Antichresis

Antichresis

By:
Ivan Paul Manaligod
Katen Morales
ANTICHRESIS
DEFINITION
Art 2132
By the contract of antichresis the creditor
acquires the right to receive the fruits of the
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
ANTICHRESIS
KIND OF
CONTRACT PARTIES OBJECT IMPORTANCE CONTRACT FORMALITY
ACCORDING
TO
PERFECTION
ANTICHRESIS Antichretic FRUITS of an Accessory Consensual Principal +
Debtor immovable contract Interest =
(Art 2132 ) in writing
Antichretic
Real Right
Creditor If not : void
(Art. 2134. )
Characteristics

• Accessory Contract – secures the

performance of an obligation
• Formal Contract – It must be in a specified
form to be valid (i.e in writing)
• Nominate – It has been given a specific name
by the civil code
• Consensual – The civil code does not require
delivery of the immovable to the creditor
Special Requisites

• It can cover only the fruits of an immovable and not

the immovable property itself.
• Delivery is only necessary only for the creditor to
receive the fruits and not for the contract to be
binding.
• Amount of the principal and interest must be in
writing for the contract to be binding.
• Express agreement that the debtor will give
possession of the property to the creditor and that the
latter will apply the fruits of the property to the
interest if any, then to the principal of his credit.
FRUITS
Art 441 (NCC)
There are three kinds of fruits under the civil
code:
• Natural fruits
• Industrial fruits
• Civil fruits
Fruits
Art 442 (NCC)
Natural fruits are the spontaneous
products of the soil, and the young and other
products of animals.
Example: fruits that have grown wild without
the intervention of human labor like wild
mushrooms
Fruits

Industrial fruits are those produced by

lands of any kind through cultivation or labor.

Example: those which are fruits of the land

through labor of man – fruits of fruit bearing
trees (a tree is an immovable under Art 415)
Fruits

Civil fruits are the rents of buildings, the

price of leases of lands and other property and
the amount of perpetual or life annuities or
other similar income.
Example: Stock dividends made by a
corporation are considered civil fruits
(Bachrach vs Seifert)
Article 2133

• The actual market value of the fruits at the

time of the application thereof to the interest
and principal shall be the measure of such
application.
Article 2133

The actual market value of the fruits at the time of the

application thereof to the interest and the principal
shall be the measure of such application

Purpose: The purpose of this provision is to forestall

the use of antichresis for purposes of usury.
(Commission report p. 158)
The interests in antichresis are subject to the
limitations laid down in the usury law.
Art 2134
The amount of the principal and of the
interest shall be specified in writing;
otherwise, the contract of antichresis is void.

Note: Only the contract of antichresis is

void, not the whole contract which could be
another contract in the civil code
Antichretic Rights

Rights of the Creditor Rights of the Debtor

1. The right to the fruits and
income of the thing (Art. 2132) Reacquire the enjoyment
2. The right to retain the thing until Of the immovable upon
the debt is paid (Art 2136) payment of debt
3. The right to have the thing sold (Art 2136)
upon non-payment at maturity
(Art 2137)
4. The right of preference to the
proceeds of the sale of the thing
5. Compel the debtor to enter
again upon the enjoyment of the
property (Art 2136 )
Antichretic Obligations
Obligations of the Debtor
1. Pay his debts (Art 2136)
2. To pay the taxes and
charges upon the estate
once compelled by the
creditor to enter again upon
the enjoyment of the
property
Obligations of the Creditor
1. Apply fruits to the interest,
then to the principal. (Art
2132)
2. Pay taxes and charges upon
the estate to be duducted
from the fruits (Art 2135)
3. Bear the expenses
necessary for preservation
and repair to be deducted
from the fruits. (Art 2135)
Article 2135

The creditor, unless there is a stipulation

to the contrary, is obliged to pay the taxes and
charges upon the estate.
He is also bound to bear the expenses
necessary for the preservation and repair.
The sums spent for the purposes stated
in this article shall be deducted from the
fruits
Obligations
to pay charges

In the absence of any stipulation to the

contrary, the antichretic creditor is under the
obligation to pay the taxes and charges which
burden the estate. (Pardo vs Gimenez 54 Phil 459)
Failure of the antichretic creditor to observe
this obligation such as to pay taxes, and the rent
on the lot where the same was built, renders him
liable in damages to the antichretic debtor who
suffers thereby. (Pando vs Jimenez)
 Pando v Gimenez
GR L-31616 Feb 8, 1930

Defendant Gimenez executed a real estate

mortgage in favor of Pando as a security for his
indebtedness. Thereafter, Pando had to leave to
attend to business in Cagayan. At the special
instance of plaintiff, defendant gave to the
plaintiff full control, and complete absolute
administration of the building and a parcel of land
on which said building was erected under the
condition that said plaintiff would attend to the
administration, care and preservation of said
building and the property leased from Hacienda
Tuason, the payment of the premium of the
 Pando v Gimenez
GR L-31616 Feb 8, 1930
Insurance of this building, the payment of taxes
that might become due, the payment to the lessor
rents of the leased property, and to collect the rents
from the tenants of said building.
The rents that would be collected will be applied
to the expenses necessary for the preservation and
maintenance of said property, the rents of the leased
property, and the balance to be applied in payment
on account of the interest that may become due in
favor of the plaintiff under the mortgage.
 Pando v Gimenez
GR L-31616 Feb 8, 1930
In the course of administration by the
plaintiff of the said building and land
leased, said plaintiff neglected to pay taxes
and rent for several years.
By reason of failure, neglect and
abandonment of the plaintiff, to pay taxes
and rent, the government sold the building
at public auction and the lessor cancelled
the contract of lease.
Supereme Court
Ruling

