Alcantara v.

Alinea

Facts:

1. In 1904, Ambrosio Alinea and Eudosia Belarmino borrowed from Pedro

Alcantara the amount of 480 pesos, payable in January 1905.

2. It was agreed that if, at the expiration of the said period and the said
amount should not be paid, the house owned by the defendants and
located in the town of San Pablo be considered as absolutely sold to
the plaintiff for the said sum.

3. Although the time for the payment of said sum has expired and no
payment has been made, the defendants refused to deliver to plaintiff
the said property.

4. Defendants alleged that the principal borrowed was only 200 pesos
and that the interest was 280 pesos, and that they offered to pay the
plaintiff the sum of 480 pesos, but the plaintiff had refused to accept it.

5. Trial court ruled for the plaintiff.

Issue: Was the contract between the parties that of mortgage, or

pledge, or antichresis and was the contract against the law?

(Note: The dissent suggest that identifying the nature of the contract
between the parties was the issue because the Spanish law then did
not allow an agreement whereby the mere failure to pay the loan at
maturity shall divest a debtor of a specific property without any right
on his part to redeem the property (pledge, mortgage). The contract in
this case did not give to a debtor a right to redeem.)

Decision: No on both issues.

Ratio:

1. The contract was that of loan and promise of sale of a house and lot
with the amount loaned as the price. Either one of the contracts is
perfectly legal and both are authorized by the Civil Code.

2. The contract was not a mortgage because in order to constitute a

valid mortgage it is indispensable that the instrument be registered
in the Register of Property, in accordance with article 1875 of the
Civil Code, and because said document was not vested with the
character and conditions of a public instrument.

3. The contract was not a pledge because the property was not a
personal property and because the debtor continued in possession
thereof and the said property has never been occupied by the
creditor.

4. The contract was not an antichresis too because the creditor has
never been in possession of the property, has not enjoyed the said
property, and has not received its rents.

5. As the amount loaned has not been paid and continued to be in

possession of the debtor, it is only just that the promise of sale be
carried into effect, and the necessary instrument be executed by
the vendees.

6. Judgment of the trial court for plaintiff Alcantara was AFFIRMED.