegal act of
dispossession. 
the Civil Code in its article 1881, which says: 
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It is to be inferred from the facts and the foregoing
statements that though the plaintiff Alberto Barretto has no
title of ownership over the hacienda of Balintagac, and
therefore, he can not be declared owner of the same,
nevertheless, his claim that a judgment be rendered ordering
the return to him of the portion usurped by the defendant
Leonardo F. Barretto which refers to the first cause of action
of his complaint, as well as the lot described in the second
cause of the action of the same, which is withheld by said
defendant, is in conformity with the law and is in accordance
with the merits of the present action. The plaintiff being in the
legitimate possession and use of all the hacienda of
Balintagac which was voluntarily delivered to him by Juan
Antonio Barretto Grandpre, Jr., and his coheirs as the
successors of the deceased Juan Antonio Barretto, Sr., with
the object that the creditor Antonio Vicente Barretto might
collect the capital and interests which they owed and still
owe him — a lawful contractual act called by law a covenant
or agreement in antichresis — the debtors, or any of them,
can under no circumstances while the debt exists and is not
fully paid, recover or reacquire, as the mentioned article
1883 provides, the possession and use of the real property
delivered to the creditor, without the latter giving his consent;
consequently, the defendant Leonardo F. Barretto without
the knowledge or consent of the plaintiff Alberto Barretto who
succeeded by singular title in the possession and use of the
hacienda in question, could not have recovered by
usurpation the possession and use of a portion of the same. 
Although the plaintiff affirms in his complaint that he is the
sole owner of the said hacienda and as such he claims in his
complaint the delivery of the portion of the land and the lot
withheld by the defendant, his complaint is not, even then,
explicit enough to affirm that the action brought thereby is a
technical one and precisely that of recovery of possession
(reivindicatoria). In a complaint whereby the "accion
publiciana" is brought, also called in law a plenary action of
possession, the restitution and delivery of the thing or real
property of the possession of which the plaintiff has been
illegally deprived is equally asked for. Therefore, it should not
be understood that, because the plaintiff Barretto asks for the
delivery of the portion of land and lot claimed in his
complaint, the action brought is that of recovery of ownership
and possession (reivindicatoria): it should be understood,
instead, that he seeks to recover the portion of land, of the
legal possession of which he has been improperly deprived
by the usurper, Leonardo F. Barretto; since the facts should
be established in the suit as grounds for decision in
accordance with the results of the evidence adduced at the
trial. When the defendants denied the ownership which the
plaintiff pretends to have over the said hacienda, they have
not denied nor could they deny the existence and the
certainty of the debt guaranteed by the mortgage of one-half
Averell B. Abrasaldo – II-Sanchez Roman
of the hacienda of Balintagac in favor of the creditor, now
deceased, Antonio Vicente Barretto; nor could they allege
and prove that the debt has been entirely paid, so that they
may reacquire and recover the possession and use of the
hacienda which was delivered to the original creditor, the
predecessor of the plaintiff.  the said hacienda and whatever rights and interests the
The preceding facts in this case are beyond discussion,
since it appears duly proved in the record that the original
owner of the hacienda of Balintagac, according to the
composition title issued by the State, Exhibit A, on July 9,
1858, was Antonio Lorenzo Barretto, now deceased, from
whom Juan Antonio Barretto, Sr., acquired one-half of said
hacienda, on March, 1881 (Exhibit C), and Juan Antonio
Barretto Jr., had acquired the other half from the said original
owner Antonio Lorenzo Barretto, on November, 1881. 
After the death of Juan Antonio Barretto, Sr., his son Juan
Antonio Grandpre, in his own behalf and as the executor of
his father, mortgaged, on May 16,1882, the cultivated half of
said hacienda in favor of Antonio Vicente Barretto as security
for the amount of P11,000 which the latter loaned to him,
according to the document, Exhibit F, recorded in the
registry. 
In order to show how and in what manner the plaintiff Alberto
Barretto succeeded to the rights acquired by the creditor
Antonio Vicente Barretto to whom the hacienda was
delivered in 1888 or 1889, that he might collect his credit
from the products of the property, it is stated that on the
death of the said creditor his three children and heirs Antonio
Ma Barretto, Ricardo Esteban Barretto, and Guadalupe
Barretto came to succeed him. The last one by means of a
document, Exhibit 1, executed July 5, 1902, made a
donation inter vivos in favor of the plaintiff Alberto Barretto of
the undivided one-third part of the hypothecary credit and of
the rights belonging to her deceased father Antonio Vicente
Barretto, assigning to the donee all the rights and actions
which she might have in the foreclosure proceedings
exhibited at the trial of the present action, on the condition
that as soon as the donee Alberto Barretto could collect the
said one-third part of the credit or should obtain the
assignment of the property of the debtor, he would divide
what was donated, into nine equal parts among the donee
himself and six living brothers and the heirs of their two
brothers now dead, each receiving one-ninth part. 
In the public documents, Exhibits J, J-1, J-2, J-3, J-4, J-5,
and J-6, it appears to be established that the plaintiff Alberto
Barretto, complying with the condition imposed in said
document of the donation executed by the donor Guadalupe
Barretto, paid to each of his brothers and nephews, the latter
by right of the representation, the sum of P875 as the price
of one-eight part of one third of the said hacienda and in
exchange for the sums received as such price his co-donees
assigned and conveyed to him one-eight part of the third of
grantors might have by virtue of the said donation in favor of
the plaintiff Barretto. It is to be noted that the plaintiff bought
one-eight undivided part of the third of the whole hacienda of
Balintagac and paid to every claimant P875 as the price of
the eight part sold to him, and, without these statements
appearing in the said seven documents Exhibit 1, it may be
understood that the third part of the ownership of the
hacienda was transferred to the plaintiff by the donor
Guadalupe Barretto. 
In fact, with the mutual purpose on the part of the brothers
Antonio M.a Barretto and Ricardo Esteban Barretto and of
that of Alberto Barretto of transferring to the latter the rest of
the two-thirds part of the hypothecary credit and of the right
to collect its value from the fruits of the hacienda of
Balintagac, the notarial document, Exhibit K, was executed
and after reciting in it that one undivided half of said
hacienda was in May, 1882, mortgaged to secure the sum of
P11,000, at 8 per cent per annum, which Juan Vicente
Barretto Grandpre received from his uncle Antonio Vicente
Barretto, and for neither having paid the debt nor having sold
the said half of the mortgaged hacienda on the three
occasions in which it was offered for public auction, the
whole hacienda was delivered to the creditor in order that he
might collect his credit and interests. From that time on the
said Antonio Vicente Barretto and later on his successors
have been in possession of the hacienda, receiving the fruits
of the property, paying the expenses and the corresponding
taxes, the outcome being that the debt, capital and interests,
up to March 31, 1813, according to the liquidation, amounted
to about one hundred thousand pesos. It is further stated that
by virtue of the same, the grantors, the brothers Antonio M.a
Barretto and Ricardo Esteban Barretto, sold and conveyed
all their rights and actions included and derived from the said
hypothecary credit for the price of P14,000 which would be
paid by the grantee and vendee by installments and in the
manner prescribed in the said deed, assigning to him,
besides, all the rights which the said brothers had over the
two-third parts of the said hacienda. 
The contents of this documents, which is public in nature, as
well as those of another deed, Exhibit 1, conclusively prove
that the plaintiff did not obtain by assignment, sale, or
transfer, as expressed in said deeds, the ownership of the
said hacienda of Balintagac, but only the hypothecary credit
which the heirs of the deceased creditor Antonio Vicente
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Barretto had inherited from the latter, after the plaintiff had
obtained from his other brothers the conveyance of their
respective rights to the donation.  death of the above-mentioned Luis Bonifacio Barretto, his
The rights acquired by the creditor were transmitted by
hereditary title through operation of law to the heirs of the
same Antonio M.a, Ricardo Esteban, and Guadalupe,
Barretto y Rocha and these in turn assigned, sold and
transferred the credit with all their rights as hypothecary
creditors, as well as the right to the usufruct of all the
hacienda of Balintagac to the plaintiff Alberto Barretto,
without it being ever understood that the right of ownership
over the same was transferred for the reason that neither the
original creditor Antonio Vicente Barretto nor his three heirs
had acquired such right of ownership but merely the right to
receive the products of the hacienda in order to cover the
credit which the owners of the hacienda owed.  Antonio Barretto Grandpre, Jr., residing abroad and Antonio
If the fact were not certain that the hacienda was delivered
by its owners to the creditor Antonio Vicente Barretto, it
cannot be understood why it is that in the long course of this
action the defendant and the interveners could not explain
how and in what manner Antonio Vicente Barretto took
possession of the hacienda in 1888 or 1889 after the
termination of the said foreclosure proceedings, nor could
they explain how and why several of the coowners of the
said hacienda had acted as administrators of the same in the
name and representation of the creditor Antonio Vicente
Barretto.  creditor that the latter might acquire the ownership of the
It appears from the record without any contradiction
whatsoever that the first who administered the said hacienda
in the name and by direction of Antonio Vicente Barretto was
the defendant Leonardo F. Barretto himself till the year 1890
in which year the latter voluntarily left by the direction of the
creditor and was succeeded by his brother Jose Barretto till
1893, when Leopoldo Barretto entered as administrator
relieving Jose Barretto by order of Antonio Vicente Barretto
himself, till 1894. In this year the defendant Leonardo F.
Barretto himself returned to act as administrator by direction
and in the name of the creditor Antonio Vicente Barretto, till
the year 1895, when according to the letter of Leonardo,
Exhibit L, and the letter, Exhibit M, of Antonio Vicente
Barretto by direction of the latter the defendant Leonardo F.
