In this petition for review on certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure, petitioner Cornelio M. Isaguirre assails the October 5, 1998 decision1 [Entitled "Cornelio M. Isaguirre v. Hon. Jesus A. Zozobrado, Jr., Hon. Wenceslao E. Ibabao, Annie May Braga-Leuterio, Alfonso P. Escovilla, Jr., and Felicitas de Lara" and docketed as CA-G.R. SP No. 48310.] of the Court of Appeals2 [Eighth Division composed of J. Eloy R. Bello, Jr., ponente; and JJ. Salome A. Montoya and Ruben T. Reyes, concurring.] and its Resolution promulgated on March 5, 1999.

The antecedent facts of the present case are as follows:

Alejandro de Lara was the original applicant-claimant for a Miscellaneous Sales Application over a parcel of land identified as portion of Lot 502, Guianga Cadastre, filed with the Bureau of Lands on January 17, 1942 and with an area of 2,342 square meters. Upon his death, Alejandro de Lara was succeeded by his wife - respondent Felicitas de Lara, as claimant. On November 19, 1954, the Undersecretary of Agriculture and Natural Resources amended the sales application to cover only 1,600 square meters. Then, on November 3, 1961, by virtue of a decision rendered by the Secretary of Agriculture and Natural Resources dated November 19, 1954, a subdivision survey was made and the area was further reduced to 1,000 square meters. On this lot stands a two-story residential-commercial apartment declared for taxation purposes under TD 43927 in the name of respondent’s sons - Apolonio and Rodolfo, both surnamed de Lara.

Sometime in 1953, respondent obtained several loans from the Philippine National Bank. When she encountered financial difficulties, respondent approached petitioner Cornelio M. Isaguirre, who was married to her niece, for assistance. On February 10, 1960, a document denominated as "Deed of Sale and Special Cession of Rights and Interests" was executed by respondent and petitioner, whereby the former sold a 250 square meter portion of Lot No. 502, together with the two-story commercial and residential structure standing thereon, in favor of petitioner, for and in consideration of the sum of P5,000.

Sometime in May, 1968, Apolonio and Rodolfo de Lara filed a complaint against petitioner for recovery of ownership and possession of the two-story building.3 [Docketed as Civil Case No. 6021.] However, the case was dismissed for lack of jurisdiction.

On August 21, 1969, petitioner filed a sales application over the subject property on the basis of the deed of sale. His application was approved on January 17, 1984, resulting in the issuance of Original Certificate of Title No. P-11566 on February 13, 1984, in the name of petitioner. Meanwhile, the sales application of respondent over the entire 1,000 square meters of subject property (including the 250 square meter portion claimed by petitioner) was also given due course, resulting in the issuance of Original Certificate of Title No. P-13038 on June 19, 1989, in the name of respondent.4 [Rollo, 69-71.]

Due to the overlapping of titles, petitioner filed an action for quieting of title and damages with the Regional Trial Court of Davao City against respondent on May 17, 1990. The case was docketed as Civil Case No. 20124-90. After trial on the merits, the trial court rendered judgment on October 19, 1992, in favor of petitioner, declaring him to be the lawful owner of the disputed property. However, the Court of Appeals reversed the trial court’s decision, holding that the transaction entered into by the parties, as evidenced by their contract, was an equitable mortgage, not a sale.5 [Docketed as CA - G.R. No. CV No. 42065; decision was promulgated on March 31, 1995.] The appellate court’s decision was based on the inadequacy of the consideration agreed upon by the parties, on its finding that the payment of a large portion of the "purchase price" was made after the execution of the deed of sale in several installments of minimal amounts; and finally, on the fact that petitioner did not take steps to confirm his rights or to obtain title over the property for several years after the execution of the deed of sale. As a consequence of its decision, the appellate court also declared Original Certificate of Title No.P-11566 issued in favor of petitioner to be null and void. On July 8, 1996, in a case docketed as G. R. No. 120832, this Court affirmed the decision of the Court of Appeals and on September 11, 1996, we denied petitioner’s motion for reconsideration.

On May 5, 1997, respondent filed a motion for execution with the trial court, praying for the immediate delivery of possession of the subject property, which motion was granted on August 18, 1997. On February 3, 1998, respondent moved for a writ of possession, invoking our ruling in G. R. No. 120832. Petitioner opposed the motion, asserting that he had the right of retention over the property until payment of the loan and the value of the improvements he had introduced on the property. On March 12, 1998, the trial court granted respondent’s motion for writ of possession. Petitioner’s motion for reconsideration was denied by the trial court on May 21, 1998. Consequently, a writ of possession dated June 16, 1998, together with the Sheriff’s Notice to Vacate dated July 7, 1998, were served upon petitioner.

