Antichresis 2 cases only

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. L-36821 June 22, 1978

JOSE P. DIZON, petitioner, vs.ALFREDO G. GABORRO (Substituted by PACITA DE GUZMAN GABORRO as Judicial Administratrix of the Estate of Alfredo G. Gaborro) and the DEVELOPMENT BANK OF THE PHILIPPINES, respondents.

Leonardo Abola for petitioner.

Carlos J. Antiporda for respondents.

 

GUERRERO, J.:

Petition for review on certiorari of the decision of the Court Appeals 1 in CA-G.R. No. 46975-R entitled "Jose P. Dizon, Plaintiff-Appellant, vs. Alfredo G. Gaborro (substituted by Pacita de Guzman Gaborro as Judicial Administratrix of the Estate of Alfredo G, Gaborro) trial the Development Bank of the Philippines, Defendants-Appellees," affirming with modification the decision of the Court of First Instance of Pampanga, Branch II in Civil Case No. 2184.

The dispositive portion of the decision sought to be reviewed reads:

IN VIEW OF THE FOREGOING, the judgment appealed therefrom is hereby affirmed with modification that the plaintiff-appellant has the right to refund or reimburse the defendant- appellees he sum of P131,831.91 with interest at 8% per annum from October 6, 1959 until full payment, said right to be exercised within one year from the date this judgment becomes final, with the understanding that, if he fails to do so within the said period, then he is deemed to have lost his right over the lands forever. With costs against the appellant. 2

MODIFIED.

The basic issue to be resolved in this case is whether the 'Deed of Sale with Assumption of Mortgage', trial Option to Purchase Real Estate". two instruments executed by trial between Petitioner Jose P. Dizon trial Alfredo G. Gaborro (defendant below) on the same day, October 6, 1959 constitute in truth trial in fact an absolute sale of the three parcels of land therein described or merely an equitable mortgage or conveyance thereof by way of security for reimbursement, refund or repayment by petitioner Jose P. Dizon of any trial all sums which may have been paid to the Development Bank of the Philippines trial the Philippine National Bank by Alfredo G. Gaborro (later substituted herein by his wife Pacita de Guzman Gaborro as administratrix of the estate of Alfredo G. Gaborro) who had died during the pendency of the case.

A supplementary issue raised is whether or not Gaborro or the respondent administratrix of the estate should account for all the fruits produced trial income received by them from the lands mentioned trial described in the aforesaid "Deed of Sale with Assumption of Mortgage."

The antecedent facts established in the record are not disputed. Petitioner Jose P. Dizon was the owner of the three (3) parcels of land, subject matter of this litigation, situated in Mabalacat, Pampanga with an aggregate area of 130.58 hectares, as evidenced by Transfer Certificate of Title No. 15679. He constituted a first mortgage lien in favor of the Develop. ment Bank of the Philippines in order to secure a loan in the sum of P38,000.00 trial a second mortgage lien in favor of the Philippine National Bank to cure his indebtedness to said bank in the amount of P93,831.91.

Petitioner Dizon having defaulted in the payment of his debt, the Development Bank of the Philippines foreclosed the mortgage extrajudicially pursuant to the provisions of Act No. 3135. On May 26, 1959, the hinds were sold to the DBP for- P31,459.21, which amount covered the loan, interest trial expenses, trial the corresponding "Certificate of Sale," (Exhibit A-2, Exhibit 1b was executed in favor of the said On November 12, 1959, Dizon himself executed the deed of sale (Exhibit Al over the properties in favor of the DBP which deed was recorded in the Office of the Register of Deeds on October 6, 1960.

Sometime prior to October 6, 1959 Alfredo G. Gaborro trial Jose P. Dizon met. Gaborro became interested in the lands of Dizon. Dizon originally intended to lease to Gaborro the property which had been lying idle for some time. But as the mortgage was already foreclosed by the DPB trial the bank in fact purchased the lands at the foreclosure sale on May 26, 1959, they abandoned the projected lease. They then entered into the following contract on October 6, 1959 captioned trial quoted, to wit:

DEED OF SALE WITH ASSUMPTION

OF MORTGAGE

KNOW ALL MEN BY THESE PRESENTS:

This DEED OF SALE WITH ASSUMPTION OF MORTGAGE, made trial executed at the City of Manila, Philippines, on this 6th day of October, 1959 by trial between —

JOSE P. DIZON, of legal age, Filipino, married to Norberta Torres, with residence trial postal address at Mabalacat, Pampanga, hereinafter referred to as the VENDOR.

ALFREDO G. GABORRO, likewise of legal age, Filipino, married to Pacita de Guzman, with residence trial postal address at 46, 7th St., Gilmore Avenue, Quezon City, hereinafter referred to as the VENDEE,

W I T N E S S E T H: That —

WHEREAS, the VENDOR is the registered owner of three (3) parcels of land covered by Transfer Certificate of Title No. 15679 of the land records of Pampanga. situated in the Municipality of Mabalacat, Province of Pampanga, trial more particularly described trial bounded as follows:

1. A parcel of land (Lot No. 188 of the Cadastral Survey of Mabalacat), with the improvements thereon, situated in the Municipality of Mabalacat, Bounded on the NE by Lot No 187: on the SE., by Lots Nos. 183, 189, 191

trial 192; on the SW by Lot No. 192 trial on the NW by the unimproved provincial road to Magalang. Containing an area of TWO HUNDRED AND TWENTY ONE THOUSAND ONE HUNDRED SEVENTY TWO SQUARE METERS (221,172), more or less.