Barretto delivered the hacienda to his brother Bartolome
Barretto. It is to be noted that in the said letter, Exhibit M,
Antonio Vicente Barretto advised the defendant Leonardo to
tell the tenants of the hacienda to transact their business with
Bartolome as the administrator. In 1896, because of the
death of Bartolome Antonio Barretto, Luis Bonifacio Barretto
succeeded him as administrator, who managed the hacienda
in the name of the same creditor. After the death of the latter,
Averell B. Abrasaldo – II-Sanchez Roman
he (Luis) dealt with Antonio M.a Barretto, one of the heirs of
the deceased creditor. On August, 1902 because of the
brother Antonio T. Barretto succeeded him in the
administration of the hacienda in the name and account of
the heirs of the deceased Antonio Vicente Barretto and the
said Antonio T. Barretto continued to act as administrator of
the hacienda in the name of the plaintiff Barretto, who
acquired the rights of the heirs of the deceased creditor
Antonio Vicente Barretto, until the beginning of the present
action. 
These facts which have been fully established show that the
whole hacienda was delivered to Antonio Vicente Barretto so
that he might collect his credit, and this is corroborated by
the letters which have been exchanged between Juan
Vicente Barretto, as well as by the account, Exhibit 3,
rendered to Juan Antonio Barretto, Jr., by Antonio Vicente
Barretto up to December 31, 1888, in which the hypothecary
credit of P11,000 with its interests amounting to P16,255.70
still appear existing and complete. Such facts cannot in any
way prove that Antonio Vicente Barretto took possession of
the hacienda in the character of the owner although he had
been appointing administrators until his death in 1897 and
the administrators had dealt with him while living for the
determination of the rent of the hacienda and other
particulars, as well as the fact that the declaration of
ownership of the assessment of the property was made in
his name and the payment of the land tax due was made on
his account, for the reason that he acted as creditor in
antichresis, and not as a owner and proprietor of the
hacienda, which fact does not appear to be proved by the
oral evidence, whole the contrary has been fully established
by the documentary evidence attached in the record. 
That the said verbal contract of antichresis was not set out in
some document is not contrary to what has been said, since
the same, being a consensual contract, has the elements
enumerated in article 1261 of the Civil Code and was
complied with and carried into effect without any difficulty
whatsoever from the year 1888 until 1912, that is, during
more than 24 years, without any protest or objection on the
part of any of those who could and probably had the right to
impugn it; but, on the contrary, several of the coowners of
the hacienda usufructed by the creditor submitted
themselves to the discretional orders of the latter in the
exercise of his right as creditor in antichresis, the former
acting successively as administrators of the very hacienda of
which they were coowners; and they only dared to oppose
and to overlook the facts whose realization many of them
have helped, from the time the defendant Leonardo F.
Barretto, who on two occasions administered the hacienda in
the name and on the account of the creditor Antonio Vicente
Barretto, dared to usurp a portion of the hacienda and to
deny the unquestioned rights of the plaintiff which were
directly derived from the said creditor, now dead, taking
possession of two portions of the hacienda in usufruct, in his
own behalf, while the whole debt, or part of it, still exists for
the payment of which the right of usufruct is at present
exercised. 
In other respects, the proceedings in the present action do
not offer any legal cause or reason by virtue of which it can
be established that the plaintiff has acquired the ownership
of the said hacienda by prescription, since the original
possessor entered into possession of the same with the
consent of the owners and not as owner, but as a creditor
with the right only to collect his credit on the fruits of the said
hacienda, and the plaintiff could not acquire better rights than
those which had been conferred upon him by his
predecessors in possession. Thus, article 1884 of the Civil
Code declares that the creditor cannot acquire the ownership
of the real property for failure to pay the debt within the time
agreed upon. Any stipulation to the to the contrary shall be
void. 
It is, therefore, clear and beyond all discussion that the
possession enjoyed by the predecessors of the plaintiff has
not been conferred by the owners of the hacienda to the
property, but merely that from its products he might collect
the existing debt. Consequently, the possession exercised by
the creditor Antonio Vicente Barretto, not being under title of
ownership because no right of ownership could have taken
place, the present possession of the hacienda can not
possibly turn into title of acquisitive prescription of the
property. 
Furthermore, it does not appear that the donation made by
Guadalupe Barretto and the sales or assignment made by
Antonio M.a Barretto and Ricardo Esteban Barretto were that
of the ownership or dominion of the hacienda, but the
hypothecary credit and whatever right the donor and the
assignor and vendors had against the owners of the
hacienda, as it is clearly expressed in the documents Exhibit
1, and K above referred to. The rights acquired by the
plaintiff Alberto Barretto consist, without any doubt
whatsoever, of what the said three brothers of the creditor
Antonio Vicente Barretto had transferred to him and under no
circumstance could it be understood that they transferred the
dominion and the ownership of the said hacienda. 
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As the extinguishment of the right of the creditor and the
termination of the use and possession of the real property
depend upon the entire payment of the debt and its interest,
it is proper — the liquidation of accounts having been made
— to fix definitely the sums of the amount which the debtors
had paid on account of the capital and interests and which
had been really received by the creditor.  defendants in order to give them an opportunity to show
For these considerations, whereby some of the errors,
assigned against the sentence appealed from as notoriously
opposed to the foundation of right and justice laid down in
this decision, are deemed to have been refuted, holding the
plaintiff to be in legitimate possession of the said hacienda,
the defendant Leonardo F. Barretto should be sentenced and
we sentence him to vacate and release immediately —
otherwise subject to an order of ejectment — the portion of
land and lot included within the boundary of the hacienda
Balintagac, and place same at the disposal of the plaintiff
Alberto Barretto, or of his representatives; it being
understood that before liquidation, the actual amount of the
debt be fixed, which debt, in the form of capital and interest,
is collectible from the products of the hacienda, by the
adjustment of the amounts paid and received on their
account to cover the debt. There is no special finding as to
costs in both instances; thus, that part of the judgment
appealed from, which is in conformity with this decision is
affirmed and that contrary to it is reversed. So ordered.
G.R. No. 18574           September 20, 1922
JOSE C. MACAPINLAC, plaintiff-appellant,  complaint was dismissed with costs against the plaintiff.
vs.
FRANCISCO GUTIERREZ REPIDE, ET AL., defendants  plaintiff had not here insisted upon the sufficiency of his
FRANCISCO GUTIERREZ REPIDE, defendant-appellee.  complaint in point of law, the appealed judgment would
J. F. BOOMER, defendant-appellant.
STREET, J.:
This action was instituted on June 27, 1921, in the Court of
First Instance of the Province of Pampanga by Jose C.
Macapinlac, for the purpose of securing a decree declaratory
of the rights of the plaintiff as owner of a valuable estate
located in the municipality of Porac, Pampanga, known as
the Hacienda Dolores; to nullify a transfer of the Torrens
certificate now appearing in the name of the Torrens
certificate now appearing in the name of the defendant
Francisco Gutierrez Repide, with certain remedial measure
incident to said to said relief; and to recover said estate from
Averell B. Abrasaldo – II-Sanchez Roman
the possession of said defendant, with damages; and to
secure general relief. In addition to Francisco Gutierrez
Repide several other parties are named as defendants in the
complaint, for the alleged reason that they have been at one
time or another holders of liens , now cancelled, upon said
property, and it was deemed proper to join them as
cause, if any they have, whey their respective liens should
not be cancelled in the registry. Soon after the action was
instituted Francisco Gutierrez Repide died; and his executrix,
Da. Maria Sanz, was admitted as defendant in his stead.
To the original complaint the attorneys for the executrix in
due time demurred, while the defendant J. F. Boomer
interposed an answer and a cross-complaint directed mainly
against Jose C. Macapinlac and his codefendant Repide. To
this cross-complaint Jose C. Macapinlac answered with a
general denial, while the representation of Repide merely
demurred. By this means the case, as it reaches this court,
presents itself in two branches, namely, first, that which has
relation to the controversy between the plaintiff and
Francisco Gutierrez Repide and, secondly, that which has
relation to the controversy between the defendant Boomer
and the two principal litigants. For convenience of treatment
in this opinion, we first give attention to the controversy
between the plaintiff and the defendant Repide, a course
which is the more proper for the reason that cause of action
stated in Boomer's cross-bill in great measure depends upon
the questions arising upon the other controversy.
By an order of October 29, 1921, entered in the lower court
the demurrer interposed to the complaint in behalf of the
defendant Repide was sustained, and at the same time the
From this order the plaintiff appealed.
A preliminary point arises with respect to the conditions
under which the appeal has been prosecuted, which must be
disposed of before we enter into a consideration of the legal
questions involved in the allowance of the demurrer; and in
this connection it is suggested by the attorneys for the
appellee that the appeal is premature.
The point is clearly not well taken. While it is of course
undeniable that an order merely sustaining a demurrer is not
forthwith appealable, and an appeal in such case is
premature (Serrano vs. Serrano, 9 Phil., 142), the same
cannot be said of an order sustaining a demurrer and at the
same time actually dismissing the complaint. Such an order
is definitive and "final" in the sense necessary to justify the
taking of an appeal, and if an appeal had not in fact been
prosecuted from the order in this case, the plaintiff would
have been completely and forever out of court. This is self-
evident.
On the other hand, the trial court committed manifest error
when it entered the order dismissing the complaint at the
same time that it sustained the demurer, without allowing the
plaintiff an opportunity to amend his complaint, if he had
elected to amend. Section 101 of the Code of Civil
Procedure expressly provides that the plaintiff shall have this
election; and it has been repeatedly held to be reversible
error on the part of a Court of First Instance to dismiss a
cause immediately upon sustaining a demurrer, without
giving the plaintiff an opportunity to amend, it he so desires.
(Molina vs. La electricista, 6 Phil., 519; Ibañez de Aldecoa
vs. Fortis, 17 Phil., 82.) To the action thus taken by the trial
court the plaintiff has duly assigned error, and said error (No.
VIII, in the appellant's assignment of errors) is without doubt
well taken.