Petitioner filed with the Court of Appeals a special civil action for certiorari and prohibition with prayer for a temporary restraining order or preliminary injunction to annul and set aside the March 12, 1998 and May 21, 1998 orders of the trial court, including the writ of possession dated June 16, 1998 and the sheriff’s notice to vacate dated July 7, 1998.6 [Rollo, 6-17, 44.]

The appellate court summarized the issues involved in the case as follows: (1) whether or not the mortgagee in an equitable mortgage has the right to retain possession of the property pending actual payment to him of the amount of indebtedness by the mortgagor; and (b) whether or not petitioner can be considered a builder in good faith with respect to the improvements he made on the property before the transaction was declared to be an equitable mortgage.

The Court of Appeals held that petitioner was not entitled to retain possession of the subject property. It said that -

Petitioner’s claims that he was a builder in good faith and entitled to reimbursement for the improvements he introduced upon the property were rejected by the Court of Appeals. It held that petitioner knew, or at least had an inkling, that there was a defect or flaw in his mode of acquisition. Nevertheless, the appellate court declared petitioner to have the following rights:

The case was finally disposed of by the appellate court in the following manner:

On March 5, 1999, petitioner’s motion for reconsideration was denied by the appellate court.8 [Ibid., 41-42.] Hence, the present appeal wherein petitioner makes the following assignment of errors:

Basically, petitioner claims that he is entitled to retain possession of the subject property until payment of the loan and the value of the necessary and useful improvements he made upon such property.10 [Ibid., 4.] According to petitioner, neither the Court of Appeals’ decision in G.R. CV No. 42065 nor this Court’s decision in G.R. No. 120832 ordered immediate delivery of possession of the subject property to respondent.

The dispositive portion of the March 31, 1995 decision of the Court of Appeals in G.R. CV No. 42065, which was affirmed by this Court, provides that –

Petitioner argues that the abovementioned decision merely settled the following matters: (1) that the transaction between petitioner and respondent was not a sale but an equitable mortgage; (2) that OCT No. P-13038 in the name of respondent is valid; and (3) that OCT No. P-11566 in the name of petitioner is null and void. Since the aforementioned decision did not direct the immediate ouster of petitioner from the subject property and the delivery thereof to respondent, the issuance of the writ of possession by the trial court on June 16, 1998 constituted an unwarranted modification or addition to the final and executory decision of this Court in G.R. No. 120832.12 [Ibid., 20-21.]

We do not agree with petitioner’s contentions. On the contrary, the March 31, 1995 decision of the appellate court, which was affirmed by this Court on July 8, 1996, served as more than adequate basis for the issuance of the writ of possession in favor of respondent since these decisions affirmed respondent’s title over the subject property. As the sole owner, respondent has the right to enjoy her property, without any other limitations than those established by law.13 [Civil Code, art. 428 –

The owner has also a right of action against the holder and possessor of the thing in order to recover it.] Corollary to such right, respondent also has the right to exclude from the possession of her property any other person to whom she has not transmitted such property.14 [Id., art. 429 –

It is true that, in some instances, the actual possessor has some valid rights over the property enforceable even against the owner thereof, such as in the case of a tenant or lessee.15 [Perez v. Evite, 1 SCRA 949 (1961)] Petitioner anchors his own claim to possession upon his declared status as a mortgagee. In his Memorandum, he argues that –

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Petitioner’s position lacks sufficient legal and factual moorings.

A mortgage is a contract entered into in order to secure the fulfillment of a principal obligation.17 [Civil Code, art. 2085 -

Third persons who are not parties to the principal obligation may secure the latter by pledging or mortgaging their own property.] It is constituted by recording the document in which it appears with the proper Registry of Property, although, even if it is not recorded, the mortgage is nevertheless binding between the parties.18 [Id., art. 2125, 1st par.] Thus, the only right granted by law in favor of the mortgagee is to demand the execution and the recording of the document in which the mortgage is formalized.19 [Id., art. 2125, 2nd par.] As a general rule, the mortgagor retains possession of the mortgaged property since a mortgage is merely a lien and title to the property does not pass to the mortgagee.20 [Oronce v. Court of Appeals, 298 SCRA 133 (1998); Adlawan v. Torres, 233 SCRA 645 (1994); Capulong v. CA, 130 SCRA 245 (1984); Peña, Peña Jr., Peña, Registration of Land Titles and Deeds, 257 (1994)] However, even though a mortgagee does not have possession of the property, there is no impairment of his security since the mortgage directly and immediately subjects the property upon which it is imposed, whoever the possessor may be, to the fulfillment of the obligation for whose security it was constituted.21 [Civil Code, art. 2126.] If the debtor is unable to pay his debt, the mortgage creditor may institute an action to foreclose the mortgage, whether judicially or extrajudicially, whereby the mortgaged property will then be sold at a public auction and the proceeds therefrom given to the creditor to the extent necessary to discharge the mortgage loan. Apparently, petitioner’s contention that "[t]o require [him] … to deliver possession of the Property to respondent prior to the full payment of the latter’s mortgage loan would be equivalent to the cancellation of the mortgage" is without basis. Regardless of its possessor, the mortgaged property may still be sold, with the prescribed formalities, in the event of the debtor’s default in the payment of his loan obligation.