2. A parcel of land (Lot No. 193 of the Cadastral Survey of Mabalacat), with the improvements thereon, situated in the Municipality of Mabalacat. Bounded on the NE., by a road trial Lots Nos. 569,570 trial 571; on the SE., by Lot No. 571 trial the unimproved road to Magalang, on the SW by a road; trial on the NE., by a road trial the Sapang Pritil Containing an area of NINE HUNDRED SEVENTY EIGHT THOUSAND SEVEN HUNDRED AND SEVENTEEN SQUARE METERS (978,717), more or less.

3. A parcel of land (Lot No. 568 of the Cadastral Survey of Mabalacat), with the improvements thereon, situated in the Municipality of Mabalacat. Bounded on the NE., by Lot No. 570, on the SE SW trial NW by roads. Containing an area of ONE HUNDRED FIVE THOUSAND NINE HUNDRED AND TWENTY ONE SQUARE METERS (105,921), more or less,

WHEREAS, the above-described properties are presently mortgaged (first mortgage) to the Development Bank of the Philippines (,formerly Rehabilitation Finance Corporation) to secure the payment of a loan, plus interest, of THIRTY EIGHT THOUSAND PESOS ONLY (P38,000.00), Philippine currency, as evidenced by a deed of mortgage for- P... dated ... which deed was ratified trial acknowledged before Notary Public of Manila, Mr. ... as Doc. No. Page No. Reg. No. Series of 196 ... ;

WHEREAS, the aforesaid properties are likewise mortgage (second mortgage) to the Philippine National Bank to secure the payment of a loan of NINETY THREE THOUSAND EIGHT HUNDRED THIRTY ONE PESOS & 91/100 (P93,831.91), Philippine Currency, plus interest up to August 13, 1957, as evidenced by deed of Mortgage for P............. dated................... which deed was ratified trial acknowledged before Notary Public of Manila, Mr, I . I as Doc. No............ Page No.......... Reg. No. Series of 196........... ; WHEREAS, the VENDOR, has offered to sell trial the VENDEE is willing to purchase the above-described properties for ONE HUNDRED THIRTY ONE THOUSAND EIGHT HUNDRED THIRTY ONE PESOS & 91 /100 (P131,831.91), Philippine Currency, under the terms trial conditions herein below set forth;

NOW, THEREFORE, for- trial in consideration of the above premises trial the amount of ONE HUNDRED THIRTY ONE THOUSAND EIGHT HUNDRED THIRTY ONE PESOS & 91/100 (P131,831.91), Philippine Currency, in hand paid in cash by the VENDEE unto the VENDOR, receipt whereof is hereby acknowledged by the VENDOR to his entire trial full satisfaction, trial the assumption by the VENDEE of the entire mortgage indebtedness, both with the Development Bank of the Philippines trial the Philippine National Bank above mentioned, the VENDOR does by these presents, sell, transfer trial convey, as he had sold, transferred, trial conveyed, by way of absolute sale, perpetually trial forever, unto the VENDEE, his heirs, successors trial assigns. above-described properties, with all the improvements thereon, free from all liens trial encumbrances of whatever nature. except the pre- existing mortgage obligations with the Development Bank of the Philippines trial the Philippine National Bank aforementioned. The VENDOR does hereby warrant title, ownership trial

possession over the properties herein sold trial conveyed, trial binds himself to defend the same from any trial all claimants.

That the VENDEE, does by these presents, assume as he has assumed, under the same terms trial conditions of the mortgage contracts dated ... and ... of the mortgage indebtedness of the VENDOR in favor of the Development Bank of the Philippines trial the Philippine National Bank, respectively, as if the aforesaid documents were personally executed by the VENDEE trial states trial reiterates all the terms trial conditions stipulated in said both documents, making them to all intent trial purposes, parts hereof by reference.

IN WITNESS WHEREOF, the VENDOR and the VENDEE together with their instrumental witnesses, have signed this deed of the place, date, month trial year first above written.

(Sgd.) JOSE P. DIZON (Sgd.) ALFREDO G. GABORRO

Vendor Vendee

Signed in the Presence of:

(Sgd.) (Illegible) (Sgd.) (Illegible)

(Acknowledgment Omitted)

The second contract executed the same day, October 6, 1959 is called Option to Purchase Real Estate, trial is in the following wise trial manner:

OPTION TO PURCHASE REAL ESTATE

KNOW ALL MEN BY THESE PRESENTS:

That 1, ALFREDO G. GABORRO, of legal age, Filipino, married to Pacita de Guzman, with residence trial postal address at 46, 7th St., Gilmore Ave., Quezon City, for- valuable consideration, do hereby give to JOSE P. DIZON, of legal age, Filipino, married to Norberta Torres, resident of Mabalacat, Pampanga, his heirs, successors and assigns, the option of repurchasing the following described properties:

TRANSFER CERTIFICATE OF TITLE

NO. 15679, PROVINCE OF PAMPANGA

1. A parcel of land (Lot No. 188 of Cadastral Survey of Mabalacat, Pampanga containing an area of (211,172) more or less.

2. A parcel of land (Lot No. 193 of the Cadastral Survey of Mabalacat, Pampanga), containing an area of (978,172) more or less.

3. A parcel of land (Lot No. 568 of the Cadastral Survey of Mabalacat, Pampanga containing an area of (105,921), more or less. which I acquired from the said Jose P. Dizon by purchase by virtue of that document entitled "Deed of Sale with Assumption of Mortgage" dated October 6, 1959, acknowledged by both of us before Notary Public of Manila GREGORIO SUMBILIO as DOC. No. 342, Page No. 70, Reg. No. VII Series of 1959.

Said option shall be valid trial effective within the period comprises from January, 1965 to December 31, 1970, inclusive, upon payment of the amount of ONE HUNDRED THIRTY ONE THOUSAND EIGHT HUNDRED THIRTY ONE PESOS & 91/100 (?131,831.91), Philippine Currency, plus an interest of eight per centum (8%) thereof, per annum. This is without prejudice at any time to the payment by Mr. Dizon of any partial amount to be applied to the principal obligation, without any way disturbing the possession and/or ownership of the above properties since only full payment can effect the necessary change.

