[G.R. No. 153710.

September 2, 2002]
SPS. ZOTOMAYOR vs. PEDRO RUBIO, et al.
FACTS:
> Petitioner spouses Javier secured two loans in the total amount of P103,809.56 as evidenced by
a promissory note from Tito Santos (deceased), husband of Rufina Santos (deceased), who are
both predecessors-in-interest of herein private respondents, all surnamed Rubio.
> In their Kasunduan, P63,809.56 of the loan was to be paid in the form of gravel and sand to be
extracted by Tito Santos from the quarry-concession of the then debtors and herein petitioners
Javier, granted to them by the Bureau of Mines.
> The other loan amounting to P40,000.00 was to be paid within a period of one (1) year and was
secured by a real estate mortgage on petitioners property.
> The parties also agreed that, despite full payment of P63,809.56 in the form of gravel and sand,
if the other loan of P40,000.00 remained unpaid after one year, then Tito Santos (predecessor-ininterest of private respondents) had the option to either continue extracting from the quarry until
the value of the extracted materials reached P40,000.00 or foreclose the property covered by the
mortgage.
> It was agreed that once the loan was fully paid, the real estate mortgage was to be discharged.
> However, Tito Santos failed to extract quarry materials from petitioners concession since the
latters permit from the Bureau of Mines had already expired on April 26, 1979.
> For petitioners failure to pay the first loan of P63,809.56, Tito Santos commenced a collection
suit against the spouses Javier.
> However, the parties executed a compromise agreement wherein the spouses Javier admitted
their indebtedness of 63,809.56 and obligated themselves to pay the same.
> RTC rendered judgment based on the compromise agreement. When petitioners again failed to
comply with the judgment within the specified time, a writ of execution was issued. Petitioners, in
partial satisfaction thereof, issued a check in the amount of P50,000.00.
> In the meantime, since petitioners also reneged on their obligation to pay their second loan of
which was secured by the real estate mortgage, Tito Santos foreclosed on petitioners property.
The foreclosure was annotated on petitioners TCT.
> When Tito Santos died, his surviving spouse Rufina, had petitioners TCT cancelled and a new
title issued in her name.
> Petitioners filed a complaint against Rufina Santos for Annulment of Certificate of Title and
Damages before the RTC. He alleged that their entire indebtedness to Tito Santos had been fully
paid in the form of gravel and sand quarried by Santos from their concession. They also alleged
that Tito Santos, despite petitioners full payment of their loan, still foreclosed on the mortgage.
> Rufina Santos denied that petitioners paid their loan in the form of quarry materials and alleged
by way of affirmative defense that petitioners, in the action against them for collection of sum of
money, even admitted their failure to pay the two loans within the period agreed upon.
> RTC - ruled for the then plaintiffs (petitioners herein) and declared the new title issued in the
name of Rufina Santos as null and void. It held that the contract entered into by the parties with
respect to the P40,000.00 loan was not a real estate mortgage but a contract of antichresis. There
being no mortgage to foreclose, according to the court, the new transfer certificate of title issued in
the name of Rufina Santos was null and void.
> Rufina Santos died during the pendency of the case and was duly substituted by her legal heirs.
> CA - reversed the trial court and dismissed the complaint for annulment of title and damages
filed by petitioners.

ISSUE:
Whether or not the Contract entered into is one of Antichrises.
HELD:
No.
The Court of Appeals assailed the conclusion of the trial court on the existence of a contract of
antichresis. In ruling for the private respondents, the appellate court reasoned out:
In any event, the conclusion of the trial court that the contract entered into by Tito
Santos and appellee-spouses is a contract of antichresis is without factual and legal basis.
Under Article 2132 of the Civil Code, a contract is one of antichresis when 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 of the loan, if owing, and thereafter to the principal
of his credit. Thus, when a contract of loan with security does not stipulate that the
creditor would apply the fruits of his debtors immovable to the interest of the loan
when owing, and thereafter to the principal, the contract is not a contract of
antichresis but a contract of mortgage.
To be sure, the Kasunduan which supplemented the Deed of Real Estate Mortgage
executed by appellee-spouses and Tito Santos gave the latter the option to extract quarry
materials from the concession of the former and apply the value thereof to the payment of
the P40,000.00 portion of appellee-spouses loan. The aforesaid agreement, however, does
not qualify the subject contract of mortgage as one of antichresis. First, the use of the
concession is not the immovable contemplated by law, the fruits of which is to be applied
towards the payment of the interest of the loan, if owing, and thereafter to the principal.
Second, the concession for quarry extraction is merely a privilege granted to appelleespouses by the government. It is not an immovable property that can be used as security for
the payment of an obligation. Third, and more importantly, the concession was in fact
not used as security for appellee-spouses loan. Rather, it is the property of appelleespouses as a collateral for the P40,000.00 portion of the loan. Thus, the Kasunduan
was merely a mode of payment, separate and distinct from the real estate
mortgage. [Emphasis supplied]

Note: The issue on antichrises was discussed only in CA. What was discussed in SC is about WON the reopening of
the case or annulment of judgment should be allowed. They argue that the decision rendered by the Court of Appeals
was null and void since such was rendered without their appellees brief.
SC Decision: Denied the petition of the petitioner. The remedy of annulment under Rule 47 is restricted to the grounds
specifically provided for by the Rules of Court: a) lack of jurisdiction and b) extrinsic fraud.
The Court of Appeals was therefore correct in dismissing the petition since petitioners allegation on the existence of
extrinsic fraud had neither factual nor legal basis.
The assertion of petitioners on the lack of due process (allegedly since their case was decided without their having
filed their appellees brief due to the negligence of their counsel) must also fail.
This Court has held that rules of procedure, especially those prescribing specific time frames within which certain acts
must be done, should not be taken lightly nor ignored for such rules are necessary for the proper, efficient and orderly
discharge of judicial functions.