The contract is antichretic in character and

the plaintiff has failed to comply with his
obligations under Art 1882 (Old civil code,
now Art 2135)
The plaintiff having failed in his obligation
to pay the tax on the house and rent on the lot,
is by law required to pay indemnity for
damages.
Deficiency of fruits

If the fruits are not sufficient to cover the

taxes and charges, the deficiency must be
borne by the creditor, unless otherwise
stipulated
Art 2136

The debtor cannot reacquire the enjoyment

of the immovable without first having totally
paid what he owes the creditor.
But the latter, in order to exempt himself
from the obligation 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.
Remedies of the
Creditor in case
of default

• An action for specific performance

• Petition for the sale of the real property as in
foreclosure of mortgages under rule 68 of the
Rules of Court (art 2137)
Stipulation for
automatic appropriation

• Under Art 2088 of the Civil Code, a stipulation

authorizing the antichretic creditor to
appropriate the property, upon the non
payment of the debt, within the agreed period
is void.
Creditor is
not the
property owner
Art 2137
The creditor does not acquire the
ownership of the real estate for non payment of
the debt within the period agreed upon.
Every stipulation to the contrary shall be
void. But the creditor may petition the court
for the payment of the debt or the sale of the
real property. In this case, the Rules of Court
on the forclosure of mortgages shall apply.
Possession is
not ownership

The creditor in antichresis cannot by mere

possession of real property which he received
by virtue of antichresis acquire ownership over
the same for failure of the debtor to pay the
debt within the stipulated time, any agreement
to the contrary being void.
Creditor may ask the courts to sell the real
property to satisfy his credit .

The debtor cannot recover the enjoyment

and use of the real property given in
antichresis to the creditor, without having
previously paid to the latter all his debt and
interest thereon. The creditor is entitled to
ask the courts that the said real property be
sold to satify the credit.
Stipulation
for Foreclosure

The parties may validly stipulate

for the extrajudicial foreclosure of
the security in the same manner as
they are allowed to do so in contracts
of mortgage and of pledge. (El Hogar
Filipino vs Paredes)
Reimbursement

The creditor is entitled to be

reimbursed, not only in his capital
and interest, but also for his expenses
for machinery and other
improvements in the land.
(Magdangal vs Lichauco)
Usurious Interest
Art 2138

The contracting parties may stipulate that

the interest upon the debt be compensated
with the fruits of the property which is the
object of the antichresis, provided that if the
value of the fruits should exceed the amount of
interest allowed by the laws against usury, the
excess shall be applied to the principal.
Note: may no longer be applicable as the
Usury Law is currently suspended
Interest

There are two types of interests

1. Under Art 2209 of the Civil Code provides
that if the debtor incurs in default, in the
absence of stipulation, the indemnity shall be
the legal interest of six percent (6%) per
annum.

note: if the stipulated interest in

unconscionable, the courts may reduce the
interest
Interest

2. Under the Usury Law or Act No. 2655”,

a legal rate of 6% per annum is applicable for
“loan or forbearance of any money, goods or
credits and in judgements”.
note: The usury law was enacted in Feb 24,
1916. It was suspended effective Jan. 1, 1983
Interest rates whenever unconscionable may
still be declared illegal
Article 2139

• The last paragraph of article 2085, and articles

2089 to 2091 are applicable to this contract.
Article 2085

• Third persons who are not parties to the

principal obligation may secure the latter by
pledging or mortgaging their own property.
Article 2089

• A pledge or mortgage is indivisible, even though the

debt may be divided among the successors in interest
of the debtor or of the creditor.
• Therefore, the debtor's heir who has paid a part of the
debt cannot ask for the proportionate extinguishment
of the pledge or mortgage as long as the debt is not
completely satisfied.
• Neither can the creditor's heir who received his share
of the debt return the pledge or cancel the mortgage,
to the prejudice of the other heirs who have not been
paid.
Article 2089

• From these provisions is excepted the case in

which, there being several things given in
mortgage or pledge, each one of them
guarantees only a determinate portion of the
credit.
• The debtor, in this case, shall have a right to
the extinguishment of the pledge or mortgage
as the portion of the debt for which each thing
is specially answerable is satisfied
Article 2091

• The contract of pledge or mortgage may

secure all kinds of obligations, be they pure or
subject to a suspensive or resolutory condition.
Antichresis compared to
other contracts
 Antichresis vs Pledge
Antichresis Pledge
As to Subject matter
Antichresis refers to real property Pledge refers to personal property
As to Perfection
Antichresis is perfected by mere consent of Pledge is perfected via delivery of the
the parties thing pledged
 Antichresis vs Real Estate Mortgage
Antichresis Real Estate Mortgage
As to delivery and non delivery of the property
Real Property is delivered to the creditor Debtor usually retains possession of the
property
As to Right to the Fruits
Creditor acquires only the right to receive the Creditor does not have any right to receive the
fruits of the property fruits, but the mortgage creates a real right
over the property
As to the obligation to pay taxes
The creditor, unless there is a contrary The creditor has no obligation to pay the taxes
stipulation is obliged to pay the taxes and and charges on the property
charges upon the estate
As to obligation to apply fruits to the interest
It is expressly stipulated that the creditor, given There is no such obligation in a Real Estate
possession of the property shall apply all the Mortgage
fruits to the payment of interest, if owing, and
thereafter to the principal
Sample Contract of
Antichresis