As to the extent of the review which may be had at the
instance of the appellant in this court, it should be noted that
by the express terms of section 143 of the Code of Civil
Procedure a party appealing by bill of exceptions to this court
is entitled to a review of all rulings, orders, and judgments
made in the action to which he has duly excepted; and this
means, as applied to the present case, that the appellant is
entitled to a review of the decision of the lower court not only
upon the error committed in peremptorily dismissing the
cause demurrer, without giving the appellant opportunity to
amend, but upon any error that may have been committed by
said court in sustaining the demurrer. (Cancino vs. Valdez, 3
Phil., 429; Balderrama vs. Compañia General de Tabacos,
13 Phil., 609.) Of course if the only point subject to exception
had been that which relates to the right to amend, and the
merely be reversed and the cause would be remanded by us
with direction that the plaintiff be allowed to amend, as was
done in Molina vs. La Electricista, supra. But such is not the
situation now before us; and we accordingly proceed to
consider the question whether the trial judge erred in
sustaining the demurrer.
Turning then to the complaint and assuming, for the
purposes of this decision only, that all material facts stated
therein, and well pleaded, are true, we find that the case
made in the complaint is substantially this:
On and prior to August 22, 1916, the plaintiff was the owner
of the Hacienda Dolores, a property located in the
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municipality of Porac, Pampanga, and assessed upon the
tax books at P288,000, but having an actual value of no less
than P800,00, encumbered, however, with certain debts and
charges which need not be here enumerated. This property
had been registered under Act No. 496, as amended, and
upon May 13, 1916, a Torrens certificate of title covering the
same had been issued to the plaintiff.
On the date above stated, or August 22, 1916, the said
plaintiff was indebted to the Bachrach Garage & Taxicab
Company, of Manila, later organized under the name of
Bacharch Motor Company, for the price of an automobile,
previously purchased upon credit, and certain automobile
accessories; and as evidence of this indebtedness the
plaintiff executed on said dated a series of fourteen
promissory notes payable to the Bachrach Garage & Taxicab
Company, and amounting in all to the sum of P12,960, falling
due respectively upon the second of each month beginning
on September 2, 1916, and ending on October 2, 1917. Each
of these notes was drawn in the amount of P1,000, except
the last two which together amounted to P960. On
September 1, 1916, eleven of these notes were discounted
by the Bachrach Garage & Taxicab Company, through its
manager E. M. Bachrach, at the Philippine National Bank.
The other three votes, amounting to P2,277.70, remained in
the hands of the payee corporation and were subsequently
paid in full by the plaintiff.
Contemporaneously with the delivery of said notes, or on
August 16, 1916, and as a security or guaranty for the
payment of said notes, the plaintiff executed what on its face
purports to be a deed of sale, with privilege of repurchase, to
be exercised on or before October 2, 1917. This transfer
comprises all the property covered by Torrens certificate No.
427 (which includes the Hacienda Dolores), subjects to the
encumbrances noted thereon; and the conveyance to which
reference is now made was itself extended on the back of
said certificate. In this conveyance E. M. Bachrach is named
as transferee, instead of the alleged real creditor, the
Bachrach Garage & Taxicab Company. Upon the
circumstance of the nonconformity of the promissory notes
and the deed of sale as regards creditor and beneficiary, the
complaint alleges that the deed of sale is void for lack of
consideration as between the plaintiff and E. M. Bachrach,
the nominal beneficiary; but to this suggestion, for obvious
reasons, we attach little importance.
On November 8, 1917, Francisco Gutierrez Repide acquired,
for the sum of P5,000, all the rights of E. M. Bachrach in the
property which had been thus conveyed to the later; and at
this time Francisco Gutierrez Repide, so that complaint
alleges, was well aware that the transfer to Bachrach had
Averell B. Abrasaldo – II-Sanchez Roman
been made by the plaintiff for the purpose of securing a debt
owing to the Bachrach Company, and he was furthermore
aware that part of said debt has been paid and that the
balance really due from the plaintiff to said company was
less than one-half of the sum of P12,960, expressed in the
fourteen promissory notes.
After Francisco Gutierrez Repide had acquired the interest
above described in the hacienda in question, he addressed
himself to the problem of procuring the certificate of title to be
transferred to this own name. To accomplish this is was
necessary to make it appear that the contract of sale
with pacto de retro noted in the original Torrens certificate
was really and truly what it appeared to be, that is, a contract
of sale, not a mere mortgage, and that the ownership had
consolidated in the purchaser by reason of the failure of the
seller to repurchase the property before the expiration of the
time allowed for redemption. When this question was raised,
it was referred for decision to the judge of the Court of First
Instance of Pampanga, who was of the opinion that the
conveyance to Bachrach was a straight contract of sale
with pacto de retro; and inasmuch as it appeared that the
ownership had then consolidated in the purchaser, he
directed the register of deeds of Pampanga to register the
property in the name of Francisco Gutierrez Repide and to
issue to him a new certificate of transfer, which was
accordingly done. The order here referred to was in fact
entered in case No. 104 of the Court of First Instance of
Pampanga, this being the same land registration
proceedings in which the title had been registered in the
name of the plaintiff, and in which judicial proceedings had
already been terminated.
Though not plainly so stated in the complaint, it is to be
inferred that one of the decisive considerations that operated
upon the mind of the judge of the Court of First Instance in
making the order above alluded to was the fact that the
plaintiff himself had made an affidavit which directly
sustained the contention of Repide, and this affidavit was
submitted to the court in support of Repide's contention.
Certain it is that the inscription of the property in the name of
Francisco Gutierrez Repide was accomplished with the
external approval of the plaintiff and by means of his
assistance or collusion.
In the complaint now before us the plaintiff alleges that his
apparent acquiescence in the transfer of title to Francisco
Gutierrez Repide, under the circumstances above set forth,
was due to fraudulent practices on the part of said Repide
and to the undue influence exerted over the plaintiff by that
person. In this respect the complaint contains a very full and
complete narrative of facts, which, if true — as they must
here be taken to be — would undoubtedly justify any court in
relieving a party from the effects of fraudulent practices,
duress, or undue influence; and it seems unnecessary for us
here to recount these charges in detail, more especially for
the reason that the sufficiency of these allegations,
considered as stating a case of fraud, has not bee
questioned, the defense at this point being rested on the
ground that the Torrens certificate is unimpeachable in the
hands of Repide and that the plaintiff's remedy to obtain
relief, supposing the transfer of title to have been procured
by fraud, has prescribed. 
It appears from the complaint that, at the time of the filing of
this complaint, the defendant Repide was in actual
possession of the property in question, and that he had in
effect been enjoying possession since august 24, 1917, to
the alleged prejudice of the plaintiff in the sum of no less
than P200,000 per annum.
The sketch above given contains, we believe, the substance
of the essential allegations of the lengthy complaint in this
cause, and it will at least serve as the necessary basis for a
discussion of the legal problems here requiring solution. In
taking up these problems we begin with the situation created
by the execution of the contract of sale with pacto de
retro between the plaintiff, Jose C. Macapinlac, and E. M.
Bachrach Company, assuming, as we do, that the
personality of the second party to that contract is a matter of
indifference. In this connection the first and most obvious
proposition to be laid down is that inasmuch as said
conveyance is alleged to have been executed as security for
a debt owing by the plaintiff to the Bachrach Company, it
follows that in equity said conveyance must be treated as a
mere security or substantially as a mortgage, that is, as
creating a mere equitable charge in favor of the creditor or
person named as the purchaser therein. This conclusion is
fully supported by the decision in Cuyugan vs. Santos (34
Phil., 100), where this court held that a conveyance in the
form of a contract of sale with pacto de retro will be treated
as a ere mortgage, if really executed as security for a debt,
and that this fact can be shown by oral evidence apart from
the instrument of conveyance, a doctrine which has been
followed in the later cases of Villa vs. Santiago (38 Phil.,
157), and Cuyugan vs. Santos (39 Phil., 970).
In view of the lengthy discussion contained in the first
decision of Cuyugan vs. Santos, supra, it might seem
superfluous to add to what is there said, but the importance
of the subject and the paucity of our own jurisprudence on
this topic — apart from that case and its two successors, —
must serve as our justification for here collating a few
additional passages relative to the same subject, taken from
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Mr. Pomeroy's treatise on Equity Jurisprudence, recognized
as the leading work on this subject in all jurisdiction where
the common law prevails.
Speaking then with referrence to the conditions under which
a conveyance absolute on its face may be treated as a
mortgage, this distinguished writer says:
Any conveyance of land absolute on its face,
without anything in its terms to indicate that it is
otherwise than an absolute conveyance, and
without any accompanying written defeasance,
contract of repurchase, or other agreement, may,
in equity, by means of extrinsic and parol
evidence, be shown to be in a reality a mortgage
as between the original parties, and as against all
those deriving title from or under the grantee, who
are not bona fide purchasers for value and without
notice. The principle which underlies this doctrine
is the fruitful source of any other equitable rules;
that it would be a virtual fraud for the grantee to
insist upon the deed as an absolute conveyance of
the title, which had been intentionally given to him,
and which he had knowingly accepted, merely as a
Again says he:
security, and therefore in reality as a mortgage.
The general doctrine is fully established, and
certainly prevails in a great majority of the states,
that the granter and his representatives are always
allowed in equity to show, by parol evidence, that a
deed absolute on its face was only intended to be
a security for the payment of a debt, and thus to be
a mortgage, although the parties deliberately and
knowingly executed the instrument in its existing
form, and without any allegations of fraud, mistake,
or accident in its mode of execution. As in the last
preceding case, the sure test and the essential
requisite are the continued existence of a debt. (3
Pom. Eq. Jur., sec. 1196.)
And, Speaking particularly of the contract of sale with pacto
de retro, he adds:
Whether any particular transaction does thus
amount to a mortgage or to a sale with a contract
of repurchase must, to a large extent, depend
upon its own special circumstances; for the
question finally turns, in all cases, upon the real
intention of the parties as shown upon the face of
the writings, or as disclosed by extrinsic evidence.