Moreover, this Court cannot find any justification in the records to uphold petitioner’s contention that respondent delivered possession of the subject property upon the execution of the "Deed of Sale and Special Cession of Rights and Interests" on February 10, 1960 and that the transfer of possession to petitioner must therefore be considered an essential part of the agreement between the parties. This self-serving assertion of petitioner was directly contradicted by respondent in her pleadings.22 [Rollo, 108.] Furthermore, nowhere in the Court of Appeals’ decisions promulgated on March 31, 1995 (G.R. CV No. 42065) and on October 5, 1998 (G.R. SP No. 48310), or in our own decision promulgated on July 8, 1996 (G.R. No. 120832) was it ever established that the mortgaged properties were delivered by respondent to petitioner.

In Alvano v. Batoon,23 [25 Phil 178 (1913)] this Court held that "[a] simple mortgage does not give the mortgagee a right to the possession of the property unless the mortgage should contain some special provision to that effect." Regrettably for petitioner, he has not presented any evidence, other than his own gratuitous statements, to prove that the real intention of the parties was to allow him to enjoy possession of the mortgaged property until full payment of the loan.

Therefore, we hold that the trial court correctly issued the writ of possession in favor of respondent. Such writ was but a necessary consequence of this Court’s ruling in G.R. No. 120832 affirming the validity of the original certificate of title (OCT No. P-13038) in the name of respondent Felicitas de Lara, while at the same time nullifying the original certificate of title (OCT No. P-11566) in the name of petitioner Cornelio Isaguirre. Possession is an essential attribute of ownership; thus, it would be redundant for respondent to go back to court simply to establish her right to possess subject property. Contrary to petitioner’s claims, the issuance of the writ of possession by the trial court did not constitute an unwarranted modification of our decision in G.R. No. 120832, but rather, was a necessary complement thereto.24 [Gonzales v. Court of Appeals, 212 SCRA 595 (1992); Perez v. Evite, supra note 15. See also Phil Veterans Investment Development Corp. v. Velez, 199 SCRA 405 (1991); Cid v. Peralta, 24 Phil 142 (1913); Salacup v. Rambac, 17 Phil 21 (1910)] It bears stressing that a judgment is not confined to what appears upon the face of the decision, but also those necessarily included therein or necessary thereto.25 [Del Rosario v. Court of Agrarian Relations, 120 SCRA 422 (1984); Salomon v. Mendoza, 14 SCRA 867 (1965); Unson v. Lacson, 2 SCRA 861 (1961)]

With regard to the improvements made on the mortgaged property, we confirm the Court of Appeals’ characterization of petitioner as a possessor in bad faith. Based on the factual findings of the appellate court, it is evident that petitioner knew from the very beginning that there was really no sale and that he held respondent’s property as mere security for the payment of the loan obligation. Therefore, petitioner may claim reimbursement only for necessary expenses; however, he is not entitled to reimbursement for any useful expenses26 [Useful expenses are incurred to give greater utility or productivity to the thing. Tolentino, Civil Code of the Philippines II, 294 (1992)] which he may have incurred.27 [Civil Code, art. 546 –

Finally, as correctly pointed out by the Court of Appeals, this case should be remanded to the Regional Trial Court of Davao City for a determination of the total amount of the loan, the necessary expenses incurred by petitioner, and the period within which respondent must pay such amount.28 [Rollo, 48.] However, no interest is due on the loan since there has been no express stipulation in writing.29 [Civil Code, art. 1956; Velez v. Balzarza, 73 Phil 630 (1942)]

WHEREFORE, the assailed Decision of the Court of Appeals dated October 5, 1998 and its Resolution dated March 5, 1999 are hereby AFFIRMED. Respondent is entitled to delivery of possession of the subject property. This case is hereby REMANDED to the trial court for determination of the amount of the loan, the necessary expenses incurred by petitioner and the period within which the respondent must pay the same.

Melo, (Chairman), Vitug, and Purisima, JJ., concur.

Panganiban, J., on leave.