Short answer. Yes. Article 2132 says that in an antichresis the creditor receives the fruits of the debtor's immovable with the obligation to apply them to the payment of the interest, if owing, and thereafter to the principal. So the harvest or rent he collects goes to interest first, and only what remains reduces the principal of the debt.
What the law says
the creditor acquires the right to receive the fruits of an immovable of his debtor
Civil Code, Article 2132 — Antichresis Defined. Read the full provision →
What the law says
with the obligation to apply them to the payment of the interest, if owing, and thereafter to the principal of his credit
Civil Code, Article 2132 — Antichresis Defined. Read the full provision →
Interest first, then principal
Article 2132 defines antichresis and, in doing so, fixes the order of application. By the contract, the creditor acquires the right to receive the fruits of an immovable of his debtor — the harvest of farmland, the rent of a leased building — but that right comes tied to a duty. He takes the fruits with the obligation to apply them to the payment of the interest, if owing, and thereafter to the principal of his credit. So the sequence is not the creditor's to choose. Whatever he collects is applied to interest first, to the extent any interest is due, and only the surplus goes to reducing the principal. The order is built into the contract by law.
Why the order protects the debtor
Applying the fruits in this fixed order keeps the arrangement honest. Because the creditor is in possession of the property and collecting its income, he could otherwise be tempted to characterise or delay applications in ways that keep the debt alive longer. Requiring interest first and then principal gives a predictable accounting: as the fruits come in, they steadily service the interest and then eat into the principal, moving the debtor toward discharge. It also means the debtor benefits directly from the productivity of his own property, since its fruits are working continuously to pay down what he owes rather than sitting to the creditor's advantage.
The creditor's duty to account
The words if owing matter. Fruits go to interest only to the extent interest is actually due; there is no licence to invent or inflate interest to soak up the income. This ties into the creditor's broader position in an antichresis: holding the property and its fruits, he is expected to account for what he receives and to apply it faithfully in the order the article sets. A debtor is entitled to know how the fruits have been applied and to see the debt shrinking accordingly. If the creditor collects fruits but does not properly credit them, the debtor can challenge the accounting, because the obligation to apply them is not optional.
Where the parties' agreement fits in
Antichresis is a contract, so the parties set the terms of the loan it secures — the amount, and the interest, if any. What Article 2132 supplies is the rule for how the fruits are then applied once those terms exist: to interest, if owing, and then to principal. If no interest is owing at all, the fruits go straight to the principal, since there is nothing ahead of it in the queue. The provision does not let a creditor keep the fruits as a bonus on top of repayment, nor apply them however he pleases. Their function is to pay the secured debt down, in the order the law prescribes.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Sps. Charito M. Reyes and Roberto Reyes, et al. vs. Heir of Benjamin Malance, et al, G.R. No. 219071, August 24, 2016 — read the decision on LawPhil →
- Amada Cotoner-Zacarias vs. Sps. Alfredo Revilla and the Heirs of Paz Revilla, G.R. No. 190901, November 12, 2014 — read the decision on LawPhil →
- Oscar Angeles, et al. vs. The Hon. Secretary of Justice, et al, G.R. No. 142612, July 29, 2005 — read the decision on LawPhil →