A general criterion, however, has been established
by an overwhelming consensus of authorities,
Averell B. Abrasaldo – II-Sanchez Roman
which furnishes a sufficient test in the great
majority of cases; and whenever the application of
this test still leaves a doubt, the American courts,
from obvious motives of policy, have generally
leaned in favor of the mortgage. This criterion is
the continued existence of a debt or liability
between the parties, so that the conveyance is in
reality intended as a security for the debt or
indemnity against the liability. If there is an
indebtedness or liability between the parties, either
a debt existing prior to the conveyance, or a debt
arising from a loan made at the time of the
conveyance, or from any other cause, and this
debt is still left subsisting, not being discharged or
satisfied by the conveyance, but the granter is
regarded as still owing and bound to pay it at some
future time, so that the payment stipulated for in
the agreement to reconvey is in reality the
payment of this existing debt, then the whole
transaction amount to a mortgage, whatever
language the parties may have used, and
whatever stipulations they may have inserted in
the instruments. (3 Pom. Eq. Jur., sec. 1195.)
. . . The doctrine has been firmly established from
an early day that when the character of a
mortgage has attached at the commencement of
the transaction, so that the instrument, whatever
be its form, is regarded in equity as a mortgage,
that character of mortgage must and will always
continue. If the instrument is in its essence a
mortgage, the parties cannot by any stipulations,
however express and positive, render it anything
but a mortgage, or deprive it of the essential
attributes belonging to a mortgage in equity. The
debtor or mortgagor cannot, in the inception of the
instrument, as a part of or collateral to its
execution, in any manner deprive himself of his
equitable right to come in after a default in paying
the money at the stipulated time, and to pay the
debt and interest, and thereby to redeem the land
from the lien and encumbrance of the mortgage;
the equitable right of redemption, after a default is
preserved, remains in full force, and will be
protected and enforced by a court of equity, no
matter what stipulations the parties may have
made in the original transaction purporting to cut
off this right. (3 Pom. Eq. Jur., sec. 1193.)
And finally, concerning the legal effects of such contracts,
the same author observes:
. . . Whenever a deed absolute on its face is thus
treated as a mortgage, the parties are clothed with
all the rights, are subject to all the liabilities, and
are entitled to all the remedies of ordinary
mortgagors and mortgagees. The grantee may
maintain an action for the foreclosure of the
grantor's equity of redemption; the grantor may
maintain an action to redeem and to compel a
reconveyance upon his payment of the debt
secured. If the grantee goes into possession, he is
in reality a mortgagee in possession, and as such
is liable to account for the rents and profits. (3
Pom. Eq. Jur., sec. 1196.)
In Cuyugan vs. Santos, supra, the action to enforce the right
of redemption was brought was brought directly against the
immediate grantee in the conveyance there held to be a
mortgage, and no account had to be there taken of the
situation resulting from a transfer of the property to a
stranger. In the present case the rights of the immediate
grantee (E. M. Bachrach) passed by transfer for a valuable
consideration to Francisco Gutierrez Repide and this transfer
had been effected before the action in this case was began.
But is obvious that this circumstance cannot be any obstacle
to the enforcement of any rights that the plaintiff my have
had as against Bachrach (or the Bachrach Company) since it
is alleged that at the time Repide acquired the interest of
Bachrach, he was fully aware of the nature of the transaction
between Bachrach and the plaintiff and knew that part of the
debt secured by the conveyance of August 22, 1916, had
been paid.
In this connection the cardinal rule is that a party who
acquires any interest in property with notice of an existing
equity takes subject to that equity. "The full meaning of this
most just rule," says Mr. Pomeroy, "is, that the purchaser of
an estate or interest, legal or equitable, even for a valuable
consideration, wit notice of any existing equitable estate,
interest, claim, or right, in or to the same subject-mater, held
by a third person, is liable in equity to the same extend and
in the same manner as the person from whom he made the
purchase; his conscience is equally bound with that of his
vendor, and he acquires only what his vendor can honestly
transfer." (2 Pom. Eq. Jur., sec. 688.)
In other words, having acquired the interest of Bachrach in
the Hacienda Dolores, with knowledge that the contract of
August 22, 1916, has been executed as security for a debt,
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Francisco Gutierrez Repide — or his estate, now that Repide
is a dead — must be understood to stand towards the
present plaintiff in exactly the same position that would have
been occupied by Bachrach, if the transfer to Repide had
never been effected.
But it is insisted that the title of Repide has become
indefeasible, owing to the fact that the conveyance of the
land to him has been followed by the issuance of a transfer
certificate of title in his name, and the original certificate in
the name of the plaintiff has been cancelled, — all of which
had been accomplished more than one year before the
present action was begun. The unsoundness of this
contention can be easily demonstrated from several different
points of view.  more than thirty years after the mortgage had been
In the first place, it must be borne in mind that the equitable
doctrine which has been so fully stated above, to the effect
that any conveyance intended as security for a debt will be
held in effect to be a mortgage, whether so actually
expressed in the instrument or not, operates regardless of
the form of the agreement chosen by the contracting parties
as the repository of their will. Equity looks through the form
and considers the substance; and no kind of engagement
can be adopted which will enable the parties to escape from
the equitable doctrine to which reference is made. In other
words, a conveyance of land, accompanied by registration in
the name of the transferee and the issuance of a new
certificate, is no more secured from the operation of this
equitable doctrine than the most informal conveyance that
could be devised.
In the second place, the circumstance that the land has been
judicially registered under the Torrens system does not
change or affect civil rights and liabilities with respect thereto
except as expressly provided in the Land Registration Act
(see sec. 70); and as between the immediate parties to any
contract affecting such lands their rights will generally be
determined by the same rules of law that are applicable to
unregistered land. A judicial decree of registration admittedly
has the effect of binding the land and quieting the title
thereto, to the extent and with the exceptions stated in
section 38 of the Land Registration Act. But an ordinary
transfer of land, effected in any of the ways allowed by law,
even when followed by registration and that issuance of a
new certificate, as contemplated in sections 50 to 55,
inclusive, of the Land Registration Act, has a different
character.
One of the differences between an original decree of
registration and the subsequent registration by transfer of the
Averell B. Abrasaldo – II-Sanchez Roman
certificate of title, pertinent to the present controversy, is that The preceding discussion conducts us to the conclusion that,
which may be noted in regard to the period within which relief so far as this case is concerned, the estate of Francisco
may be obtained from fraud. Thus, under section 38 of Act Gutierrez Repide occupies substantially the position of a
No. 496, any person deprived of land by a decree of mortgagee in possession. The question then arises as to
registration procured by fraud is limited to the period of one what are the legal rights of the plaintiff as against the Repide
year after the entry of the decree within which to file a estate, judged by the facts alleged and relief sought in the
petition for review, and even this remedy is unavailable if any complaint as at present framed, and in this connection the
innocent purchaser for value has acquired the property; while circumstances is not to be ignored that the complaint
under section 55, if a subsequent transfer is infected with contains in usual form the prayer for general.
fraud or the title is procured by any fraudulent means to be
registered in the name of the transferee, the injured party
The solution of this problem is to be found in the application
may pursue all his legal and equitable remedies against the
of the doctrine formulated by this court in Barretto vs.
party, or parties, to such fraud, saving the rights of any
Barretto (37 Phil., 234). In that case the heirs of a mortgagee
innocent holder of the tittle for value. This means of course
of an estate were found in possession of mortgaged property
that the person thus defrauded may bring any appropriate
action to be relieved within the ordinary period of limitation
executed; and it was shown that the mortgage had never
applicable in other cases of fraud, or within the four-year
been foreclosed. Upon this state of facts it was in effect held
period prescribed in subsection 4, of section 43 of the Code
that the rights of the parties, heirs respectively of the
of Civil Procedure.
mortgagor and mortgagee, were essentially the same as
under the contract of antichresis.
Applying said provision to the facts of the present case it
must follow that the cause of action of the present plaintiff to
By reference to the appropriate provisions of the Civil Code
annul the registration of this property in the name of
(arts. 1881-1884), in the chapter dealing with antichresis, it
Francisco Gutierrez Repide did not prescribe at one year, as
will be at once seen that while non-payment of the debt does
the trial judge erroneously supposed, and the plaintiff's
not vest the ownership of the property in the creditor,
cause of action upon this branch of the case had not in fact
nevertheless the debtor cannot recover the enjoyment of the
been barred at all when the present action was begun.
property without first paying in full what he owes to his
creditor. At the same time, however, the creditor is under
Before leaving the topic of this alleged fraud committed by obligation to apply the fruits derived from the estate in
Repide in procuring a Torrens certificate to be issued in his satisfaction, first, of the interest on the debt, if any, and,
own name, thereby making it appear that the absolute and secondly, to the payment of the principal. From this is
indefeasible title had become vested in himself, it will be well necessarily deduced the obligation of the creditor to account
to point out that the complaint reflect a mistaken point of view to the debtor for said fruits and the corresponding right of the
as to the consequences of that act. Upon perusal of the debtor to have the same applied in satisfaction of the
compliant it will be noted that it proceeds upon the mortgage debt, as recognized in Barretto vs. Barretto, supra.
assumption that, if the alleged fraud should be proved, the
plaintiff will be entitled to have the premises at once restored
The respective rights and obligations of the parties to a
to himself, with an accounting for profits, and an award of
contract of antichresis, under the Civil Code, appear to be
damages adequate to compensate the plaintiff for the wrong
similar and in many respects identical with those recognized
supposed to have been done. But the circumstance must not
in the equity jurisprudence of England and American as
be overlooked that the supposed fraud relates only to the
incident to the position of a mortgagee in possession, in
registration of the title in the name of Repide, and even
reference to which the following propositions may be taken to
supposing that this act had never been accomplished, the
be established, namely, that if the mortgagee acquires
Repide estate would merely be in the position occupied by
possession in any lawful manner, he is entitled to retain such
Repide after he had acquired the interest of Bachrach in the
possession until the indebtedness is satisfied and the
property, without prejudice to the rights acquired by that
property redeemed; that the non-payment of the debt within
purchase. But of course in the case supposed the plaintiff
the term agreed does not vest the ownership of the property
would be entitled to have the certificate of title cancelled and
in the creditor; that the general duty of the mortgagee in
other issued in such form as to show the correct state of
possession towards the premises is that of the ordinary
facts with respect to the ownership and incumbrance of the
prudent owner' that the mortgagee must account for the
property.
rents and profits of the land, or its value for purposes of use
and occupation, any amount thus realized going towards the
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discharge of the mortgage debt; that if the mortgagee
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., sex. 1215-1218.)
