Symbolic Logic

ANTICHRESISCharacteristicsDistinguishment from Pledge and MortgageUse of Actual Market ValueFormObligations of the CreditorProhibition of Pactum Commissorium Jurisprudence and Bar questions

I.CharacteristicsArt. 2132By the contract of antichresis the creditor acquires the right to receive the fruits of an immovable of his debtor, with the obligation to apply them to the payment of the interest,if owing, and thereafter to the principal of his credit.

1.) Accessory contract- it secures the performance of a principal obligation.

2.) Formal contract- It must be in a specified form to be valid. It must be in writing otherwise, it is VOID.

II. Distinguishment from Pledge and Mortgage

AntichresisPledgeRefers only with immovable propertyRefers only to personal propertyAntichresisMortgageRight to receive the fruits of an immovableNo right to receive the fruitsIII. Use of Actual Market ValueArt. 2133The 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.

The fruits of the immovable which is the object of the antichresis must be appraised at their actual market value at the time of the application.

IV. FormArt. 2134The amount of the principal and of the interest shall be specified in writing; otherwise, the contract of antichresis shall be void.

Formal contract- it must be in writing

V. Obligations of the Antichretic Creditor

Art. 2135The creditor, unless there is a stipulation to the contrary, is obliged to pay the taxes the charges upon the estate.

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

Art. 2136The debtor cannot reacquire the enjoyment of the immovable without first having totally paid what he owes the creditor. But the latter, on order to exempt himself from the obligations imposed upon him by the preceding article, may always compel the debtor to enter again upon enjoyment of the property, except when there is a stipulation to the contrary

1.) To pay taxes and charges on the estate, including necessary expenses.Creditor may avoid said obligation by:a.) compelling the debtor to reacquire enjoyment of the propertyb.) by stipulation to the contrary2.) To apply all the fruits, after receiving them, to the payment of interest, if owing, and thereafter to the principal.

3.) To render an account of the fruits to the debtor

4.) To bear the expenses necessary for its preservation and repairV. Prohibition against Pactum Commissorium

Art. 2137The 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 sale of the real property. In this case, the Rules of Court on the foreclosure of mortgages shall apply.

Art. 2139The last paragraph of Article 2085, and Articles 2089 to 2091 are applicable to this contract.VI. Jurisprudence and Bar question

1.) A borrower obtained a loan, delivered the property as security so that the creditor may use the fruits. But no interest was mentioned; and it was not stated that the fruits would be applied to the interest first and then to the principal.

What kind of a contract is this?This is a real mortgage, not an antichresis.

What characterizes a contract of antichresis is that the creditor acquires the right to receive fruits of the property of his debtor, with the obligation to apply them to the payment of interest , if any is due, am d then to the principal of his credit- and when such covenant is made in the contract, the contract cannot be an antichresis.

G.R. No. 16256 September 28, 1921DIONISIA VALENCIA, ET AL. vs.HONORIO ACALA, ET AL.

Facts: The parties agree that the land in question is the same lot that is the subject of litigation in civil cause No. 966 of this court; and that in the year 1891, the plaintiff herein, Dionisia Valencia, and her deceased husband, Daniel Adepueng, conveyed to one Severino Agbagala and his wife Francisca Cadapan.

Later on in the year 1899 Francisca Cadapan, wife of Severino Agbagala, conveyed this same property to Juan Cagayat and Josefa Galendi.

That the possession of the land passed to Pedro Acala, who is one of the Acalas, the defendants in the present action. In the year 1912, the herein defendants Acala sold the land unconditionally to the herein defendant Bagayanan for the sum of P70.That Daniel Adepueng and Dionisia Valencia, acknowledged they being indebted to Severino Agbagala in the sum of P6.75, which they will pay with the fruits of the land the possession of which they turn over to him.