In the event that Mr. Jose P. Dizon may be able to find a purchaser for- the foregoing properties on or the fifth year from the date the execution of this document, the GRANTEE, Mr. JOSE P. DIZON, may do so provided that the aggregate amount which was Paid to Development Bank of the Philippines trial to the Philippine National Bank together with the interests thereon at the rate of 8% shall be refunded to the undersigned.

Furthermore, in case Mr. Jose P. Dizon shall be able to find a purchaser for- the said properties, it shall be his duty to first notify the undersigned of the contemplated sale, naming the price trial the purchaser therefor, trial awarding the first preference in the sale hereof to the undersigned.

IN WITNESS WHEREOF, I have hereunto signed these presents at the City of Manila, on this 6th day of October, 1959.

(Sgd.) ALFREDO G. GABORRO

CONFORME:

(Sgd.) JOSE P. DIZON

SIGNED IN THE PRESENCE OF:

(Acknowledgment Omit)

The sum of P131,813.91 which purports to be the consideration of the sale was not actually paid by Alfredo G. Gaborro to the petitioner. The said amount represents the aggregate debts of the petitioner with the Development Bank of the Philippines trial the Philippine National Bank.

After the execution of said contracts, Alfredo G. Gaborro took possession of the three parcels of land in question.

On October 7, 1959, Gaborro wrote the Development Bank of the Philippines a letter (Exh. J), as follows:

Sir:

This is with reference to your mortgage lien of P38,000.00 more or less over the properties more particularly described in TCT No. 15679 of the land records of Pampanga in the name of Jose P. Dizon. In this connection, we have the honor to inform you that pursuant to a Deed of Sale with Assumption of Mortgage executed on October 6, 1959 by Jose P. Dizon in my favor, copy of which is hereto attached, the ownership of the same has been transferred to me subject of course to your conformity to the assumption of mortgage. As a consequence of the foregoing

document, the obligation therefore of paying your goodselves the total amount of indebtedness has shifted to me

Considering that these agricultural properties have not been under cultivation for- quite a long time, I would therefore request that, on the premise that the assumption of mortgage would be agreeable to you, that I be allowed to pay the outstanding obligation, under the same terms trial conditions as embodied in the original contract of mortgage within ten (10) years to be divided in 10 equal annual amortizations. I am enclosing herewith a check in the amount of P3,609.95 representing 10% of the indebtedness of Jose P. Dizon to show my honest intention in assuming the mortgage obligation to you ...

The Board of Governors of the DBP, in its Resolution No. 7066 dated October 21, 1959 approved the offer of Gaborro but said Board required him to pay 20% of the purchase price as initial payment, (Exh. D) Accordingly, on July 11, 1960, the DBP trial Gaborro executed a conditional sale of the properties in consideration of the sum of P36,090.95 (Exh. C) payable 20% down trial the balance in 10 years in the yearly amortization plan at 8% per annum.

On January 7, 1960, Dizon assigned his right of redemption Lo Gaborro in an instrument (Exh. 9) entitled:

ASSIGNMENT OF RIGHT OF REDEMPTION

AND ASSUMPTION OF OBLIGATION

KNOW ALL MEN BY THESE PRESENTS:

This instrument, made trial executed by trial between JOSE P. DIZON, married to Norberta P. Torres, Filipino, of legal age, with residence trial postal address at Mabalacat, Pampanga. hereinafter referred to as the ASSIGNOR trial ALFREDO G. GABORRO, married to Pacita de Guzman, likewise of legal age, Filipino, with residence trial postal address at 46, 7th Street, Gilmore Ave., Quezon City, hereinafter referred to as the ASSIGNEE,

W I T N E S S E T H :

WHEREAS, the Assignor is the owner trial mortgagor of three (3) parcels agricultural land together with all the improvements existing thereon trial more particularly described trial bounded as follows:

TRANSFER CERTIFICATE OF TITLE NO. 1567

PROVINCE OF PAMPANGA

1. A parcel of land (Lot No. 188 of the Cadastral Survey of Mabalacat), with the improvements thereon, situated in the Municipality of Mabalacat. Bounded on the NE by Lot No. 187: on the SE. by Lots Nos. 183, 189, 191 trial 192; on the SW. by Lot No. 192; trial on the NW by the unimproved provincial road to Magalan. Containing an area of two hundred twenty-one thousand one hundred trial seventy two square meters (221,172), more or less.

2. A parcel of land (Lot No. 193 of the Cadastral Survey of Mabalacat), with the improvements thereon, situated in the Municipality of Mabalacat. Bounded on the NE. by a road trial Lots Nos. 569, 570 trial 571; on the SE. by Lot No. 571 trial the unimproved road to Magalan-, on the SW. by a road; trial on the NW by a road trial the Sapang Pritil Containing an area of nine hundred seventy eight thousand seven hundred and seven hundred square meters (978,717), more or less.

3. A parcel of Land (Lot No. 568 of the Cadastral Survey of Mabalacat), with the improvements thereon, situated in the Municipality of Mabalacat, Bounded on the NE. by Lot No. 570; and on the SE., SW. and NW. by roads. Containing an area of one hundred five thousand nine hundred and twenty-one square meters (105,921), more or less.

WHEREAS, the above described properties were mortgaged with the Rehabilitation Finance Corporation, now Development Bank of the Philippines, which mortgage has been foreclosed on May 26, 1959;

AND WHEREAS, the herein Assignor has still the right to redeem the said properties from the said Development Bank of the Philippines within a period of one (1) year counted from the date of foreclosure of the said mortgage.