From the complaint it appears that, even before acquiring the
interest of Bachrach in the Hacienda Dolores, the defendant
Francisco Gutierrez Repide had taken over from the
Archbishop of Manila a mortgage on the property in favor of
said Archbishop, paying therefor the sum of P35,000; and we
infer from the complaint that Repide had probably discharged
other liens on the property either before or after he acquired
the interest of Bachrach. If so, his executrix will be entitled to
charge the plaintiff with the amount paid to free the property
from such liens, and to retain possession until all valid claims
against the estate are satisfied, in obedience to the maxim
that he who seeks equity must do equity.
A question has been made as to whether, in an action like
this, it is necessary for the plaintiff to tender the amount
necessary to effect the redemption of the property; and we
note that in paragraph XII of the complaint it is alleged that
the plaintiff had made a written offer to the defendant Repide
to pay all debts and charges held by Repide against the
property, which offer said defendant had refused to accept.
this paragraph of the complaint was doubtless inserted in
view of section 347 of the Code of Civil Procedure which
declares that a written offer to pay a particular sum of money
is, if rejected, equivalent to the actual tender of the money.
The allegation contained in paragraph XII of the complaint is
not sufficient to comply with the provisions of the section
cited, for the reason that it does not appear that the written
offer mentioned a particular sum as the amount to be paid.
There was therefore no valid tender.
But the case is not one where a tender is necessary,
because the amount actually due cannot be known until an
accounting is had and the extent of the plaintiff's
indebtedness reduced to certainty. When this had been
accomplished, it will become the duty of the court, upon such
amendment of the complaint as may appear desirable, to
make the proper decree, allowing the plaintiff to redeem and
requiring the executrix of Francisco Gutierrez Repide to
surrender the property in question to the plaintiff.
In what has preceded we have demonstrated the error of the
trial judge in sustaining the demurrer interposed to the
original complaint on behalf of the Repide estate, and we
Averell B. Abrasaldo – II-Sanchez Roman
have at the same time indicated the character of the relief to
which the plaintiff appears to be entitled on the showing
made in the complaint. It is hardly necessary to add that we
must not be understood as defining the rights of the parties
further than is necessary to dispose of the case as presented
to us upon demurrer; and it is obvious that if the litigation
proceeds further, many questions will be presented which
cannot and should not here be anticipated.
Directing our attention now to the appeal of the defendant
Boomer, we not that this litigant by way of cross-complaint a
right to the Hacienda Dolores hostile to both Jose C.
Macapinlac and Francisco Gutierrez Repide, basing his
claim upon a contract (Exhibit 1) between Macapinlac and
Boomer, of a date anterior to the contract of sale with pacto
de retro of August 22, 1916. It is unnecessary her to enter
into the details of Boomers contention. Suffice it to say that, if
the allegations of the cross-complaint are true, as is to be
assumed upon demurrer, it shows a cause of action proper
to be ventilated in this suit. The trial judge, however,
sustained the demurrer to the cross-complaint, apparently for
the reason that this Honor believed that the transfer of
certificate of title to the name of Repide constituted an
insuperable obstacle to the cross-action. This point has been
fully discussed by us in connection with the controversy
between the two principal litigants, and for the rest it may be
said that the action of the trial judge in sustaining the
demurrer to Boomer's cross-complaint involves the same
errors that were committed in the other branch of the case.
From what has been said it follows that the action of the trial
judge in sustaining the two demurrers interposes in behalf of
Francisco Gutierrez Repide to the original complaint and to
Boomer's cross-complaint must be reversed and said
demurrers are hereby overruled, with costs; and the cause
will be returned to the lower court with directions to require
the appellee to answer within the time allowed by the rules.
So ordered.
August 24, 2016
G.R. No. 219071
SPOUSES CHARITO M. REYES and ROBERTO REYES,
and SPOUSES VILMA M. MARAVILLO and DOMINGO
MARAVILLO, JR. , Petitioners, 
vs.
HEIRS OF BENJAMIN MALANCE,* namely: ROSALINA M.
MALANCE, BERNABE M. MALANCE, BIENVENIDO M.
MALANCE, and DOMINGA** M. MALANCE, represented
by BIENVENIDO M. MALANCE, Respondents.
DECISION
PERLAS-BERNABE, J.:
Before the Court is a petition for review on certiorari1assailing
the Decision2 dated July 23, 2013 and the Resolution 3dated
June 18, 2015 of the Court of Appeals (CA) in CA-G.R. CV
No. 95984, which directed petitioners Charito M. Reyes and
Vilma M. Maravillo (the Magtalas sisters) to surrender and
tum-over the physical possession of the subject land to
respondents Heirs of Benjamin Malance, namely: Rosalina
M. Malance, Bernabe M. Malance, Bienvenido M. Malance,
and Dominga M. Malance, represented by Bienvenido M.
Malance (the Malance heirs) upon payment of the amount of
₱4,320.84.
The Facts
Benjamin Malance (Benjamin) was the owner of a 1.4017-
hectare parcel of agricultural land covered by Emancipation
Patent No. (EP) 615124 4 situated at Dulong Malabon,
Pulilan, Bulacan5 (subject land). During his lifetime, Benjamin
obtained from the Magtalas sisters, who are distant
relatives,6 a loan in the amount of ₱600,000.00, as
evidenced by a Kasulatan Ng Ukol sa Utang 7dated June 26,
2006 (Kasulatan). Under the Kasulatan, the Magtalas sisters
shall have the right to the fruits of the subject land for six (6)
years or until the loan is fully paid. 8
After Benjamin passed away on September 29, 2006,9 his
siblings, the Malance heirs, inspected the subject land and
discovered that the Magtalas sisters, their respective
husbands, Roberto Reyes and Domingo Maravillo, Jr.
(petitioners), and their father, Fidel G. Magtalas
(Fidel), 10 were cultivating the same on the basis of
the Kasulatan.  11Doubting the authenticity of the
said Kasulatan, the Malance heirs filed a Complaint for
Recovery of Possession, Declaration of Nullity of
the Kasulatan and Damages with Prayer for Writ of
Preliminary Injunction and Temporary Restraining
Order12 against petitioners, before the Regional Trial Court of
Malolos City, Bulacan (RTC), Branch 84, docketed as Civil
Case No. 748-M-2006, which the Malance heirs
subsequently amended. 13 They claimed that: (a) during his
lifetime, Benjamin accumulated enough wealth to sustain
himself, was unmarried and had no children to
support; 14 (b) the Kasulatan was executed during the time
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when Benjamin was seriously ill and mentally incapacitated
due to his illness and advanced age;
and (c) the Kasulatan was simulated as the signature of
15
Benjamin appearing thereon was not his signature.  of palay valued at ₱600.00/cavan, with half of the income
In their answer, 16 petitioners denied that Benjamin had
accumulated enough wealth to sustain himself as his only
source of income was his farm, and averred, inter
alia, that: (a) when Benjamin became sickly in 2000, he
leased the subject land to different people who cultivated the
same with their (petitioners') help; 17 (b) the Kasulatan was
executed before a notary public at the time when Benjamin
was of sound mind, though sickly; (c) they were cultivating
the subject land in accordance with the
said Kasulatan;  18 (d) the case involved an agrarian conflict
within the jurisdiction of the Department of Agrarian Reform
Adjudication Board; and (e) the Malance heirs must pay
Benjamin's indebtedness prior to recovery of possession. 19
The complaint was initially dismissed for lack of
jurisdiction,20 but was subsequently reinstated21 and re-raffled
to Branch 9 of the same RTC.22
The RTC Ruling
In a Decision23 dated August 31, 2010, the RTC dismissed
the complaint for failure of the Malance heirs to substantiate
their claim that Benjamin's signature was forged, and upheld
the validity of the Kasulatan on the ground that it is a
notarized document which enjoys the presumption of
regularity in its execution. It declared the Kasulatan as a
contract of antichresis binding upon Benjamin's heirs - the
Malance heirs - and conferring on the Magtalas sisters the
right to retain the subject land until the debt is paid.24
Aggrieved, the Malance heirs appealed to the CA.25
The CA Ruling
In a Decision26 dated July 23, 2013, the CA upheld the RTC's
findings and declared that: (a) the mere allegation of forgery
will not suffice to overcome the positive value of
the Kasulatan, a notarized document which has in its favor
the presumption of regularity and is conclusive as to the
truthfulness of its contents;27 and (b) the contract between
the parties was a contract of antichresis. 28 However, it ruled
that only the amount of ₱218,106.84 was actually received
by Benjamin as expenses for his medical treatment and the
cost of his funeral service/memorial lot, 29 while the rest was
Averell B. Abrasaldo – II-Sanchez Roman
kept in the custody of the Magtalas sisters' father,
Fidel.30 Considering petitioners' evidence that the subject
land has an average annual production of 107 cavans
expended for costs, and that they had been cultivating the
subject land for 6.66 years, the CA ruled that the outstanding
amount of the loan is only ₱4,320.84. 31 Consequently, it
directed the Magtalas sisters to surrender and turn-over the
physical possession of the subject land to the Malance heirs
upon payment by the latter of the outstanding loan.32
Dissatisfied, petitioners moved for
reconsideration,33 contending that: (a) the CA should have
imposed interest on Benjamin's loan despite the absence of
express stipulation, and applied the fruits from the subject
land thereto, and thereafter, to the principal; 34 and (b) the
available receipts for Benjamin's hospitalization were
adduced for the purpose of proving that he had valid reason
to obtain a loan for his personal use, and should not have
been considered as the only proceeds received by
him. 35 The same was, however, denied in a Certificate Number despite the express requirement 41 of the
Resolution36 dated June 18, 2015; hence, this petition.
