Case Name Kasilag v Rodriguez

GR No. | Date GR No. 46623 | December 7, 1939

Topic Ignorance of the Law
Doctrine Good faith may be premised upon ignorance of the laws.
Parties involved MARCIAL KASILAG, petitioner , vs. RAFAELA RODRIGUEZ, URBANO ROQUE, SEVERO
MAPILISAN and IGNACIO DEL ROSARIO, respondents
Ponente J. Imperial
General Summary Emiliana Ambrosio (matriarch of respondents) borrowed a sum of P1,000 from Kasilag
(petitioner). In settling the debt, both entered into a contract of mortgage. The terms
stipulated that Ambrosio was to pay the debt with interest using the fruits of her property
within 4 and a half years, where in such case, the mortgage would not have any effect.
Ambrosio would also pay the tax on land, and should she fail to pay the debt within 4 and
a half years, Ambrosio was to execute a deed of sale. A year later, it turned out she was
unable to pay the tax. They entered into a verbal agreement wherein Kasilag would possess
the land on condition that he would pay the land tax, would benefit by the fruits of the
land, and would introduce land improvements. These pacts made by the parties
independently were calculated to alter the mortgage a contract clearly entered into,
converting the latter into a contract of antichresis. The Court held that the petitioner acted
in good faith in taking possession of the land and enjoying its fruits. It is a fact that the
petitioner is not conversant with the laws because he is not a lawyer. In accepting the
mortgage of the improvements, he proceeded on the well-grounded belief that he was not
violating the prohibition regarding the alienation of the land.

FACTS
● The case was an appeal taken by defendant-petitioner Marcial Kasilag from the CA decision modifying the
decision of the Court of First Instance of Bataan, holding that the contract Exhibit 1 (their contract of mortgage,
see bullet 2) is null and void and without effect, that the plaintiffs-respondents, then appellants, are the
owners of the disputed land, with its improvements, hence, they are entitled to the possession thereof; that
the defendant-petitioner should yield possession of the land in their favor, with all the improvements and free
from any lien; that the plaintiffs-respondents jointly and severally pay to the defendant-petitioner the sum of
P1,000 with interest at 6 per cent per annum from the date of the decision; and absolved the plaintiffs-
respondents from the cross-complaint relative to the value of the improvements claimed by the defendant-
petitioner.
● Defendant-petitioner Marcial Kasilag and Emiliana Ambrosio agreed in a contract of mortgage, which
stipulated for the improvements1 of land acquired as homestead in order to pay for her debt of Php 1,000 plus
12% interest per annum. Ambrosio was to pay the debt with interest within 4 and a half years, where in such
case, the mortgage would not have any effect. Ambrosio would also pay the tax on land, and should she fail
to pay the debt within 4 and a half years, Ambrosio was to execute a deed of sale.
● A year later, it turned out that she was unable to pay the tax. They entered into a verbal agreement wherein
Kasilag would possess the land on condition that he would pay the land tax, would benefit by the fruits of the
land, and would introduce land improvements.
● These pacts made by the parties independently were calculated to alter the mortgage a contract clearly
entered into, converting the latter into a contract of antichresis2. The contract of antichresis, being a real
encumbrance burdening the land, is illegal and void.

ISSUE:
● Whether the petitioner should be deemed a possessor in good faith because he was unaware of any flaw in
his title or in the manner of its acquisition by which it is invalidated.

1
Not mortgage on the land itself, but mortgage on the "fruits" of the improvements only. The improvements which she mortgaged consisted of
four (4) fruit-bearing mango trees, 110 hills of bamboo trees, 1 tamarind tree and 6 betelnut trees, the assessed value of which was P660.
2
Antichresis: a contract whereby a debtor pledges real property to a creditor, allowing the use and occupation of the pledged property, in lieu
of interest on the loan.

UP Law - 1 BGC Eve 2 (2027) / LAW 100

RULING
● Yes

For all the foregoing considerations, the appealed decision is reversed, and we hereby adjudge: (1) that the contract
of mortgage of the improvements, set out in Exhibit 1, is valid and binding (2) that the contract of antichresis agreed
upon verbally by the parties is a real incumbrance which burdens the land and, as such, is null and without effect;
(3) that the petitioner is a possessor in good faith; (4) that the respondents may elect to have the improvements
introduced by the petitioner by paying the latter the value thereof, P3,000, or to compel the petitioner to buy and
have the land where the improvements or plants are found, by paying them its market value to be fixed by the court
of origin, upon hearing the parties; (5) that the respondents have a right to the possession of the land and to enjoy
the mortgaged improvements; and (6) that the respondents may redeem the mortgage of the improvements by
paying to the petitioner within three months the amount of P1,000, without interest, as that stipulated is set off by
the value of the fruits of the mortgaged improvements which the petitioner received; and in default thereof the
petitioner may ask for the public sale of said improvements for the purpose of applying the proceeds thereof to the
payment of his said credit. Without special pronouncement as to the costs in all instances. So ordered.

REASONING
● It is a fact that the petitioner is not conversant with the laws because he is not a lawyer. In accepting the
mortgage of the improvements, he proceeded on the well-grounded belief that he was not violating the
prohibition regarding the alienation of the land. In taking possession thereof and in consenting to receive its
fruits, he did not know, as clearly as a jurist does, that the possession and enjoyment of the fruits are attributes
of the contract of antichresis and that the latter, as a lien, was prohibited by section 1163. These considerations
again bring us to the conclusion that, as to the petitioner, his ignorance of the provisions of section 116 is
excusable and may, therefore, be the basis of his good faith. We do not give much importance to the change
of the tax declaration, which consisted in making the petitioner appear as the owner of the land, because such
an act may only be considered as a sequel to the change of possession and enjoyment of the fruits by the
petitioner, to about which we have stated that the petitioner's ignorance of the law is possible and excusable.
The Court, therefore, held that the petitioner acted in good faith in taking possession of the land and enjoying
its fruits.

SEPARATE OPINION

Villa-real, Concurring
 With the majority opinion except for holding that the interest is set off against the fruits of the mortgaged
improvements, because as a result of the nullity of the contract of antichresis the petitioner should return to the
respondents the products of the mortgaged improvements, and the latter should pay to the petitioner the amount
of the loan plus interest due and unpaid at the rate of 12% per annum from the date of the contract until fully paid

Laurel, Concurring
 In holding that the petitioner acted in bad faith, the CA committed the error of assuming that petitioner possessed
knowledge of the law (the premise that such possession is banned by law at least for five years from the issuance
of patent [section 116, Public Land Act]) and drew the conclusion that petitioner was aware of the illegality of his
possession.

3
Section 116 of Act No. 2874. Except in favor of the Government or any of its branches, units or institutions, or legally constituted banking
corporations, lands acquired under the free patent or homestead provisions shall not be subject to encumbrance or alienation from the date of
the approval of the application and for a term of five years from and after the date of issuance of the patent or grant, nor shall they become
liable to the satisfaction of any debt contracted prior to the expiration of said period; but the improvements or crops on the land may be
mortgaged or pledged to qualified persons, associations, or corporations. (As amended by section 23 of Act No. 3517).

UP Law - 1 BGC Eve 2 (2027) / LAW 100