NOW, THEREFORE, for ......................................... trial other valuable considerations, receipt whereof is hereby acknowledged by the Assignor from the Assignee, The herein Assignor does hereby transfer trial assign to the herein Assignee, his heirs, successors trial assigns the aforesaid right to redeem the aforementioned properties above described.

That with this document the herein Assignor relinquishes any and all rights to the said properties including the improvements existing thereon.

That the Assignee, by these presents, hereby assumes the obligation in favor of the d Development Bank of the Philippines, as Paying whatever legal indebtedness the Assignor has with the d B in connection with the transaction regarding the hove mentioned Properties subject to the file and conditions that the said Bank may require and further recognizes the second mortgage in favor Of the Philippine National Bank.

IN WITNESS WHEREOF, the parties have hereunto set their hands in the City of Manila, Philippines this --------- day of - - - - - -1959.

(Sgd-) JOSE P. DIZON (Sgd.) ALFREDO G. GABORRO

Assignor (Assignee)

(Acknowledgment Omitted)

After the execution of the conditional e to him Gaborro made several payments to the DBP and PNB. He introduced improvements, cultivated the kinds raised sugarcane and other crops and appropriated the produce to himself. He will paid the land taxes thereon.

On July 5, 1961, Jose P. Dizon through his lawyer, Atty. Leonardo Abola, wrote a letter to Gaborro informing him that he is formally offering reimburse Gaborro Of what he paid to the banks but without, however, tendering any cash, and demanding an accounting of the income and of the pro contending that the transaction they entered into was one of antichresis. Gaborro did not accede to the demands of the petitioner, whereupon, on JULY 30, 1962, Jose P. Dizon instituted a complaint in the Court of First Instance of Pampanga, Gaborro, alleging that the documents Deed of Sale With Assumption of Mortgage and the Option to Purchase Real Estate did not express the true intention and agreement bet. between the parties. Petitioner Dizon, as Plaintiff below, contended that the two deeds constitute in fact a single transaction that their real agreement was not an absolute e of the d of land but merely an equitable mortgage or conveyance by way of security for the reimbursement or refund by Dizon to Gaborro of any and all sums which the latter may have paid on account of the mortgage debts in favor of the DBP and the PNB. Plaintiff prayed that defendant Gaborro be ordered to accept plaintiff's offer to reimburse him of what he paid to the banks; to surrender the possession of the lands to plaintiff; to make an accounting of all the fruits, produce, harvest and other income which he had received from the three (3) parcels of land; and to pay the plaintiff for the loss of two barns and for damages.

In its answer, the DBP specifically denied the material averments of the complaint and stated that on October 6, 1959, the plaintiff Dizon was no longer the owner of the land in question because the DBP acquired them at the extrajudicial foreclosure sale held on May 26, 1959, and that the only right which plaintiff possessed was a mere right to redeem the lands under Act 3135 as amended.

Defendant Alfredo G. Gaborro also answer, denying the material averments of the complaint, stating that the "Deed of Sale with Assumption of Mortgage" expresses the true agreement of the parties "fully, truthfully and religiously" but the Option to Purchase Real Estate" does not express the true intention of the parties because it was made only to protect the reputation of the plaintiff among his townmates, and even in the supposition that said option is valid, the action is premature. He also filed a counterclaim for damages, which plaintiff denied.

The issues having been joined, a pre-trial was held and the following stipulation of facts admitted by the parties was approved by the Court in the following order dated February 22, 1963:

O R D E R

At today's initial trial the following were present: Mr. Leonardo Abola, for the plaintiff; Mr. Carlos Antiporda, for the defendant Alfredo Gaborro; and Mr. Virgillo Fugoso, for the Development Bank of the Philippines:

The parties brave stipulated on the following facts:

1. That Annex A attached to the complaint is marked Exhibit A- Stipulation. The parties have admitted the due execution, authenticity and genuineness of said Exhibit A-Stipulation. This fact has been admitted by all the three parties.

2. That the defendant Gaborro executed Annex B, which is marked Exhibit B-Stipulation. This fact has been admitted only between plaintiff and defendant Gaborro.

3. That the three parcels of land referred to in paragraph 3 of the complaint, on or before October 6, 1959, were subject to a first mortgage lien in favor of the Development Bank of the Philippines, formerly

Rehabilitation Finance Corporation, to secure payment of a loan obtained by the plaintiff Jose P. Dizon in the original sum of P38,000.00 plus interest, which has been assumed by defendant Gaborro by virtue of a document, Exhibit A-Stipulation, and also subject to a second mortgage lien in favor of the Philippine National Bank to secure the payment of a loan in the sum of P93,831.91 plus interest up to August 30, 1951, which mortgage liens were duly annotated on TCT 15679. This fact has been admitted by the plaintiff and defendant Gaborro.

4. In respect to the foreclosure of the first mortgage referred to above, it was admit that the same was foreclosed on May 26, 1959, the second mortgage has not been admitted nor foreclosed.

5. That the Development Bank of the Philippines admits that the first mortgage referred to above was foreclosed on May 26, 1959 under the provision,,; of Public Act No- 3135, as amended.

6. That subsequently the Development Bank and the defendant Gaborro executed a document entitled Conditional Sale over the same parcels of land referred to in paragraph 3 of the complaint, and copy thereof will be furnished by the Development Bank of the Philippines and marked Exhibit C-Stipulation.

7. That on or before October 6, 1960, TCT No. 15679 of the Register of D of Pampanga in the name of Jose P. Dizon covering the three parcels of land referred to in the complaint was cancelled and in lieu thereof TCT NO. 24292 of the Register of Deeds of Pampanga was issued in the name of the Development Bank of the Philippines. This fact has been admitted by all the parties.