The Issues Before the Court
The essential issues for the Court's resolution are whether or
not: (a) the CA committed reversible error in ruling that the
amount of ₱218,106.84, representing the duly receipted
expenses for Benjamin's medical treatment and the cost of
the funeral service/memorial lot, was the only proceeds
received from the ₱600,000.00 loan obligation; and (b) legal
interest is due despite the absence of express stipulation.
The Court's Ruling
Prefatorily, it should be mentioned that the remedy of appeal
by certiorari under Rule 45 of the Rules of Court
contemplates only questions of law, not of fact. While it is not
the function of the Court to re-examine, winnow and weigh
anew the respective sets of evidence of the parties,37 there
are, however, recognized exceptions,38 among which is when
the inference drawn from the facts was manifestly mistaken,
as in this case.
Here, the CA upheld the validity of the Kasulatan between
Benjamin and the Magtalas sisters for failure of the Malance
heirs to prove their challenge against its due execution and
authenticity, ruling further that being a notarized document, it
has in its favor the presumption of regularity and is
conclusive as to the truthfulness of its contents.39
Generally, a notarized document carries the evidentiary
weight conferred upon it with respect to its due execution,
and documents acknowledged before a notary public have in
their favor the presumption of regularity which may only be
rebutted by clear and convincing evidence. However, the
presumptions that attach to notarized documents can be
affirmed only so long as it is beyond dispute that the
notarization was regular. A defective notarization will strip
the document of its public character and reduce it to a
private document. Consequently, when there is a defect in
the notarization of a document, the clear and convincing
evidentiary standard normally attached to a duly-notarized
document is dispensed with, and the measure to test the
validity of such document is preponderance of evidence. 40
In this case, the Court observes that the Kasulatan was
irregularly notarized since it did not reflect any competent
evidence of Benjamin's identity, such as an identification
card (ID) issued by an official agency bearing his photograph
and signature, but merely indicated his Community Tax
2004 Rules on Notarial Practice.42 Consequently, having
failed to sufficiently establish the regularity in the execution
of the Kasulatan, the presumption accorded by law to
notarized documents does not apply and, therefore, the said
document should be examined under the parameters of
Section 20, Rule 132 of the Rules of Court which provides
that "[b]efore any private document offered as authentic is
received in evidence, its due execution and authenticity must
be proved either: (a) [by] anyone who saw the document
executed or written; or (b) [by] evidence of the genuineness
of the signature or handwriting of the maker."
The burden falls upon petitioners to prove the authenticity
and due execution of the Kasulatan,43which they were,
nonetheless, able to discharge. Records show that while the
notary public, Atty. Cenon Navarro (Atty. Navarro),44 did not
require an ID when he notarized the Kasulatan, when
confronted with Benjamin's ID issued by the Office of Senior
Citizens Affairs of Pulilan, Bulacan (Senior Citizen ID), he
identified the person in the picture as the person who signed
the Kasulatan, and received money from the Magtalas
sisters in his presence.45
On the other hand, respondent Bienvenido Malance's self-
serving and uncorroborated testimony that Benjamin's
signature on the Kasulatan was forged purportedly because
he does not know how to write 46 was contradicted by the
Malance heirs' own manifestation that Benjamin has a Senior
Citizen ID and that the signature affixed thereon is different
from his signature appearing on the Kasulatan.  47The said
ID, however, was not offered in evidence 48 as to enable the
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RTC, the CA, and the Court to make an examination of the
signature thereon vis-a-vis that on the Kasulatan. It is
important to note that a finding of forgery does not depend
exclusively on the testimonies of expert witnesses and that
judges must use their own judgment, through an
independent examination of the questioned signature, in
determining the authenticity of the handwriting.49
Hence, the evidence as to the genuineness of Benjamin's
signature, and the consequent due execution and
authenticity of the Kasulatan preponderate in favor of
petitioners, who were likewise able to prove Benjamin's
receipt of the amount of ₱600,000.00 reflected in
the Kasulatan. Atty. Navarro testified having prepared
the Kasulatan according to the agreement of the
parties, 50 and that he witnessed the exchange of money
between the parties to the Kasulatan.  51As such, it was
erroneous for the CA to conclude that the amount of ₱218,
106.84, representing the duly receipted expenses for
Benjamin's medical treatment and the cost of the funeral
service/memorial lot, was the only proceeds received from
the ₱600,000.00 loan obligation. Notably, the purpose
indicated for the Malance heirs' formal offer of the records
and receipts of hospitalization, medicines, and burial
expenses of Benjamin was merely "to show proof of
expenses incurred by x x x Benjamin x x x relative to his
sickness and x x x where he spent the loan he
obtained"52 from the Magtalas sisters.
The Court, however, concurs with the RTC's finding, as
affirmed by the CA, that the Kasulatan is a contract of
antichresis.1âwphi1 Article 2132 of the Civil Code provides:
Art. 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.
Thus, antichresis involves an express agreement between
parties whereby : (a) the creditor will have possession of
the debtor's real property given as security; (b)such
creditor will apply the fruits of the said property to the
interest owed by the debtor, if any,  then to the principal
amount;53(c) the creditor retains enjoyment of such
property until the debtor has totally paid what he
owes;54and (d) should the obligation be duly paid, then
the contract is automatically extinguished proceeding
from the accessory character of the agreement. 55
Averell B. Abrasaldo – II-Sanchez Roman
Bearing these elements in mind, the evidence on record
shows that the parties intended to enter into a contract of
antichresis. In the Kasulatan, Benjamin declared:
Na, aka ay tumanggap ng halagang ANIMNARAANG
LIBONG PISO (₱600,000.00) salaping Pilipino buhat
kina CHARITO M. REYES kasal kay Roberto
Reyes at VILMA MARAVILLO kasal kay Domingo Maravilla,
Jr., pawang mga sapat na gulang, Pilipino at
nagsisipanirahan sa Dulong Malahan, Pulilan, Bulacan,
bilang UTANG;
Na, ako ay nangangakong babayaran ang halagang aking
inutang sa nasabing sina CHARITO M. REYES at VILMA
MARAVILLO, sa kanilang tagapagmana, makakahalili at
paglilipatan sa loob ng anim (6) na taon;
Na, upang mapanagutan ang matapat na pagbabayad sa
aking pagkakautang ay aking IPINANAGOT ang aking ani
ng lupa na matatagpuan sa Dulong Malabon, Pulilan,
Bulacan, may sukat na 1 ektarya at kalahati (1½) humigi’t
kumulang;
Na, kung sa loob ng taning na panahon na nabanggit ay
mabayaran na ang halaga ng aking inutang sa nasabing
sina CHARITO M. REYES at VILMA MARAVILLO at sa
kanilang mga tagapagmana, makakahalili at paglilipatan,
ang kasulatang ito ay kusang mawawalan ng bisa, tibay at
lakas, ngunit kung hindi mabayaran ang halaga ng aking
inutang ang kasulatang ito ay mananatiling mabisa, matihay
at maaaring ipatupad ayon sa umiiral na batas.56
As aptly observed by the CA:
The language of the Kasulatan leaves no doubt that the
[₱]600,00.00 was a loan secured by the fruits or ani of the
landholding beneficially owned by Benjamin. The document
specifically authorizes [the Magtalas sisters] to receive the
fruits of the subject landholding with the obligation to apply
them as payment to his [₱]600,000.00 principal loan for a
period of six (6) years. The instrument provides no accessory
stipulation as to interest due or owing the creditors, x x x. No
mention of interest was ever made by the creditors when
they testified in court. This could only be interpreted that the
[Magtalas sisters] have no intention whatsoever to charge
Benjamin of interest for his loan. We note also that
the Kasulatan is silent as to the transfer of possession of the
subject property. However, [the Magtalas sisters] admitted
taking possession of Benjamin's landholding after his death
on September 29, 2006 and that they have been cultivating it
since then. They rationalize that their action is in accord with
their agreement with Benjamin when the latter was still alive.
They assure the return of the subject property upon full
payment of Benjamin's loan by [the Malance heirs], the
successors-in-interest of Benjamin. 57
While the Kasulatan did not provide for the transfer of
possession of the subject land, the contemporaneous and
subsequent acts of the parties show that such possession
was intended to be transferred. Atty. Navarro testified that
while the Kasulatan only shows that the harvest and the
fruits shall answer for Benjamin's indebtedness, the parties
agreed among themselves that the lenders would be the one
to take possession of the subject land in order for them to get
the harvest.58 Indeed, such arrangement would be the most
reasonable under the premises since at that time, Benjamin's
medical condition necessitated hospitalization, hence, his
physical inability to cultivate and harvest the fruits thereon.59
As antichretic creditors, the Magtalas sisters are entitled to
retain enjoyment of the subject land until the debt has been
totally paid. Article 2136 of the Civil Code reads:
Art. 2136. The debtor cannot reacquire the enjoyment of the
immovable without first having totally paid what he owes the
creditor.
