G.R. No. L-28845. June 10, 1971. TEODORA GONZALES BUNYI, petitioner, vs. SABINA REYES, LUZ JOAQUIN, ELVIRA JOAQUIN, ROSENDO JOAQUIN, JR., LUALHATI JOAQUIN and LOIDA VIVO and the HONORABLE COURT OF APPEALS, respondents.
FACTS:

Private respondents, heirs of Gil Joaquin, filed an action for reconveyance against petitioner Teodora Gonzales Bunyi over a parcel of land in Taguig, Rizal. They alleged that a 1935 document, styled as a “Venta con Pacto de Retro” (sale with right to repurchase) in favor of Bunyi for P100, was in reality an equitable mortgage securing a loan. They claimed the contents were not properly explained to the illiterate spouses. Gil Joaquin failed to repurchase, and Bunyi consolidated her ownership in 1941, obtaining a new title. The respondents asserted they continued to pay land taxes and collect rents from houses on the lot, only discovering Bunyi’s claim of ownership in 1961.
The trial court dismissed the complaint, upholding the deed as an unambiguous sale with pacto de retro. It found the lone testimony of surviving spouse Sabina Reyes insufficient to overcome the notarial document’s validity and ruled the contract was governed by the old Civil Code, not the equitable mortgage provisions of the new Code. The Court of Appeals reversed, declaring the contract void for lack of intelligent consent, construing it as an equitable mortgage under Article 1602 of the new Civil Code, and ordering reconveyance upon payment of the loan.

ISSUE

Whether the Court of Appeals erred in (1) reversing the trial court’s factual findings; (2) applying the provisions on equitable mortgage of the new Civil Code retroactively; and (3) ruling that the action for reconveyance had not prescribed.

RULING

Yes, the Court of Appeals committed reversible error. The Supreme Court reinstated the trial court’s decision. On the first issue, the trial court’s factual findings, based on credibility assessments and the strength of documentary evidence, are generally binding. The notarial deed’s plain terms indicated a sale, and Sabina Reyes’s uncorroborated testimony was inadequate to prove fraud or a different agreement. The cited circumstances like tax payments were insufficient to categorically prove an equitable mortgage under the old law.
On the second issue, the contract, executed and consummated under the old Civil Code (ownership consolidated in 1941), is governed by its provisions. The new Civil Code’s Articles 1602-1605 on equitable mortgage cannot be applied retroactively to impair vested rights acquired under the prior law. Petitioner’s ownership became irrevocable upon consolidation in 1941 under the old Code.
On the third issue, the action had prescribed. Following jurisprudence, the right to question the nature of the transaction or to seek reconveyance prescribes ten years from the consolidation of ownership. Since consolidation occurred in July 1941, the period lapsed in 1951. The filing of the suit in 1961, nearly twenty years later, is barred by prescription. The appellate court’s theory of a void contract leading to imprescriptibility is incorrect, as the contract was valid under the governing law at the time of its execution and fulfillment.