The judge quo held that the contract in question was one of sale with the right of repurchase, and decided: (a) That the defendants must be absolved from the complaint; (b) that the contract (Exhibit A) and those that were successively executed involving the lot in question are contracts of sale and not of mortgage or of loan with security; (c) that the action for the redemption and annulment of the sale of the lot in question has prescribed; (d) that the defendant Apolinario Bagayanan is at present the lawful owner of the said lot; and (e) that the costs of the suit should be paid by the plaintiffs jointly and severally to the defendants.

Issue: Whether or not the contract is of antichresis.Held: Yes.

In the case ofDe la Vega vs. Ballilos(34 Phil., 683), this court said:When money is loaned and the debtor places the creditor in possession of a piece of real property as security for the sum loaned in order that he may hold it in usufruct, in consideration for the said loan, the contract is not one of mortgage, notwithstanding the terms thereof, inasmuch as it is not of the nature of a public instrument, and even though it were, it does not appear to have been recorded in the property registry. Neither can such a contract be classified as one of sale underpacto de retro, notwithstanding that it is set forth therein that the debtor cedes and conveys to the creditor the ownership and possession of the said real property. Therefore, such a contract should be classified as one of antichresis, by means of which the creditor acquires the right to collect the fruits of the real property turned over to him by his debtor, but with the obligation to apply them to the payment of whatever interest is due and the contracting parties may stipulate that the interest of the debt be paid by the fruits of the property given in antichresis.

That the defendants Acala could not sell unconditionally the same land to their codefendant Bagayanan, is proved by the agreed statement of facts according to which the possession of the predecessor in interest of the Acala people was the same precarious possession of his assignor Juan Cagayat.

The judgment appealed from is reversed, and it is ordered that the defendants return the land in question to the plaintiffs upon payment by the latter of the sum of P6.75.

Truth in Lending Act( RA 3765)Section 3. As used in this Act, the term

(1) "Board" means the Monetary Board of the Central Bank of the Philippines.

(2) "Credit" means any loan, mortgage, deed of trust, advance, or discount; any conditional sales contract; any contract to sell, or sale or contract of sale of property or services, either for present or future delivery, under which part or all of the price is payable subsequent to the making of such sale or contract; any rental-purchase contract; any contract or arrangement for the hire, bailment, or leasing of property; any option, demand, lien, pledge, or other claim against, or for the delivery of, property or money; any purchase, or other acquisition of, or any credit upon the security of, any obligation of claim arising out of any of the foregoing; and any transaction or series of transactions having a similar purpose or effect.

(3) "Finance charge" includes interest, fees, service charges, discounts, and such other charges incident to the extension of credit as the Board may be regulation prescribe.

(4) "Creditor" means any person engaged in the business of extending credit(including any person who as a regular business practice make loans or sells or rents property or services on a time, credit, or installment basis, either as principal or as agent) who requires as an incident to the extension of credit, the payment of a finance charge.

(5) "Person" means any individual, corporation, partnership, association, or other organized group of persons, or the legal successor or representative of the foregoing, and includes the Philippine Government or any agency thereof, or any other government, or of any of its political subdivisions, orany agency of the foregoing.

Purpose: For the State to protect its citizens from a lack of awareness of the true cost of credit to the user by assuring a full disclosure of such cost with a view of preventing the uninformed use of credit to the detriment of the national economy.(Sec 2)

What does this act require on creditors?Sec 4: Any creditor shall furnish to each person to whom credit is extended, prior to the consummation of the transaction, a clear statement in writing setting forth, to the extent applicable and in accordance with rules and regulations prescribed by the Board, the following information: (CADCTFP)(1) the cash price or delivered price of the property or service to be acquired;

(2) the amounts, if any, to be credited as down payment and/or trade-in;

(3) the difference between the amounts set forth under clauses (1) and (2);

(4) the charges, individually itemized, which are paid or to be paid by such person in connection with the transaction but which are not incident to the extension of credit;

(5) the total amount to be financed;

(6) the finance charge expressed in terms of pesos and centavos; and

(7) the percentage that the finance bears to the total amount to be financed expressed as a simple annual rate on the outstanding unpaid balance of the obligation.