In the present case, the CA deemed the amount of ₱600.00
as reasonable cost of a cavan of palay from the subject land,
which yields an annual harvest of 107 cavans, or a gross
income of ₱64,200.00;60 half of the income is expended for
expenses, resulting to an annual net income of
₱32,100.00.61 This, both parties failed to refute. Thus, from
June 2006 up to the date of this Decision, only the amount of
₱326,351.07 is deemed to have been paid on Benjamin's
loan, leaving an unpaid amount of ₱273,648.93, computed
as follows:
Amount of ₱600,000.00
indebtedness
Less: Amount
deemed paid
Annual net ₱32,100.00
income
From June x 10.1667 326,351.07
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2006 to
August 2016
Outstanding ₱273,648.93
balance
The debt not having been totally paid, petitioners are entitled
to retain enjoyment of the subject land. Consequently, the
Malance heirs' complaint for recovery of possession,
declaration of nullity of the Kasulatan, and damages against
petitioners must be dismissed.
As a final matter for resolution, the Court likewise dismisses
petitioners' counterclaim for the payment of Benjamin's
principal debt, including interest, considering that the same
was not yet due and demandable at the time the claim
therefor was filed. Particularly, petitioners' counterclaim was
prematurely filed on January 4, 2007,62 which was well within
the six-year payment period under the Kasulatan, and
hence, should be dismissed. Nonetheless, it should be noted
that the dismissal of petitioners' counterclaim is without
prejudice to the proper exercise of the Magtalas sisters'
rights under Article 2137 of the Civil Code 63 now that
Benjamin's debt is due and demandable. In the meantime,
the Magtalas sisters, as antichretic creditors, are directed to
henceforth render an annual accounting 64 to the Malance
heirs, as represented by Bienvenido Malance, of the annual
net yield from the subject land, until such time that they have
completely collected the outstanding balance of said debt.
WHEREFORE, the Decision dated July 23, 2013 and the
Resolution dated June 18, 2015 of the Court of Appeals in
CA-G.R. CV No. 95984 are hereby MODIFIED: (a) declaring
that the unpaid loan balance of Benjamin Malance's
(Benjamin) to petitioners Charito M. Reyes and Vilma M.
Maravillo (the Magtalas sisters) is ₱273,648.93 as herein
computed; (b) dismissing the counterclaim of petitioners the
Magtalas sisters and their respective husbands, Roberto
Reyes and Domingo Maravillo, Jr., on the ground of
prematurity, without prejudice; and (c) directing the Magtalas
sisters, as antichretic creditors, to henceforth render an
annual accounting to respondents Heirs of Benjamin
Malance, namely: Rosalina M. Malance, Bernabe M.
Malance, Bienvenido M. Malance, and Dominga M. Malance,
as represented by Bienvenido Malance, of the annual net
yield from the subject land, until such time that they have
completely collected the outstanding loan balance of
Benjamin's debt.
Averell B. Abrasaldo – II-Sanchez Roman
SO ORDERED.
G.R. No. L-38185 September 24, 1986
HILARIO RAMIREZ and VALENTINA
BONIFACIO, petitioners,  possession was continued by Agapita Bonifacio in 1928; that
vs.
HONORABLE COURT OF APPEALS, FRANCISCA
MEDINA, MATILDE MARTIN, EMILIO MARTIN, DELFIN
GUINTO, TEOFILO GUINTO, PRUDENCIO GUINTO and
MARGARITA GUINTO, respondents.
GUTIERREZ, JR., J.:
This is an appeal from the decision of the Court of Appeals
which affirmed in toto the decision of the then Court of First
instance of Rizal rendered in the petition for review of the
decree of registration issued in Land Registration Case No.
N-2597, L.R.C. Record No. N-17939.  petition for review. The previous complaint, Civil Case No.
On September 15,1959, petitioners-spouses Hilario Ramirez
and Valentina Bonifacio filed an application for registration of
a parcel of riceland in Pamplona, Las Pinas Rizal. After
notice and publication nobody appeared to oppose the
application. An order of general default was issued and the
court allowed the petitioners to present evidence in support
of their claim. Thereafter, the petitioners presented parol
evidence that they acquired the land in question by purchase
from Gregorio Pascual during the early part of the American
regime but the corresponding contract of sale was lost and
no copy or record of the same was available. 
On January 30, 1960, the court ordered the issuance of the
decree of registration and consequently: Original Certificate
of Title No. 2273 of the Registry of Deeds of Rizal was
issued in the petitioners names.  that the respondents could not redeem the property within a
On March 30, 1960, the private respondents Francisca
Medina, Basilio Martin, Matilde Martin, Delfin Guinto, Teofilo
Guinto, Prudencio Guinto and Margarita Guinto, petitioners'
nephews and nieces, filed a petition to review the decree of
registration on the ground of fraud. The private respondents
based their claim to the land on the following allegations: that
they are the legal heirs of the deceased Agapita Bonifacio
who died intestate on March 11, 1936; that Valentina
Bonifacio is a sister of the deceased Agapita Bonifacio, they
being the children of one Gregoria Pascual; that Gregoria
Pascual previously owned the land in question as evidenced
by Tax Declaration No. 6611 of Las Pinas Rizal issued on
December 8, 1920; that Agapita Bonifacio acquired the
property in question by purchase from Gregoria Pascual for
which reason Tax Declaration No. 8777 was issued in her
name on May 21, 1928; that Gregoria Pascual during her
lifetime, from 1916, possessed the said property in the
concept of owner, publicly and uninterruptedly, which
in 1938 respondents obtained a loan of P400.00 from the
petitioners which they secured with a mortgage on the land
in question by way of antichresis; that for this reason, Tax
Declaration No. 8777 was cancelled and substituted by Tax
Declaration Nos. 9522 and 2385 issued in the names of the
petitioners; that, thereafter, the petitioners began paying
taxes on the land; that after several attempts to redeem the
land were refused by the petitioners, the respondents filed a
complaint in the Court of First Instance of Pasay City
docketed as Civil Case No. 272-R for the recovery of the
possession and ownership of the said property; that when
they learned of the issuance of the certificate of title to the
land in the petitioners' names, they also filed the instant
272-R, was subsequently dismissed on a joint petition filed
by the parties after they agreed to have the determination of
the question of ownership resolved in the registration
proceedings. 
In their answer, the spouses Ramirez denied the material
allegations of the petition, they based their claim to the land
on two deeds of sale allegedly executed on April 15, 1937
and April 23, 1937 which they allegedly found accidentally in
March 1960. 
After trial, the court found that deeds of sale spurious. It
further found that the respondents took possession of the
land as owners after the death of Agapita Bonifacio and in
1938, mortgaged it to the spouses Ramirez to secure the
payment of a loan in the amount of P400.00. It was agreed
period of five years and that the petitioners would take
possession of the land, enjoy its fruits, and pay the land
taxes thereon. The written agreement was kept by the
petitioners as creditors. The trial court appreciated the fact of
the petitioners' failure, despite formal request, to produce the
document in court in favor of the respondents. Finding the
claims of the herein respondents sustained by the evidence,
it ordered the reconveyance of the property in the following
manner: 
WHEREFORE, judgment is hereby
rendered in favor of petitioners and
against applicants as follows: 
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Cases
1) Setting aside its decision dated 6) Ordering applicants to pay P3,000.00 RESPONDENTS HAD NOT
December 28, 1959 insofar as it found to petitioners as and for attorney's fees; POSSESSED THE SAME AT ALL? 
and declared applicants to be the
owners of the parcel of land described in
7) Ordering applicants to pay the costs FOUR-DO THE PRIVATE
Exhibits A, B and C and insofar as it
of this suit.  RESPONDENTS HAVE THE LEGAL
ordered the registration thereof in their
CAPACITY AND QUALIFICATION TO
names; 
ACQUIRE AND BE VESTED BY THE
The decision was affirmed by the Court of Appeals. On a
COURT WITH TITLE TO THE LAND IN
motion for reconsideration filed by the petitioners, the same
2) Declaring the petitioners, all Filipinos, QUESTION? 
appellate court, but with a new member, promulgated a
all of legal age, and all residents of Ligas
resolution setting aside the original decision. On a motion for
Bacoor, Cavite, to be the true and
reconsideration filed by the private respondents, this We find the petition without merit. 
absolute owners pro indiviso of the said
resolution was set aside and the original decision was
parcel of land described in Exhibits A, B
reinstated. 
and C in the following proportions:  The first question does not warrant favorable consideration.
The issue was submitted to the appellate court and in our
The petitioners went to this Court in a petition for review on opinion, correctly resolved therein. The Court of Appeals
a. Francisca Medina, married to Tomas
certiorari with the following questions:  stated: 
de Leon, one-third (1/3) thereof; 

ONE-HAS THE COURT OF FIRST ... The petition alleged that 'the
b. Emilio Martin, married to Dolores
INSTANCE, ACTING AS A LAND applicants Hilario Ramirez and Valentina
Antonio, and Matilde Martin, married to
REGISTRATION COURT, THE Bonifacio willfully and fraudulently
Federico Torres, one-third (1/3)
JURISDICTION TO GIVE DUE suppressed the facts that the petitioners
thereof-, 
COURSE TO A PETITION FOR are the legal and rightful owners of the
REVIEW OF DECREE UNDER SEC. 38 ricefield in question and that they
c. Teofilo Guinto, married to Rocila de la OF ACT 496 AND TO RE-OPEN THE possess the said ricefield merely as
Cruz, Delfin Guinto, married to Gregoria ORIGINAL PROCEEDINGS WHEN THE antichretic creditors as security for the
Pamaran, Prudencio Guinto, married to PETITION IS ACTUALLY ONE OF loan of P400.00; that the applicants are
Ana Guinto, and Margarita Guinto, RECONVEYANCE AND NOT BASED guilty of fraudulent misrepresentation
married to Felix Calacala one- third (1/3) ON ACTUAL OR EXTRINSIC FRAUD?  and concealment when they declared in
thereof;  their application, in the case at bar, that
no other person had any claim or
TWO-DOES SEC. 38 OF ACT NO. 496
interest in the said land.' These we
3) Ordering the registration of the said APPLY ON ALL FORES (SIC) TO
believe are sufficient allegations of
parcel of land described in Exhibits A, B ORIGINAL LAND REGISTRATION
extrinsic fraud. 
