Antichresis

Define antichresis

Antichresis is a contract by virtue of which 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. (Art. 2132, CC)

Characteristics of antichresis

1. Accessory contract

2. Formal contract - it must be in writing

3. Deal only with immovable property

4. Real right

5. Real contract

6. Can guarantee all kinds of valid obligations. 

It is not essential that the loan should earn interest in order that it can be guaranteed with a contract of antichresis. Antichresis is susceptible of guaranteeing all kinds of obligations, pure or conditional. (Javier vs. Valliser, No. 2648-R, April 29, 1950; Sta. Rosa vs. Noble, 35 O.G. 27241)

Delivery of the property to the creditor is required only in order that the creditor may receive the fruits and not for the validity of the contract.

How is a contract of antichresis be validly established?

The amount of the principal and of the interest shall be specified in writing; otherwise, the contract of antichresis shall be void.  (Art. 2134, CC)

How should the amount of payment in antichresis be determined?

The actual market value of the fruits at the time of the application thereof to the interest and principal shall be the measure of such application. (Art. 2133, CC)

What are the obligations of the creditor?

1.) The creditor, unless there is a stipulation to the contrary, is obliged to pay the taxes and charges upon the estate.

2.) He is also bound to bear the expenses necessary for its preservation and repair.

The sums spent for the purposes stated in this article shall be deducted from the fruits. (Art. 2135, CC)

3.) To apply the fruits received for the payment of the outstanding interest, if any, and thereafter to the principal of his credit.

How can the creditor be exempted from the obligations imposed by Art. 2135, CC?

The creditor may exempt himself from the two obligations imposed by Art. 2135 by compelling the debtor to enter again upon the enjoyment of the property, except when there is a stipulation to the contrary. (Art. 2136, CC)

Can the debtor reacquire the enjoyment of the immovable?

The debtor cannot reacquire the enjoyment of the immovable without first having totally paid what he owes the creditor.

But the latter, in order to exempt himself from the obligations imposed upon him by the preceding article, may always compel the debtor to enter again upon the enjoyment of the property, except when there is a stipulation to the contrary. (Art. 2136, CC)

The property delivered stands as a security for the payment of the obligation of the debtor in antichresis. Hence, the debtor cannot demand its return until the debt is totally paid. 

The debtor can only demand the return of the property after having fully paid his obligations to the creditor. It is not fair for the creditor to regain the possession of the property when his debt has not been fully paid. Until there is full payment of the obligation, the property shall stand as security therefor. (Macapinlac vs. Gutierrez Repide, No. 18574, September 20, 1922, 43 Phil 770)

May the creditor acquire ownership of the real estate for non-payment of debt?

The creditor does not acquire the ownership of the real estate for non-payment of the debt within the period agreed upon. Every stipulation to the contrary shall be void. (Art. 2137, CC)

What is the remedy of the creditor in case of non-payment of his credit?

The creditor may petition the court for the payment of the debt or the sale of the real property. In this case, the Rules of Court on the foreclosure of mortgages shall apply. (Art. 2137, CC)

1. Action for collection

2. Petition for the public sale of the property

Interest be compensated with the fruits

The contracting parties may stipulate that the interest upon the debt be compensated with the fruits of the property which is the object of the antichresis, provided that if the value of the fruits should exceed the amount of interest allowed by the laws against usury, the excess shall be applied to the principal. (Art. 2138, CC)

Is prescription as a mode of acquiring ownership available to the creditor in antichresis?

No. His possession of the property is not in the concept of an owner but that of a mere holder during the existence of the contract (Ramirez vs. Court of Appeals, G.R. No. L-38185, September 24, 1986).

Antichresis vs. contract of sale with a right of repurchase

1) Antichresis is an accessory contract, whereas sale with right of repurchase is a principal and independent contract.

2) In the first, there is no transfer of the title over the property from the debtor to the creditor, whereas in the second there is a transfer of the title over the property from the vendor a retro to the vendee a retro although conditional.

3) In the first, if the debtor fails to pay his debt, the creditor cannot appropriate the property or dispose of it, whereas in the second, as soon as there is a consolidation of title in the vendee a retro, he may dispose of it as absolute owner.

4) In the first, if the debtor fails to pay his debt within the time agreed upon, the creditor does not acquire the ownership of the property, whereas in the second, if the vendor a retro does not redeem the property within the time agreed upon, the vendee a retro irrevocably acquires absolute ownership thereof.

Antichresis vs. pledge

1) Antichresis is a consensual contract whereas pledge is a real contract.

2) In the first, the subject matter is a real property, whereas in the second, the subject matter is a personal property.

3) In the first, the requirement that the contract must be in writing is essential for validity, whereas in the second, the requirement that the contact must be in public instrument is merely for the purpose of binding third persons. 

4) In the first, the foreclosure in case of non-payment of debt is as a rule judicial, although the parties may agree to make it extrajudicial whereas in the second, the sale in case of non-payment of the debt is always extrajudicial.

Antichresis vs. real estate mortgage

1) In antichresis, the creditor acquires the right to receive the fruits of the property, but with the obligation to apply them to the payment of the interest and thereafter to the principal of his credit, whereas in real estate mortgage, the creditor does not acquire such right.

2) In the first, the creditor as a rule is in possession of the property, whereas in the second, the debtor is always in possession of the property.

3) In the first, the requirement that the contract must be in writing is essential for validity, whereas in the second, the requirement that the contact must be registered in the Registry of Property is merely for the purpose of binding third persons.

4) In the first, there is an obligation of the creditor to pay taxes and charges upon the property as well as the expenses necessary for its preservation and repair, whereas in the second, such obligation is not imposed upon the creditor.

5) In the first, foreclosure in case of non-payment of debts is a rule judicial, although the parties may agree to make it extra-judicial, whereas in the second, the foreclosure may be judicial or extra-judicial at the option of the creditor. 

A obtains a loan of P500 from B and delivers to the latter a piece of coconut land as security for the payment of the loan. In the deed executed, A agreed that B would avail of the fruits of the land during the time that the loan remains unpaid, without saying that the value of said fruits should be applied to the interest or the capital of the loan. What is the nature of the contract between the parties?

It is submitted that the contract in this case is a a type of equitable mortgage, because, although it lacks some of the formalities required by law, nevertheless, it shows the intention of the parties to charge real property as security for the payment of a debt and contains nothing that is contrary to law (Art. 1602, CC). Strictly speaking, it cannot be considered a contract of antichresis becuase it lacks the requisite regarding the obligation of the creditor to apply the fruits received by him to the payment of the interest, if owing, and thereafter to the principal of his credit. (Art. 1232, CC) In spite of the fact that it is a type of equitable mortgage where the mortgagee is in possession, it has been held by the Supreme Court, however, that the rights and obligations of the parties are similar and in may respect identical with those in a contract of antichresis. (Macapinlac vs. Gutierrez Repide, 43 Phil 770; Diaz vs. Mendezona, 48 Phil 666; Miranda vs. Imperial, 77 Phil 1066)