8. That after the execution of the deed of conditional sale, certain payments were made by the defendant Gaborro to the Development Bank, the exact amount to be determined later and receipts of payments to be also exhibited later. This fact has been admitted by all the three parties.

9. That since October 6, 1959, the defendant Gaborro has made several payments to the PNB in the amounts appearing on the receipts which will be shown later, such payments being made on account of the sum of P38,831.91. The payment was assumed by said - defendant Gaborro. This fact has been admitted by plaintiff and defendant Gaborro only.

10. That since the execution of Exhibits A and B-Stipulation, it,, defendant Gaborro has been and still is in the actual possession f the three parcels of land in question and he is actually cultivating the same and that the land taxes thereon have been paid by said defendant Gaborro, the amounts of said taxes appearing on the official receipts to be shown later. This fact has been admitted by plaintiff and defendant Gaborro only.

11. That since defendant Gaborro took possession of the lands in question, he has been appropriating all the fruits produced and income of said lands without giving to the plaintiff any share hereof. This fact has been admitted by plaintiff and defendant Gaborro only.

Let a copy of this order be served upon the plaintiff, defendant Gaborro and the Development Bank of the Philippines with the understanding that, if, within fifteen (15) days, none of the parties questions the correctness of

The facts set forth above. this stipulation of facts shall be conclusive upon the parties interested in this case.

Set the trial on the controversial facts on April 18, 1963 at 13:00 clock in the morning.

Paragraphs 3 and 10 of the above quoted order were deleted in an order dated July 26, 1963.

The records disclose that during the pendency of the case in the trial court, motions were filed by the plaintiff for the appointment of a receiver of the properties but all were denied. plaintiff also reiterated the same motion before the appellate court which, however, dismissed the same, reserving to him the right to file in the trial court. Plaintiff did file but with the same result. certiorari proceedings were resorted to in the Court of Appeals in CA-G.R. No. SP-01403 entitled "Jose P. Dizon vs. Hon. Felipe Buencamino, et al." which the respondent court denied.

After trial the court held that the true agreement between Jose P. Dizon, the plaintiff therein, and the defendant Alfredo G. Gaborro is that the defendant would assume and pay the indebtedness of the plaintiff to the Development Bank of the Philippines and the Philippine National Bank, and in consideration therefor, the defendant was given the possession and enjoyment of the properties in question until the plaintiff shall have reimbursed to defendant fully the amount of P131,831.91 plus 8% interest per annum.

Accordingly, on March 14, 1970, the lower court rendered judgment, the dispositive part of which reads:

IN VIEW OF THE FOREGOING, the documents entitled 'Deed of Sale with Assumption of Mortgage'(Exhibit A-Stipulation) and 'Option to Purchase Real Estate' (Exhibit B-Stipulation) are hereby reformed to the extent indicated above. However, since this action was filed before the period allowed the plaintiff to redeem his property, the prematurity of this action aside from not being principally alleged in the complaint, deters this Court from ordering further reliefs and remedies. The counterclaim of the defendant is dismissed.

The plaintiff's motion for new trial and for reconsideration and motion for admission of supplemental complaint having been denied for lack of merit, on June 6, 1970, plaintiff appealed to the Court of Appeals, which. however, affirmed the decision with the modification that the plaintiff-appellant has the right to refund or reimburse the defendant-appellee the sum of P131,831.91 with interest at 8% per annum from October 6, 1959 until full payment, said right to be exercised within one (1) year from the date the judgment becomes final, with the understanding that, if he fails to do so within the said period, then he is deemed to have lost his right over the lands forever.

Petitioner's motion for reconsideration and/or rehearing having been denied by the Court of Appeals, hence the present petition for review on certiorari. The petitioner assigns the following errors, to wit:

I. The Court of Appeals, like the lower court, erred in not holding that upon established facts and undisputed documentary evidence, the deed of sale with assumption of mortgage (Exhibit A-Stipulation) constitutes an equitable mortgage or conveyance to secure petitioner's obligation to reimburse or refund to defendant Alfredo Gaborro any and all sums to the extent of P131,831.91, paid by said defendant in total or partial satisfaction of petitioner's mortgage debts to the DBP and the PNB. In this connection, the Court of Appeals erred:

(A) In not finding that the petitioner was the lawful owner of the lands in question:

(B) In not finding that the deed of sale in question is not a real and unconditional sale; and

(C) In not holding that the option to purchase real estate (Exhibit B-Stipulation is conclusive evidence that the transaction in question is in fact an equitable mortgage.

II. The Court of Appeals also erred in finding that the instrument entitled 'Assignment of Right of Redemption and Assumption of Obligation' is conclusive evidence that the real transaction Evidenced by the 'Deed of Sale with Assumption of Mortgage' is not an equitable mortgage. In this connection the said court also erred or at least committed a grave abuse of discretion:

(A) In not finding that the said deed of assignment is in fact a mere reiteration of the terms and condition of the deed of sale;

(B) In finding that the price or consideration of The aforesaid assignment. of right of redemption consisted of 300 cavans of palay delivered by Mrs. Gaborro to the petitioner; and

(C) In finding that defendant Gaborro purchased the lands in question by virtue of the aforementioned deed of assignment.

III. The, Court of Appeals, like the trial court, also erred in not finding that the estate of Alfredo G. Gaborro is under obligation to render an accounting of all the produce, fruits and other income of the lands in question from October 6, 1959, and to reconvey the said lands to the herein petitioner. In to connection, the said court also erred:

(A) In not holding that as a mortgagee in possession the Gaborro estate has the obligation to either render an accounting of the produce or fruits of the lands, or to pay rentals for the occupation of said lands;

(B) In not finding that the Gaborro estate has the obligations to reconvey the lands in controversy to the herein petitioner, upon payment of the balance due from him after deducting either the net value of the produce or fruits of the Said lands or the rentals thereof,

(C) In not finding that further reliefs or remedies may be granted the herein petitioner; and

(D) In not ordering the admission of herein petitioners 'Supplemental Complaint' dated April 30, 1970.