and C in the names of petitioners;  PROCEEDINGS HAD UNDER
PARAGRAPH B, SECTION 48 OF
COM. ACT NO. 141 AS AMENDED BY In the applicant's application for
4) Setting aside its order for the
REP. ACT NO. 1942 WHEREIN THE registration, which followed the form
issuance of the decree of registration in
LAND INVOLVED IS PUBLIC required by the Land Registration Act,
favor of applicants dated January 30,
AGRICULTURAL LAND?  the applicants alleged that 'to the best of
1959, and ordering the issuance of the
our knowledge and belief, there is no
decree of registration in the names of
mortgage or incumbrance of any kind
petitioners;  THREE-HAS THE COURT OF FIRST
whatsoever affecting said land, nor any
INSTANCE, ACTING AS A LAND
other person having any estate or
REGISTRATION COURT, THE POWER
5) Cancelling Original Certificate of Title interest therein, legal or equitable, in
AND AUTHORITY TO VEST TITLE ON
No. 2273 of the Register of Deeds of possession, remainder, reversion or
THE LAND INVOLVED TO HEREIN
Rizal in the names of applicants and the expectancy.' This allegation is false and
PRIVATE RESPONDENTS AND
issuance in lieu thereof of another made in bad faith, for, as We have
ORDER EVEN ITS PARTITION
original certificate of title in the names of found, the applicants are not the owners
AMONGST THEM IN THE FACE OF
petitioners in the proportion of their of the land sought to be registered and
THE ADMITTED FACT THAT THE
ownership of the property as stated in they are in possession thereof only as
LAND IS IN ACTUAL POSSESSION OF
paragraph 2 above;  antichretic creditors. 
PETITIONERS WHILE PRIVATE

Averell B. Abrasaldo – II-Sanchez Roman 18

CREDIT TRANSACTIONS – PART 10: ANTICHRESIS (Articles 2132—2139)
Cases
The averments in the petition for review of the decree of
registration constitute specific and not mere general
allegations of actual and extrinsic fraud. Competent proof to
support these allegations was adduced. We find no
compelling reason to disturb the findings of the two courts
below.  been alloted to him in the partition, or in
The petitioners in this case did not merely omit a statement
of the respondents' interest in the land. They positively
attested to the absence of any adverse claim therein. This is
clear misrepresentation. The omission and concealment,
knowingly and intentionally made, of an act or of a fact which
the law requires to be performed or recorded is fraud, when
such omission or concealment secures a benefit to the
prejudice of a third person (Estiva v. Alvero, 37 Phil. 497). 
In the case of Libundan v. Palma Gil (45 SCRA 17), this
Court held:  overriding consideration is that the
The purpose of the law in giving
aggrieved parties, deprived of land or
any interest therein, through fraud in the
registration proceedings, the opportunity
to review the decree is to insure fair and
honest dealing in the registration of land.
But the action to annul a judgment, upon
the ground of fraud, would be unavailing
unless the fraud be extrinsic or collateral
and the facts upon which it is based
have not been controverted or resolved
in the case where the judgment sought
to be annulled was rendered. Extrinsic
or collateral fraud, as distinguished from
intrinsic fraud, connotes any fraudulent
scheme executed by a prevailing litigant
'outside the trial of a case against the
defeated party, or his agents, attorneys
or witnesses, whereby said defeated
party is prevented from presenting fully
and fairly his side of the case.'
But intrinsic fraud takes the form of 'acts
of a party in a litigation during the trial,
such as the use of forged instruments or
perjured testimony, which did not affect
the presentation of the case, but did
prevent a fair and just determination of
the case.  the register of deeds for the province
Thus, relief is granted to a party
deprived of his interest in land where the
fraud consists in a deliberate
Averell B. Abrasaldo – II-Sanchez Roman
misrepresentation that the lots are not
contested when in fact they are, or in
applying for and obtaining adjudication
and registration in the name of a co-
owner of land which he knows had not
intentionally concealing facts, and
conniving with the land inspector to
include in the survey plan the bed of a
navigable stream, or in willfully
misrepresenting that there are no other
claims, or in deliberately failing to notify
the party entitled to notice, or in inducing
him not to oppose an application, or in
misrepresenting about the indentity of
the lot to the true owner by the applicant
causing the former to withdraw his
opposition. In all these examples the
fraudulent scheme of the prevailing
litigant prevented a party from having his
day in court or from presenting his case,
The fraud, therefore, is one that affects
and goes into the jurisdiction of the
court. 
The second question assigned as an error must also be
resolved against the petitioners.  Registration Law. This is the doctrine laid down by this Court
Section 122 of Act No. 496 otherwise known as the Land
Registration Act provides: 
SEC. 122. Whenever public lands in the
Philippine Islands belonging to the
Government of the United States or to
the Government of the Philippine Islands
are alienated, granted, or conveyed to
persons or the public or private
corporations, the same shall be brought
forthwith under the operation of this Act
and shall become registered lands. It
shall be the duty of the official issuing
the instrument of alienation, grant, or
conveyance in behalf of the Government
to cause such instrument before its
delivery to the grantee, to be filed with
where the land lies and to be there
registered like other deeds and
conveyances, whereupon a certificate
shall be entered as in other cases of
registered land, and an owner's
duplicate certificate issued to the
grantee. The deed, grant, or instrument
of conveyance from the Government to
the grantee shall not take effect as a
conveyance or bind the land, but shall
operate only as contract between the
Government and the grantee and as
evidence of authority to the clerk or
register of deeds to make registration.
The act of registration shall be the
operative act to convey and affect the
land, and in all cases under this Act,
registration shall be made in the office of
the register of deeds for the province
where the land lies. The fees for
registration shall be paid by the grantee.
After due registration and issue of the
certificate and owner's duplicate, such
land shall be registered land for all
purposes under this Act. 
The law is clear. We can apply it to the facts without need for
judicial interpretation. Once the deed, grant, or instrument of
conveyance of public land is registered with the Register of
Deeds and the corresponding certificate and owner's
duplicate title is issued, such land is deemed registered land.
It is brought within the scope and operation of the Land
in a long line of cases. (See Heirs of Deogracias Ramos v.
Court of Appeals, 139 SCRA 293; Lahora v. Dayanghirang
37 SCRA 346; Ramirez v. Court of Appeals, 30 SCRA 297;
Director of Lands v. Jugado 2 SCRA 32; Nelayan v. Nelayan,
109 Phil. 183; Republic v. Heirs of Carle 105 Phil. 1227; El
Hogar Filipino v. Olviga, 60 Phil. 17; Manolo v. Lukban, 48
Phil. 973). The land in this case having been registered and
covered by an original certificate of title issued by the
Register of Deeds of Rizal, it is within the provisions of the
Land Registration Act. Thus, the decree of registration
granted by the lower court in favor of the petitioners may be
reviewed on the ground of actual and extrinsic fraud
pursuant to Section 38 of the same Act. 
There is likewise no merit in the third assigned error. While
there was an admission that the petitioners have been in
actual possession of the disputed land since 1938, it was
made to show and prove the fact that the petitioners are only
antichretic creditors. The respondents never admitted that
they have not possessed the land at all. On the contrary,
they alleged that they and their predecessors-in-interest
namely Gregoria Pascual and Agapita Bonifacio have been
in possession of the land since time immemorial and that the
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petitioners were placed in possession of the land pursuant to ordered to pay the petitioners the amount of P 400.00 as
a contract of antichresis.  principal for the contract of antichresis, the fruits obtained
from the possession of the land having been applied to the
interests on the loan. 
The court below found that the petitioners are merely
antichretic creditors. This finding and its factual bases were
affirmed by the Court of Appeals. On the basis of the SO ORDERED.
evidence supporting this conclusion, this finding is binding on
us as it is not our duty to weigh evidence on this point all
over again. This court has on several occasions held that the
antichretic creditor cannot ordinarily acquire by prescription
the land surrendered to him by the debtor (Trillana v.
Manansala, et al., 96 Phil. 865; Valencia v. Acala, 42 Phil.
177; Barreto v. Barreto, 3 Phil. 234). The petitioners are not
possessors in the concept of owner but mere holders placed
in possession of the land by its owners. Thus, their
possession cannot serve as a title for acquiring dominion
(See Art. 540, Civil Code).

The fourth issue raised by the petitioners is answered by a

referral to the detailed factual findings and conclusions of the
trial court. Ten pages of the record on appeal (Record on
Appeal, CA-G.R. No. 40425-R, pp. 56-66) state in convincing
detail the portion of the trial court's decision which support its
conclusion that Hilario Ramirez and Valentina Bonifacio are
not the owners of the disputed land and have no registrable
right over it and that the respondents herein have
established their ownership by a strong preponderance of
evidence. The respondents were declared the true and real
owners and entitled to registration in their names. The final
resolution of the Court of Appeals affirmed the trial court's
decision in toto. We see no reversible error in this finding. 

The argument of laches is explained and countered by the

close relationship of the parties and the nature of a contract
of antichresis. The private respondents are nephews and
nieces, with their spouses, of the petitioners. Moreover, there
is evidence to show that long before the filing of the cases,
there had been attempts to recover the property. 

In view of the foregoing, we are constrained to affirm the

appellate court's decision. We note, however, that in spite of
the finding of an existing contract of antichresis between the
parties, the two courts below did not order the payment of
the principal amount of mortgage. Under Article 2136 of the
Civil Code, the debtor cannot reacquire the enjoyment of the
immovable without first having totally paid what he owes the
creditor. 

WHEREFORE, the decision appealed from is hereby

AFFIRMED with a modification that the respondents are

Averell B. Abrasaldo – II-Sanchez Roman 20