What are the penalties to be sanctioned to the creditors?

CIVIL LIABILITY (Sec 6)(a-b) Creditor lialble of P100 or in amount equal to twice the finance charged required by such creditor in connection with such transaction, whichever is the greater, except that such liability shall not exceed P2,000 on any credit transaction.

It must be brought within one year from the date of the occurrence of the violation, in any court of competent jurisdiction.

The creditor shall also be liable for reasonable attorney's fees and court costs as determined by the court.

Except as specified in subsection (a) of this section, nothing contained in this Act or any regulation contained in this Act or any regulation thereunder shall affect the validity or enforceability of any contract or transactions.

CRIMINAL LIABILITY(c) Any person who willfully violates any provision of this Act or any regulation issued thereunder shall be fined by not less than P1,00 or more than P5,000 or imprisonment for not less than 6 months, nor more than one year or both.

(d) No punishment or penalty provided by this Act shall apply to the Philippine Government or any agency or any political subdivision thereof.

(e) A final judgment hereafter rendered in any criminal proceeding under this Act to the effect that a defendant has willfully violated this Act shall be prima facie evidence against such defendant in an action or proceeding brought by any other party against such defendant under this Act as to all matters respecting which said judgment would be an estoppel as between the parties thereto.

UCPB v Sps Beluso (2007)

Facts: April 16, 1996, UCPB granted the Sps Beluso a Promissory Note Line under a Credit Agreement whereby the Belusos could avail up to a maximum amount of 1.2 M for a term ending on Apr. 30, 1997. The Beluso in addition to the promissory notes, executed a real estate mortgage over some land in Roxas as additional security.

Later on, the Credit Agreement was amended to increase the amount of the Promissory Notes Line to a maximum 2.35M and the term amended which extended to February 28,1998.

The Belusos availed of 3 Promissory notes amounting to 2M which were renewed several times.

On April 30,1997, the payment of the prinicipal plus the interest of the last two notes were debited from the Sps Belusos account with UCPB; yet a consolidated loan for P1.3 M was released to the Sps. Beluso under a one promissory note with a due date 28 February 1998.

To completely avail themselves of the 2.35M credit line extended to them by UCPB, the spousese executed two more PN for a total of P350,000

However, the Sps alleges that the amounts covered by these last two PN were never released or credited to their account and, thus, claimed the principal undebtedness was only 2M.

UCPB applied interest rates on the PN ranging from 18%-34%

From Feb.1996-1998 they paid P763,000.From Feb 1998-June 1998, UCPB charge them interests and penalties and the Sps failed to make payments on these.

On Sept.1998, UCPB demanded payment of 2.3M plus 25% attys fees and still the Sps did not pay.

On Decemeber 1998, UCPB foreclosed the Sps mortgaged properties and by that time it ballooned to P3,784,603.

The Sps filed a Petiotion for Annulment, Accounting and Damages against UCPB.RTC held in favor of the of the spouses. Disposing that the interest rates provided in the PN are void and imposed a fine of P26,000 for violating the Truth in Lending Act.CA affirmed RTCs decision because the rates were determined solely by the UCPB.

Issue. WON UCPB is liable of the Truth in Lending Act.

Held: Yes.

The interest charged were left blank. Thus, UCPB failed to discharge its duty to disclose in full to the Belusos the charges applicable to their loan.

The interest rate imposed by UCPB by relying on the provision on the PN that granted power to unilaterally fixed the interest rate and which was left solely to the will of the branch head means that the PN did contain a clear statement of writing of the finance charge.Of which is not in accordance with Sec. 6 paragraph 4 of RA 3765 which states that :

Sec 6. Any creditor shall furnish to each person to whom credit is extended, prior to the consummation of the transaction, a clear statement in writing setting forth, to the extent applicable and in accordance with rules and regulations prescribed by the Board the following information:

(6) the finance charge expressed in terms of pesos and centavos;