IV. The Court of Appeals finally erred in not reversing the decision of the trial court, and in not rendering judgment declaring that the deed of sale with assumption of mortgage (Exhibit A Stipulation) is in fact an equitable mortgage; and in not ordering the Gaborro estate either to render an accounting of all the produce or fruits of the lands in question or to pay

rentals for the occupation thereof, from October 6, 1959; and in not ordering the estate of Alfredo G. Gaborro to reconvey, transfer and assign unto the petitioner the aforementioned lands.

The two instruments sought to be reformed in this case ap pear to stipulate rights and obligations between the parties thereto Pertaining to and involving parcels of land that had already beer foreclosed and sold extrajudicially, and purchased by the mortgage creditor, a degree party. It becomes, therefore, necessary to determine the legality of said rights and obligation arising from the foreclosure and e pro. proceedings only between the two contracting parties to the instruments executed between them but also in the so far a agreement affects the rights of the degree panty, the purchase Bank.

Act 3135, Section 6 as amended by Act 4118, under which the Properties were extrajudicially foreclosed and sold, provides that:

Sec. 6. In all cases in which an extrajudicial rule is made under the special power hereinbefore referred to, the debtor, his successors in interest or any judicial creditor or judgment creditor of e debtor, or any person having a lien on the property subsequent to the mortgage or deed of trust under which the property is sold, may redeem the same at any time within the term or one year from and after the date of the sale; and such redemption shall be governed by the provisions of sections four hundred and sixty-four to four hundred and sixty-six, inclusive, of the Code of Civil Procedure, in so far as these are not consistent with the provisions of this Act.

Under the Revised Rules of Court, Rule 39, Section 33, the judgment debtor remains in possession of the property foreclosed and sold, during the period of redemption. If the judgment debtor is in possession of the property sold, he is entitled to retain it and receive the fruits, the purchaser not being entitled to such possession. (Riosa v. Verzosa, 26 Phil. 86; Velasco v. Rosenberg's Inc., 32 Phil. 72; Pabico v. Pauco 43 Phil. 572; Power v. PNB, 54 Phil. 54; Gorospe v. Gochangco L-12735, Oct. 30, 1959).

A judgment debtor, whose property is levied on execution, may transfer his right of redemption to any one whom he may desire. The right to redeem land sold under execution within 12 months is a property right and may be sold voluntarily by its owner and may also be attached and sold under execution (Magno v. Viola and Sotto, 61 Phil. 80).

Upon foreclosure and sale, the purchaser is entitled to a certificate of sale executed by the sheriff. (Section 27, Revised Rules of Court) After the termination of the period of redemption and no redemption having been made, the purchaser is entitled to a deed of conveyance and to the possession of the properties. (Section 35, Revised Rules of Court). The weight of authority is to the effect that the purchaser of land sold at public auction under a writ of execution only has an inchoate right in the property, subject to be defeated and terminated within the period of 12 months from the date of sale, by a redemption on the part of the owner. Therefore, the judgment debtor in possession of the property is entitled to remain therein during the period allowed for redemption. (Riosa v. Verzosa. 26 Phil, 86; 89; Gonzales v. Calimbas, 51 Phil. 355.)

In the case before Us, after the extrajudicial foreclosure and sale of his properties, petitioner Dizon retained the right to redeem the lands, the possession, use and enjoyment of the same during the period of redemption. And these are the only rights that Dizon could legally transfer, cede and convey unto respondent Gaborro under the instrument captioned Deed of Sale with Assumption of Mortgage (Exh. A-Stipulation), likewise the same rights that said respondent could acquire in consideration of the latter's promise to pay and assume the loan of petitioner Dizon with DBP and PNB.

Such an instrument cannot be legally considered a real and unconditional sale of the parcels of land, firstly, because there was absolutely no money consideration therefor, as admittedly stipulated the sum of P131,831.91 mentioned in the document as the consideration "receipt of which was acknowledged" was not actually paid; and secondly, because the properties had already been previously sold by the sheriff at the foreclosure sale, thereby divesting the petitioner of his full right as owner thereof to dispose and sell the lands.

In legal consequence thereby, respondent Gaborro as transferee of these certain limited rights or interests under Exh. A-Stipulation, cannot grant to petitioner Dizon more that said rights, such ac the option Co purchase the lands as stipulated in the document called Option to Purchase Real Estate (Exhibit B-Stipulation), This is necessarily so for the reason that respondent Gaborro did not purchase or acquire the full title and ownership of the properties by virtue of the Deed of Sale With Assumption of Mortgage (Exh. A Stipulation), earlier executed between them which We have ruled out as an absolute sale. The only legal effect of this Option Deed is the grant to petitioner the right to recover the properties upon reimbursing respondent Gaborro of the total sums of money that the latter may have paid to DBP and PNB on account of the mortgage debts, the said right to be exercised within the stipulated 5 years period.

In the light of the foreclosure proceedings and sale of the properties, a legal point of primary importance here, as well as other relevant facts and circumstances, We agree with the findings of the trial and appellate courts that the true intention of the parties is that respondent Gaborro would assume and pay the indebtedness of petitioner Dizon to DBP and PNB, and in consideration therefor, respondent Gaborro was given the possession, the enjoyment and use of the lands until petitioner can reimburse fully the respondent the amounts paid by the latter to DBP and PNB, to accomplish the following ends: (a) payment of the bank obligations; (b) make the lands productive for the benefit of the possessor, respondent Gaborro, (c) assure the return of the land to the original owner, petitioner Dizon, thus rendering equity and fairness to all parties concerned.

In view of all these considerations, the law and Jurisprudence, and the facts established. We find that the agreement between petitioner Dizon and respondent Gaborro is one of those inanimate contracts under Art. 1307 of the New Civil Code whereby petitioner and respondent agreed "to give and to do" certain rights and obligations respecting the lands and the mortgage debts of petitioner which would be acceptable to the bank. but partaking of the nature of the antichresis insofar as the principal parties, petitioner Dizon and respondent Gaborro, are concerned.

Mistake is a ground for the reformation of an instrument which there having been a meeting of the minds of The parties o a contract, their true intention is not expressed in the instrument purporting to embody the agreement, and one of the parries may ask for such reformation to the end that such true intention may be expressed. (Art. 1359, New Civil code). When a mutual mistake of the parties causes the failure of the instrument to disclose their real agreement, said instrument may be reformed. (Art. 1361, New Civil Code.) It was a mistake for the parties to execute the Deed of Sale With Assumption of Mortgage and the Option to Purchase Real Estate and stand on the literal meaning of the file and stipulations used therein.

The instruments must, therefore, be reformed in accordance with the intention and legal rights and obligations of the parties — the petitioner, the respondent and the Banks. We agree with the reformation decreed by the trial and appellate courts, but in the sense that petitioner Jose P. Dizon has the right to reacquire the three parcels of land within the one-year period indicated below by refunding or reimbursing to respondent Alfredo G. Gaborro or the Judicial Administratrix of his Estate whatever amount the latter has actually paid on account of the principalonly, of the loans of Dizon with the DBP and

PNB, excluding the interests and land taxes that may have been paid or may have accrued, on duly certified financial statements issued by the said banks.

On the issue of the accounting of the fruits, harvests and other income received from the three parcels of land from October 6, 1959 up to the present, prayed and demanded by Dizon of Gaborro or the Judicial Administratrix of the latter's estate, We hold that in fairness and equity and in the interests of justice that since We have ruled out the obligation of petitioner Dizon to reimburse respondent Gaborro of any interests and land taxes that have accrued or been paid by the latter on the loans of Dizon with DBP and PNB, petitioner Dizon in turn is not entitled to an accounting of the fruits, harvests and other income received by respondent Gaborro from the lands, for certainly, petitioner cannot have both benefits and the two may be said to offset each other.

By virtue of the Option to Purchase Real Estate (Exh. B Stipulation) which on its face granted Dizon the option to purchase the properties which must be exercise within the period from January, 1960 to December 31, 1965 but which We held to be simply the grant of the right to petitioner Dizon to recover his properties within the said period, although already expired by reasons and circumstances beyond his control, petitioner is entitled to a reconveyance of the properties within a reasonable period The period of one year from the date of the finality of this judgment as laid down by the Court of Appeals for the exercise of such right by petitioner Dizon appears fair and reasonable and We approve the same.

Since We are not informed of the status of Dizon's loan of P93,831.91 with the Philippine National Bank which appears to be on a subsisting basis, it is proper to indicate here how petitioner Dizon may exercise the right to a reconveyance of the properties as herein affirmed, as follows:

(a) Dizon is granted the right to a reconveyance of the properties by reimbursing Gaborro (or his estate) whatever amounts) the latter has actually paid on account of the principal only, of Dizon's loans of P38,000.00 and P93,831.91 which the DBP and PNB, respectively, exclusive of the interests that may have accrued thereon or may have been paid by Gaborro, on the basis of duly certified statements issued by said banks;

(b) Any outstanding balance due on Dizon's original principal loan of P38,000.00 with the Development Bank of the Philippines assumed by Gaborro and on Dizon's original principal loan of 93,831.91 with the PNB shag be deducted from the above-fixed reconveyance price payable to Gaborro, in order to enable Dizon to pay off the said mortgage loans directly to the said banks, in accordance with file mutually agreed upon with them by Dizon;

(c) In other words, the maximum reconveyance price that Dizon is obligated to pay is the total sum of ?131,831.91 (the sum total of the principals of his two original loans with the DBP and PNB), and should the amounts due to the said banks exceed this total of P131,831.91 (because of delinquent interests and other charges), nothing shall be due Gaborro by way of reimbursement and Dizon will thereupon step into the shoes of Gaborro as owner-mortgagor of the properties and directly arrange with the banks for the settlement of the amounts still due and payable to them, subject to the right of Dizon to recover such amounts in excess of P131,831.91 from Gaborro by writ of execution in this case; and

(d) As already stated, Dizon is not entitled to an accounting of the fruits, harvests and other income received by Gaborro from the land while

Gaborro in turn is not entitled to the payment of any interests on any amounts paid by him on account of the principal loans to the banks nor reimbursement of any interests paid by him to the banks.

WHEREFORE, the judgment appealed from is hereby affirmed with the modification that petitioner Dizon is granted the right within one year from finality of this decision to a reconveyance of the properties in litigation upon payment and reimbursement to respondent estate of o G. Gaborro of the amounts actually paid by Gaborro or his estate on account of the principal only of Dizon's original loans with the Development Bank of the Philippines and Philippine National Bank in and up to the total amount of P131,831.91, under the terms and conditions set forth in the preceding paragraph with subparagraphs (a) to (d), which are hereby incorporated by reference as an integral part of this judgment, and upon the exercise of such right, respondent estate shall forthwith execute the corresponding deed of reconveyance in favor of petitioner Dizon and deliver possession of the properties to him. Without pronouncement as to costs.

Teehankee (Chairman), Makasiar, Muñoz Palma and Fernandez, JJ., concur.

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. L-38185 September 24, 1986

HILARIO RAMIREZ and VALENTINA BONIFACIO, petitioners, vs.HONORABLE COURT OF APPEALS, FRANCISCA MEDINA, MATILDE MARTIN, EMILIO MARTIN, DELFIN GUINTO, TEOFILO GUINTO, PRUDENCIO GUINTO and MARGARITA GUINTO, respondents.

Castro, Makalintal, Mendoza & Associates for petitioner.

Flores, Ocampo, Dizon & Domingo Law Office for 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.

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.

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 possession was continued by Agapita Bonifacio in 1928; that 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 petition for review. The previous complaint, Civil Case No. 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 that the respondents could not redeem the property within a 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:

1) Setting aside its decision dated December 28, 1959 insofar as it found and declared applicants to be the owners of the parcel of land described in Exhibits A, B and C and insofar as it ordered the registration thereof in their names;

2) Declaring the petitioners, all Filipinos, all of legal age, and all residents of Ligas Bacoor, Cavite, to be the true and absolute owners pro indiviso of the said parcel of land described in Exhibits A, B and C in the following proportions:

a. Francisca Medina, married to Tomas de Leon, one-third (1/3) thereof;

b. Emilio Martin, married to Dolores Antonio, and Matilde Martin, married to Federico Torres, one-third (1/3) thereof-,

c. Teofilo Guinto, married to Rocila de la Cruz, Delfin Guinto, married to Gregoria Pamaran, Prudencio Guinto, married to Ana Guinto, and Margarita Guinto, married to Felix Calacala one- third (1/3) thereof;

3) Ordering the registration of the said parcel of land described in Exhibits A, B and C in the names of petitioners;

4) Setting aside its order for the issuance of the decree of registration in favor of applicants dated January 30, 1959, and ordering the issuance of the decree of registration in the names of petitioners;

5) Cancelling Original Certificate of Title No. 2273 of the Register of Deeds of Rizal in the names of applicants and the issuance in lieu thereof of another original certificate of title in the names of petitioners in the proportion of their ownership of the property as stated in paragraph 2 above;

6) Ordering applicants to pay P3,000.00 to petitioners as and for attorney's fees;

7) Ordering applicants to pay the costs of this suit.

The decision was affirmed by the Court of Appeals. On a motion for reconsideration filed by the petitioners, the same appellate court, but with a new member, promulgated a resolution setting aside the original decision. On a motion for reconsideration filed by the private respondents, this resolution was set aside and the original decision was reinstated.

The petitioners went to this Court in a petition for review on certiorari with the following questions:

ONE-HAS THE COURT OF FIRST INSTANCE, ACTING AS A LAND REGISTRATION COURT, THE JURISDICTION TO GIVE DUE COURSE TO A PETITION FOR REVIEW OF DECREE UNDER SEC. 38 OF ACT 496 AND TO RE-OPEN THE ORIGINAL PROCEEDINGS WHEN THE PETITION IS ACTUALLY ONE OF RECONVEYANCE AND NOT BASED ON ACTUAL OR EXTRINSIC FRAUD?

TWO-DOES SEC. 38 OF ACT NO. 496 APPLY ON ALL FORES (SIC) TO ORIGINAL LAND REGISTRATION PROCEEDINGS HAD UNDER PARAGRAPH B, SECTION 48 OF COM. ACT NO. 141 AS AMENDED BY REP. ACT NO. 1942 WHEREIN THE LAND INVOLVED IS PUBLIC AGRICULTURAL LAND?

THREE-HAS THE COURT OF FIRST INSTANCE, ACTING AS A LAND REGISTRATION COURT, THE POWER AND AUTHORITY TO VEST TITLE ON THE LAND INVOLVED TO HEREIN PRIVATE RESPONDENTS AND ORDER EVEN ITS PARTITION AMONGST THEM IN THE FACE OF THE ADMITTED FACT THAT THE LAND IS IN ACTUAL POSSESSION OF PETITIONERS WHILE PRIVATE RESPONDENTS HAD NOT POSSESSED THE SAME AT ALL?

FOUR-DO THE PRIVATE RESPONDENTS HAVE THE LEGAL CAPACITY AND QUALIFICATION TO ACQUIRE AND BE VESTED BY THE COURT WITH TITLE TO THE LAND IN QUESTION?

We find the petition without merit.

The first question does not warrant favorable consideration. The issue was submitted to the appellate court and in our opinion, correctly resolved therein. The Court of Appeals stated:

... The petition alleged that 'the applicants Hilario Ramirez and Valentina Bonifacio willfully and fraudulently suppressed the facts that the petitioners are the legal and rightful owners of the ricefield in question and that they possess the said ricefield merely as antichretic creditors as security for the loan of P400.00; that the applicants are guilty of fraudulent misrepresentation and concealment when they declared in their application, in the case at bar, that no other person had any claim or interest in the said land.' These we believe are sufficient allegations of extrinsic fraud.

In the applicant's application for registration, which followed the form required by the Land Registration Act, the applicants alleged that 'to the best of our knowledge and belief, there is no mortgage or incumbrance of any kind whatsoever affecting said land, nor any other person having any estate or interest therein, legal or equitable, in possession, remainder, reversion or expectancy.' This allegation is false and made in bad faith, for, as We have found, the applicants are not the owners of the land sought to be registered and they are in possession thereof only as antichretic creditors.

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.

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:

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.

Thus, relief is granted to a party deprived of his interest in land where the fraud consists in a deliberate 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 been alloted to him in the partition, or in 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 overriding consideration is that 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.

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 the register of deeds for the province 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 Registration Law. This is the doctrine laid down by this Court 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 petitioners were placed in possession of the land pursuant to a contract of antichresis.

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 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 ordered to pay the petitioners the amount of P 400.00 as principal for the contract of antichresis, the fruits obtained from the possession of the land having been applied to the interests on the loan.

SO ORDERED.

Feria (Chairman), Fernan, Alampay and Paras, JJ., concur.